If you’re currently considering an investment proposal that involves buying and selling Residential Real Estate, you look at the bottom line.housing inventory up How much are you being asked to invest and what will be the rate of return?

 Investors who buy and sell real estate are able to find deals that the average home buyer may not due to the amount of research and work put into any particular project. The art is to buy at the lowest possible price, keep rehabilitation costs in check and sell for the highest price in the amount of time allotted for the sale.

The final sales price is influenced by similar properties in the immediate neighborhood as they are the best indicator to what the home will finally sell for. That amount is typically prepared by the real estate agent involved but is also influence by inventory, or the current number of homes available for sale. Real estate agents and developers alike pay close attention to this number as it will affect how low or how high a home may sell for once it reaches the market. Today for example, the National Association of Realtors reported that the supply of existing homes for sale increased to 5.7 months from 5.6. What, exactly, does that mean?

It means that given the current clip of home buying activity, it will take 5.7 months to completely liquidate all the homes for sale. More inventory means it will take longer to sell the current stock of real estate and can negatively impact prices as sellers lower the asking price to facilitate a quicker sale. Still, anything less than a 6 month supply is considered a seller’s market and anything less a buyer’s market. These numbers indicate that the seller still has the upper hand in price negotiations, propping up housing values. As a real estate investor and the current inventory is less than 6 months, you can expect prices to at least rise or at the very minimum not fall.