"How is the Market?" As a realtor, I hear this question all the time from folks who are truly curious. Some may even be seriously considering whether the time is right for them to sell their home or purchase one now. However, unlike the stock market which is reported in the news daily, real estate markets are hyper local. A realtor's answer should be based, not on their own business, but on 5 key indicators that tell the story:
1. # of Active listings: As this volume decreases, prices increase because there is more demand and not enough supply. (remember your macro-economic class in college?) Homeowners are not moving/listing/selling like before. As recently as 2000, 15% of the population moved every year. This fell to only 9% and this was BEFORE Covid-19. So, with more folks staying put, we are facing significant shortages.
2. Median Sales Price: The median sales price (the middle point of all the houses sold in a given time-month, year) usually trends in the opposite direction of the volume of active listings: If the median sales price is down, the volume of active listings is rising because there isn’t enough inventory. Case in point, in Walnut Creek, CA. YTD is UP 2% in Mediam Sales Price and DOWN almost 5% in new listings.
3. Time on market: When time on the market is low, (Days on Market - DOM) it means demand is high. We have seen quite a few off-market or pocket-listings, as well. A Buyer gets wind of a home that is going to be for sale and offers to purchase before it is publicly marketed. If the seller agrees, you have an off-market sale. with Zero days on market. (there are pros and cons to this we will address is next month's newsletter)
4. Ratio of active-to-pending listings: As this ration narrows, demand increases. When the number of pending listings equals the number of active listings, there is good demand. Example: Walnut Creek, CA in August 2020 there were 77 Active listings and 71 Pending sales. When the number of pending listings exceeds active listings, then you know you’re in a red-hot market.
5. % of Original List Price Received: If the average sales price matches the average list price, it means demand is up. If there are fewer listings on the market, demand will increase, and we experience an auction effect with multiple-offer situations very common.
Are you curious about how the market is in your city, neighborhood or street? Let's talk! When you are ready I am here to give you the advantage over the competition that will make the difference in your outcome.