Cycles in Real Estate

December 29th, 2007 11:04 AM by

There are times when the financial system of this country is vigorous and everyone feels confident about his or her prospects for the future. As a result, they spend money. People eat out more, buy new cars, and, most importantly from a realtor’s point of view, they buy houses.

Then, for one reason or another, the economy slows down. Everyone tries to save a little money. Companies lay off employees and consumers are more careful about where they spend money. As a result, the economy deflates even further. If it slows enough, we have a recession.

During such a time, fewer people are buying homes. But, that never means there are not homes for sale. Some homeowners find themselves in a situation where they must sell. For example, families grow beyond the capacity of the home, employees get relocated, and some may even find themselves unable to make their mortgage payment due to layoffs or illness.

In real estate, the relationship between supply and demand is calculated as "available inventory." At the current sales pace, how long would it take to sell the total number of houses available on the market? That is how the real estate industry measures inventory.

Inventory is measured in weeks and months. Longer inventory times are associated with buyers' markets. Shorter inventory periods are associated with sellers' markets. Some buyers and sellers hope to time their purchase to take advantage of market cycles.

Here at the Rosa Agency, we are on top of all the real estate trends and whether you are buying or selling your home, we can offer you a friendly, helping hand.

Posted in:General
Posted by on December 29th, 2007 11:04 AM



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