Inventory levels can be used to show us the 'health' of the real estate market in a town. If an inventory level graph shows seasonal fluctuations then we know that the market is healthy and showing normal activity.
What are Inventory Levels?
If an inventory level graph shows seasonal fluctuations then we know that the market is 'healthy' and showing normal activity. If seasonal fluctuations are not obvious then what we are seeing is an 'unhealthy' market where foreclosures and short sales have cluttered and hidden the normal trends of the market. Price trends can be learnt from inventory level data – in a 'healthy' market with demand greater than supply, prices tend to move up. In an 'unhealthy' market where supply far outstrips demand then the trend on prices is down. This follows the normal Supply and Demand market dynamics.
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