For real estate investors, particularly those who flip houses and land, choosing the right market can make the difference between a thriving business and a frustrating struggle.

While there are deals everywhere, some markets naturally offer better opportunities with faster sales and more available inventory. One of the most valuable metrics for evaluating market potential is the Sell-Through Rate (STR), also known as the Sold-to-For-Sale Ratio.

The Sell-Through Rate is a metric that compares the number of properties sold in a market over a specific time period to the number of properties currently listed for sale. It provides a snapshot of market velocity and indicates whether demand is strong or weak relative to the available supply.

RELATED: Finding the Best Markets for Land Investing

Sell-Through Rate = (Number of Properties Sold in Past 12 Months) ÷ (Number of Active Listings)

Where:

• Number of Properties Sold in Past 12 Months = Total closed sales in the last year
• Number of Active Listings = Properties currently for sale

Understanding what different ratios mean is crucial for making informed market selection decisions:

• Ratio of 1.0 = Perfect balance (one property sells for every one currently listed).
• Ratio above 1.0 = More properties sold than currently listed (hotter market, higher demand).
• Ratio below 1.0 = Fewer properties sold than currently listed (slower market, lower demand).

Practical Examples

• STR of 0.25: Properties aren’t selling fast relative to current listings – potentially a buyer’s market with limited demand.
• STR of 2.0: Strong market velocity – twice as many properties sold as are currently listed.
• STR of 6.0-8.0: Extremely hot market where properties sell very quickly – may be difficult to find good deals.

Optimal Range for Land Investors

Most experienced land investors look for markets with STR between 0.75 and 1.5. This range indicates:

• Sufficient deal flow for buying opportunities.
• Reasonable sales velocity for profitable exits.
• Balanced market conditions that aren’t too extreme in either direction.

However, these numbers aren’t set in stone. Ratios between 0.5 and 2.0 can still represent viable markets depending on your investment strategy and risk tolerance.

While 12 months is the most commonly used timeframe, investors sometimes analyze STR using different periods:

3-6 Month Analysis

Benefits:

• More relevant and recent sales data.
• Better reflection of current market conditions.
• Quicker to identify emerging trends.

Drawbacks:

• Smaller data pool may not be statistically significant.
• More susceptible to seasonal fluctuations.
• May miss important cyclical patterns.

24 Month Analysis

Benefits:

• Larger, more robust data set.
• Smooths out seasonal variations.
• Provides better long-term trend visibility.

Drawbacks:

• Older data may not reflect the current market reality.
• Economic changes over two years can skew relevance.
• May mask recent market shifts.

Why 12 Months is the Sweet Spot

The 12-month timeframe strikes an ideal balance because:

• It captures a full year of seasonal fluctuations.
• Provides sufficient data for statistical relevance.
• Remains current enough to reflect present market conditions.
• Accounts for seasonal patterns (like slower winter sales in northern states).

The Sell-Through Rate is often confused with another important metric: Months of Inventory (MOI). While both measure market dynamics, they serve different purposes.

Months of Inventory (MOI)

Formula:

Months of Inventory = (Number of Active Listings) ÷ (Average Monthly Sales)

Where Average Monthly Sales = (Properties sold in past 12 months) ÷ 12

What MOI tells you:

• Time-based estimate of how long the current inventory would last at the current sales pace.
• Direct timeframe for market clearance (e.g., “This county has 7 months of inventory”).
• Intuitive comparison to standard market benchmarks (3 months = hot market, 12+ months = slow market).

When to Use Each Metric

Use the Sell-Through Rate when:

• Quickly scanning multiple markets for comparison.
• You want to understand relative demand strength at a glance.
• Ranking markets by velocity without needing timeframes.
• Looking for a simple ratio to compare market heat.

Use Months of Inventory when:

• You need a timeframe estimate for planning purposes.
• Comparing to industry-standard “buyer’s vs. seller’s market” definitions.
• You want to understand how long properties might take to sell.
• Making decisions based on specific timeline requirements.

• Market Meter Spreadsheet (Google Sheet)
• US Migration Map

Here’s a step-by-step process for calculating STR in your target markets:

Step 1: Choose Your Platform

Primary options include:

• Zillow (most user-friendly interface)
• Redfin (good for cross-verification)
• MLS access (most comprehensive, if available)

Step 2: Set Your Search Parameters

• Property Type: Select “Lots/Vacant Land”
• Location: Choose your target county
• Acreage Range: Specify your target property sizes (e.g., 5-20 acres)
• Price Range: Set value parameters if relevant to your strategy

Step 3: Gather For-Sale Data

• Set search to “For Sale”
• Include “Coming Soon” and “Active” listings
• Record the total number of results

Step 4: Gather Sold Data

• Change search to “Sold”
• Set timeframe to “Past 12 Months”
• Record the total number of sold properties

Step 5: Calculate and Cross-Verify

• Calculate STR using the formula
• Repeat process on a second platform (like Redfin) to verify accuracy
• Look for reasonably consistent results between platforms

The more specific you can be about your target properties, the more accurate your STR analysis will be. Consider filtering by:

• The acreage range you actually target.
• Price ranges that fit your budget.
• Property characteristics relevant to your strategy.

Generic searches, including all property types and sizes, may provide misleading data for your specific investment approach.

Look Beyond the Numbers

While STR provides valuable market intelligence, supplement it with additional research:

Days on Market Analysis:

• Review how long current listings have been active.
• Look for patterns in listing duration.
• Identify whether properties in your target range sell quickly or languish.

Engagement Metrics:

• Check views and saves on similar listings.
• Assess market interest levels.
• Gauge competition for property types you target.

Transaction Volume:

• Ensure sufficient deal flow for sustainable business.
• Consider combining smaller counties if transaction volume is low.
• Evaluate whether market size supports your business model.

It’s important to acknowledge some key limitations of various data sources when calculating the Sell-Through Rate.

STR calculations typically rely on MLS data from platforms like Zillow and Redfin, which means:

• Missing transactions from Facebook Marketplace, Craigslist, land.com, and FSBO sales.
• Incomplete market picture that may underrepresent total activity.
• Platform variations that require cross-verification.

Seasonal Fluctuations

Real estate markets experience seasonal patterns:

• Northern states: Slower winter sales, active spring/summer markets.
• Vacation areas: Seasonal buying patterns based on tourism.
• Agricultural regions: Timing affected by farming cycles.

Market Size Considerations

When comparing STR across different counties:

• Large counties (like San Bernardino, CA) naturally have more transactions.
• Small counties may have good ratios but limited total opportunities.
• Geographic scope may require combining multiple counties for sufficient deal flow.

Use STR as a primary filter for:

• Initial market screening when exploring new territories
• Geographic expansion decisions
• Resource allocation across multiple markets

Investment Strategy Alignment

Different STR ranges suit different strategies:

• High STR markets: Better for quick flips but may have limited inventory
• Moderate STR markets: Balanced approach with steady opportunities
• Low STR markets: Potential for patient investors willing to hold longer

Competitive Positioning

STR analysis helps identify:

• Underserved markets with good fundamentals but less competition
• Oversaturated markets to potentially avoid
• Emerging opportunities before they become mainstream

Building Your Market Analysis System

Create a Standardized Process

Develop a consistent methodology for:

• Data collection across all target markets
• Calculation standards using the same timeframes and filters
• Documentation for future reference and trend tracking

Establish Monitoring Routines

Regularly update STR analysis to:

• Track market changes in your active areas
• Identify new opportunities as markets evolve
• Adjust strategies based on changing conditions

Combine with Other Metrics

Use STR alongside:

• Population growth data for long-term market viability
• Economic indicators like employment and income trends
• Infrastructure development that might affect property values

The Sell-Through Rate is a powerful tool for land investors seeking to make data-driven market selection decisions. While not perfect, it provides valuable insights into market velocity and demand dynamics that can significantly impact your investment success.

Remember that STR is just one piece of the market analysis puzzle. The most successful land investors combine STR analysis with local market knowledge, economic research, and careful property-level due diligence. Use this metric as a compass to point you in the right direction, but always validate your findings with real-world market testing.

Whether you’re just starting in land investing or looking to expand into new markets, incorporating STR analysis into your research process can help you identify the most promising opportunities while avoiding markets that might drain your time and resources. The key is consistent application, cross-verification of data, and ongoing monitoring to stay ahead of market changes.

As with any investment strategy, there are deals everywhere, but working smarter by choosing markets with favorable fundamentals can provide a significant competitive advantage in building a successful land investing business.