Intermediate terms

Housing Market Trends: Key Terms Glossary

Explore key terms that might be helpful when analyzing housing inventory and price trends. This curated collection offers clear definitions for commonly referenced concepts, supporting your understanding of market dynamics and property values. Use it as a quick reference to navigate the language of real estate supply and demand.

Learning Path

Months of Supply

Months of Supply (MOS) is a key real estate metric that indicates how long it would take for all current homes on the market to sell, given the current sales pace, assuming no new homes are added. It's a crucial indicator of market balance.

Intermediate5 min

Absorption Rate

The absorption rate measures the pace at which available properties are sold or leased in a specific market over a given period, indicating the balance between supply and demand.

Intermediate13-14 min

Equity

Equity in real estate is the portion of a property's value that an owner truly owns, free and clear of any outstanding debts or liens. It is calculated as the property's current market value minus the total amount owed on any mortgages or loans.

Beginner12-13 min

Housing Market Crash

A housing market crash is a severe and rapid decline in real estate property values across a broad market, often triggered by economic downturns, excessive speculation, or unsustainable lending practices, leading to widespread financial distress.

Advanced8 min

Overvalued Market

An overvalued market occurs when real estate prices significantly exceed their fundamental economic value, often driven by speculative demand, low interest rates, or irrational exuberance.

Intermediate5 min

Real Estate Permits

Real estate permits are official government authorizations required for construction, renovation, or alteration of property, ensuring compliance with building codes, zoning laws, and safety standards.

Intermediate15-18 min

Affordability Index

The Affordability Index measures whether a typical family earns enough income to qualify for a mortgage loan on a median-priced home. An index value of 100 means the median family income is exactly enough to qualify, while values above 100 indicate greater affordability.

Intermediate5-6 min

Median Home Price

The median home price is the middle value of all homes sold in a specific area during a given period, with half of sales occurring above and half below this price. It provides a reliable indicator of typical home values and market health for real estate investors.

Beginner15 min

New Housing Starts

New Housing Starts refers to the number of new residential construction projects on which ground has been broken during a given period, serving as a key economic indicator for the health of the housing market and broader economy.

Intermediate5-6 min

Housing Supply

Housing supply refers to the total number of homes available for sale or rent in a specific market at a given time, indicating the availability of properties for buyers and renters.

Beginner2-3 min

For-Sale Market

The for-sale market refers to the segment of the real estate industry where properties are actively listed and available for purchase by buyers, distinct from properties available for rent.

Beginner2-3 min

Buyer's Market

A buyer's market is a real estate condition where the supply of available properties exceeds the demand from buyers, giving buyers more leverage in negotiations and leading to potentially lower prices and more favorable terms.

Intermediate15-18 min

Seller's Market

A real estate market condition where low inventory and high buyer demand give sellers a significant advantage, leading to higher prices and faster sales.

Intermediate11-12 min

Supply and Demand

Supply and demand are fundamental economic principles describing the interaction between the availability of real estate (supply) and the desire for it (demand), which collectively determine property prices and market conditions.

Intermediate13-14 min

Mortgage Rates

Mortgage rates are the interest percentages charged on real estate loans, determining the cost of borrowing and significantly impacting monthly payments and investment profitability.

Intermediate15-18 min

Real Estate Market Cycle

The Real Estate Market Cycle refers to the recurring, non-linear pattern of expansion and contraction that characterizes real estate markets, driven by economic, demographic, and supply-demand factors.

Intermediate16 min