Market Conditions
The current state of supply and demand in the real estate market for a particular property type in a defined area. Market conditions are classified as balanced, seller's market (demand exceeds supply), or buyer's market (supply exceeds demand).
The appraiser analyzes market conditions by examining metrics such as months of supply (active listings divided by recent monthly sales rate), days on market trends, sale-to-list price ratios, price trends, new construction activity, and the direction of these indicators. UAD requires the appraiser to classify market conditions and report specific metrics. Rapidly changing market conditions require time adjustments to comparable sales to reflect value changes between the sale date and the effective date of the appraisal.
Related Terms
Absorption Rate
The rate at which available properties are sold or leased in a specific market during a given time period.
Days on Market (DOM)
DOMThe number of days between when a property is listed for sale and when it goes under contract.
Months of Supply
The estimated time it would take to sell all current listings at the current sales pace, calculated by dividing active inventory by the average monthly sales rate.
Time Adjustment (Market Conditions Adjustment)
An adjustment applied to a comparable sale to account for changes in market value between the date of the comparable's sale and the effective date of the appraisal.
Comparable Sale
A recently sold property that is similar to the subject property in terms of location, size, condition, and features, used as evidence to support the appraiser's opinion of value in the sales comparison approach..
More in Market Analysis
View allExposure Time
The estimated length of time a property would have been offered on the market before a hypothetical sale at the appraised value on the effective date.
Marketing Time
The estimated time it would take to sell a property starting from the effective date of the appraisal, looking forward.
Comparative Market Analysis (CMA)
CMAAn estimate of a property's value prepared by a real estate agent using recent sales, active listings, and pending sales data.
Broker Price Opinion (BPO)
BPOA property valuation estimate provided by a licensed real estate broker, less detailed than a formal appraisal.