This glossary covers market analysis terms used in real estate investment.
Valuation
Comparable Sales (Comps)
Recent sales of similar properties used to estimate value.
Market Value
Price a property would likely sell for in current market conditions.
Appraisal
Professional assessment of property value.
Price Per Square Foot
Property price divided by size, enabling comparison.
Supply & Demand
Inventory
Number of properties available for sale in a market.
Absorption Rate
Rate at which available properties are sold in a market.
Days on Market (DOM)
Average time properties take to sell.
Months of Supply
Current inventory divided by monthly sales rate.
Market Conditions
Buyer's Market
More supply than demand, favoring buyers with lower prices and negotiating power.
Seller's Market
More demand than supply, favoring sellers with higher prices and quick sales.
Balanced Market
Roughly equal supply and demand.
Market Cycles
Expansion
Phase of increasing prices, demand, and construction.
Peak
Top of market cycle before decline begins.
Contraction
Phase of decreasing prices and demand.
Trough
Bottom of market cycle before recovery begins.
Recovery
Phase of stabilizing and beginning to increase after trough.
Economic Indicators
GDP (Gross Domestic Product)
Total economic output, indicating economic health.
Employment Rate
Percentage of workforce employed, affecting housing demand.
Population Growth
Increase in population, driving housing demand.
Interest Rates
Cost of borrowing, affecting affordability and demand.
Location Analysis
Micro-Market
Specific neighborhood or community within larger market.
Macro-Market
Broader regional or city-wide market.
Location Premium
Higher value due to desirable location characteristics.
Understanding market analysis terminology enables informed investment decisions based on market conditions.
