Supply and Demand
The economic principle that value is created and sustained by the interaction of available properties (supply) and ready buyers (demand). Months of inventory — supply divided by the monthly absorption rate — is the appraiser's standard gauge of balance.
Related Terms
Declining Market
A market in which property values are trending downward, evidenced by falling sale prices, rising inventory, longer marketing times, and increasing seller concessions.
Appreciation
An increase in property value over time, driven by market conditions, inflation, neighborhood improvement, or rising demand.
Market Value
The most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus..
More in Market Analysis
View allMarket Conditions
The current state of supply and demand in the real estate market for a particular property type in a defined area.
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.