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Real Estate Defined – A 3-Part Series

December 11, 2009

Buying or selling real estate is the beginning of the total homeownership experience.  BUT, understanding everything involved in real estate can sometimes be confusing.  

In my 3-part series “Real Estate Defined”, I’ll re-introduce you to language we hear every day and help you understand what each term means.  And when you’re ready to take the next step into homeownership, you will have the knowledge you need to make a strong and informed start. 

In Part 1, let’s break down some of the confusion with some terms we frequently hear in the news: 

Housing Market: The housing market refers to the supply and demand for houses in a particular country or region.  Factors that affect the housing market include interest rates, the mortgage industry, economic growth, incomes, unemployment rates and population demographic trends.  More specific definitions of “market” include: 

  • Buyer’s Market: A buyer’s market occurs when demand for homes is very weak and prices do not appreciate as much or in some cases actually drop in certain areas. In a buyer’s market, homebuyers have the opportunity to purchase a home at lower prices.
  • Seller’s Market: A seller’s market occurs when demand of for homes is great. In a seller’s market, potential sellers have the opportunity to sell their home at a higher price than in the past due to a limited amount of properties available and a large number of potential buyers demanding them at current prices.  Sellers and home owners are also likely to experience higher appreciation in a seller’s market. 
  • Time on Market: The length of time in which a home is listed for sale is known as “time on market.”  On many multiple listing services (MLS) sheets, this is also noted as D.O.M. – Days On Market.

Existing Home Sales: Existing home sales is an economic indicator of both the number and prices of single-family homes, condos and co-op sales over a one-month period.  Each month, the National Association of Realtors (NAR) releases statistics on sales and prices of existing single-family homes for the nation and four regions. The existing home sales report, which includes footnotes on how the numbers are derived, is available at

Inventory: Housing inventory is the number of existing homes available for sale each month.  The most closely watched housing inventory measure is a months’ supply, which measures the latest housing supply in relation to housing demand.  In May 2009, NAR reported that nationally the inventory of existing homes for sale fell, representing a 9.6-month supply at the current sales pace.  (A six-month supply is considered a balanced market.) A decrease in homes for sale is a sign that the housing market is on its way to recovery, while a large supply of homes still available gives potential buyers more options in choosing the home that best fits their specific needs and wants.  

Home Appreciation: Home appreciation is the increase in value of a property over a period of time.  Short-term increases or decreases in value are triggered by factors such as employment rates, interest rates, housing supply, demand, affordability, crime rate, quality of schools in the area and proximity to a city.  Additional factors such as upgrading a home can also result in home appreciation.  What a home is worth depends on these elements, as they directly impact what a buyer is willing to pay for a particular property. While real estate moves in cycles and home values fluctuate regularly, real estate has consistently appreciated over the long term.

In my next segment, we talk about Realtors – who are we and what can we do to help!



Patty Cunningham, Realtor®
Coldwell Banker Preferred
390 Waterloo Blvd, Suite 101
Exton, PA 19341
 O. 610.363.6006
F. 484.356.0540
C. 610.659.4669 
Access my Business Directory here:

Oh, by the way…  I’m never too busy for one of your referrals! 

* Honored as the winner of the CARTUS Cup and the CARTUS Master’s Cup for the highest overall performance & service delivery in the world’s top performing broker relocation network
Ranked #1 in Pennsylvania & Delaware, and #7 internationally of all Coldwell Banker affiliate companies
* Cartus Platinum Recognition Award for outstanding service and performance at all levels
* “Highest Overall Satisfaction for Home Sellers Among National Full Service Real Estate Firms” by J.D. Power & Associates in their 2009 Home Buyer/Seller Study


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