One of the indicators that tells you a lot about how a particular real estate market is doing is the amount of outstanding inventory there is. When we talk about real estate inventory, all this means is the number of homes that are for sale divided by the average number of homes that sell every month. Thus, for example, if there are 100 homes for sale in a given area and 25 homes sell every month in that same area on average, there are four months of inventory.

When inventory levels are below six months, especially if there are few distressed sales (short sales and bank foreclosures), we say that an area is experiencing a seller’s market. As I’m sure you’ve heard if you haven’t been living on Mars, most of Placer County and Sacramento County are currently in a buyer’s market.

When we look at the Placer County numbers, one interesting result we find is that the areas with the most distressed sales have the lowest inventory numbers. On one end of the spectrum, Foresthill and Granite Bay have high inventory levels — above eleven months — but the lowest percentages of active short sales and foreclosures. On the other end, Roseville has the lowest inventory number of any Placer County area we looked at — seven months — but also has the highest number of foreclosures and is second only to Lincoln for short sales.

This high foreclosures means low inventory is not a rule that applies universally, however. Outside Placer County it breaks down completely. Sacramento County overall has higher numbers for foreclosures and short sales than any area we looked at in Placer County, yet inventory is high at 10 months. And in a true buyers market, we find extremely low inventory coupled with low levels of distressed sales.

The following table shows how the current inventory breaks down for several areas in Placer County, and shows how this compares to Placer County overall and Sacramento County. We include current inventory as well as the percentages of current inventory that are bank foreclosures (REOs) and short sales.

Area	Months of Inventory	Foreclosures in Inventory	Short Sales in Inventory
Foresthill	11.1	4.1%	10.2%
Granite Bay	11.4	6.0%	10.5%
Auburn	10.1	7.2%	12.3%
Rocklin	7.7	12.3%	26.9%
Lincoln	8.1	10.2%	33.6%
Roseville	7.0	14.6%	32.1%
Placer County	8.3	10.6%	24.3%
Sacramento County	10.0	27.1%	36.1%