You want to know if the market is strong if you are buying or selling real estate. Having such information lets you know how flexible you should be in your offers.

Sales have slowed across much of the east and west coasts for sellers. Good news for buyers. On the other hand, sales are recovering in parts of the interior of our country. A cheerful note for sellers. Let’s see what is happening, why and what it means to you.

Many things affect the strength of the market, but some more than others. Is employment strong in your area? Are there jobs available that pay well? Plentiful, high-paying jobs help strengthen the housing market.

Is there a high inventory of new-build, but unsold, homes in your area? Has this inventory increased or decreased? Sales tend to slow down and prices drop when inventory is very high. This often happens when prices have moved above what the average families in an area can afford.

Where home inventories are high

In Washington, DC, Miami, Florida, and Phoenix, Arizona, new unsold home inventories have increased dramatically in the last twelve months. Those markets tend to be better for buyers than in the recent past.

Where home inventories are low

In Texas, Dallas and Houston have very low increases in home inventory and a good job outlook. Prices are increasing there. Families are buying houses. Investors are also exploring the area and buying. This has created a situation that is very helpful for sellers, which is somewhat ironic given that Texas generally missed the housing boom of the last six years.

What is happening in your market?

How do you find out what the market is like in your area? Read the local news paper. Are there “reduced price” or “buy now before the next price increase” phrases on homes for sale? Are there stories about layoffs or new employers coming to town? Call your local builders association, real estate association, Chamber of Commerce. Ask a lot of questions about the number of unsold homes today compared to the number a year ago. Ask the Chamber of Commerce about employers coming to town or leaving. Visit models in new communities and ask lots of questions there too.

You will soon have your own opinion on what is happening in the part of the country where you want to buy or sell. Your strategy should match the strength of your position as a buyer or seller. Understanding the market in which you will operate is a good starting point.