Finding the Stories Within to help put real estate stats in perspective.
Real Estate Markets are specific to the local markets. Unlike the stock market you cannot look at the national numbers and gauge how well your real estate investment is performing or could be performing. To help buyers and sellers in their quest for the ideal investment opportunity, real estate agents have to be more well informed about the market they work.
Most sellers routinely check the value of their home and typically gravitate to the syndicated site that provides the best perceived value of their home. When it comes time to make a decision about selling or holding, it becomes very obvious very quickly that there could be as much as a $150,000 difference in value depending on the sites they review. This is very often where a seller will reach out to an agent to understand what their home's value is and how to interpret market dynamics.
Demonstrating solid market knowledge in palatable form makes it easier for the sellers and buyers to make decisions because their own market knowledge is stronger. Our job is to help buyers and sellers move forward confidently.
Taking Market Stats to the Next Level
It is always important to recognize the national and broader local trends when putting the market in perspective for sellers and buyers. This is critically important because those broader pieces of information are what they hear and see in local media. You must address those trends and pare the market down to what they are experiencing. Pull the most recent NAR statistics on pendings and closed transactions. Pull the most recent monthly data from your Board or MLS.
Nuts and Bolts of the MLS Stats Search
Mine into the Nitty Gritty of This Week's Market
Take it One Step Further: MSI and Absorption Rates
Nuts and Bolts of the MLS Stats Search
Every seven days, pull the statistical information for your market.
Often agents will get stuck on this step because they usually checking the MLS on a daily basis and do not see a need to do a weekly check. This weekly search is doubly important because it will help connect the dots and set a framework for improved market knowledge. Pick one day a week and run the search on that day every week.
First, pull pending data for the area that you consistently want to learn. I do not make an adjustment to the property type or price range because I want to see full data and then narrow it down in the next step. Before you narrow down the information, run a quick stats check and track average list price, average price per square foot, average days on market and median days on market. Next pull new listings for a 7 day period and track the same information.
Mine into the Nitty Gritty on This Week's Market
Now, thumb through the properties looking at the history of the property and assemble your weekly market report.
Highly underrated step but super important especially if you are trying to learn the market. As you look at each property, look at the photos, check the information, look at the property. With new listings, I like to know when each home last sold. You'll begin to see a pattern especially around the length of time the sellers owned the home and you can also tell if the current sellers made any updates to the home by checking out the previous photographs of the property. With pending property history, you'll also glean that last sold data and you'll get a better idea of how long the home was on the market, whether or not there were any price adjustments prior to the property going under contract.
This is where the best stories begin. If you notice the trend that many sellers purchased the home 5 years ago, this becomes something to watch on a weekly basis and a way for you to talk about the market. Look at the updates that sellers are making to the homes and pay particular attention to a local area property preferences that usually improve the value of the home (basement versus no basement, pool versus no pool, fireplace, etc). Pay attention to where the property was located and how long the property stayed on the market before going under contract.
In our Florida market one of the consistent trends has been that sellers often put their home on the market after four years. Out of state buyers continue to make up a good percentage of all home buyers in Florida and it can be difficult to land correctly in the right place when you first purchase the home. As their friend base grows and their interests change, they gravitate towards other properties that may make more sense to how they want to live their life. And thus, their home goes on the market.
Finally, segment out the properties that specifically relate to your market area. Glance through a comparison of new construction reported sales to resales, condos, villas and townhomes versus single family homes. Narrow this down so that you know your stats: exactly how many properties are on the market for single family homes, priced between $350,000 and $450,000, upgrades and how long the property was on the market.
Take it one step further to know MSI and Absorption Rates
No need to glaze over now! You are almost there!
Balance out the National and Regional news by knowing what types of properties are moving faster than others. Remember that the National statistics and the Regional Statistics report two types of numbers: closed data (so, lagging indicators) and general data. Your job is to clarify whether the market is a buyers market or a sellers market.
Remember the pendings and new listings data? That is a micro look at the market and important because it can be a leading indicator over time. I am careful to note the MSI and Absorption Rates month to date, but I always watch to see how balanced new listings and pending counts are on a weekly basis so I can gauge ahead of time how the market is evolving.
Months Supply of Inventory for Pending Properties: how long will it take the current inventory to sell if no other properties are added to the market and the pace of sales remains the same. Typically, less than 4.5 months of pending inventory indicates a sellers market. However, in this market it feels so slow that even though the inventory numbers are low, many sellers and buyers feel that it is a buyers market.
Pending Absorption Rate: what percent of active inventory went pending during the month. This is useful to determine how many properties typically will sell on a monthly basis.
The biggest benefit we bring to sellers and buyers in the market is our ability to help them understand the market dynamics and more more confidently towards a decision that helps realize a long term or short term goal. By finetuning your market study you'll remain the knowledgeable expert in the market.
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