Important Real Estate Statistics to Help You Better Understand Our Market

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If you want to learn about our real estate market, it’s important that you understand the statistics behind it.

Just putting the words “stats,” “statistics,” or “data” in the title of a video tends to cut out at least half of its potential viewers because they stir up bad memories of high school math class. However, I believe if more people understood these stats and what they represent, they’d be more excited about finding out about recent data.

When looking at real estate statistics, we’re trying to answer the following two questions: “Is it a buyer’s market or a seller’s market” and “What kind of market will it be tomorrow?”

Answering the first questions is easy. You can look at the data and it will tell you conclusively whether its a buyer’s market or a seller’s market. What’s the difference between the two, though?

A buyer’s market means there are more homes available for sale than there are buyers willing to buy them. Buyers have the advantage in this type of market—they have more homes to choose from, they can be pickier and think longer about their decisions, and they can offer less money. A seller’s market is the exact opposite. Most experts say we’re always in either a buyer’s market or a seller’s market. Rarely are we in the middle, and if we are, it doesn’t stay that way for long.

Answering the second question is much harder. There’s no way to predict the market, and although many experts have their opinions about how long market cycles last, history shows us that there isn’t a reliable pattern, so why even try? Well, by reviewing trends and comparing current data to previous data, we’ll have a better grasp of our market. As they say, knowledge is power.

Here are several important real estate statistics that you should know if you want to better understand our market:

• New listings: This is the number of homes that have come on the market during the period we’re analyzing.
• Inventory: This is the number of homes that are left on the market for sale at the end of the period.
• Sold listings: This is the number of homes that were sold during the period.

These three numbers, when analyzed and compared with previous periods, can give us a good perspective on inventory levels now compared to previous periods.

• The average days on market: This is the number of days the average home sits on the market from the day it’s listed on the MLS to the day it gets an offer that’s accepted. Comparing this statistic to previous periods shows us whether homes are selling in less time or more time and helps us identify a trend.
• The average sales price: Though this number is referred to as the average sale price, it’s actually the mean sale price. This is where they take the sales price of all the sold homes, add them together, and divide them by the number of homes sold.

This statistic may be skewed by certain outliers, such as if a home gets sold for $25 million. This is why people often prefer to use the median sales price instead, which is where they take all of the homes sold within a certain time frame and choose the one with the sales price that’s in the middle. If there’s an even number of sales, they take the middle two and calculate the mean average between them.

• The median price per square foot: This is where they take the median sales price and divide it by the average square footage for sold homes in the area.
• The percentage of list price received: This is where they look at all the sales and see how many homes sold over or under the asking price and then come up with an average percentage. Comparing this with previous data shows us whether people are overbidding for homes or homes are selling below asking price.
• Months of inventory (also known as “months of supply”): This is where they take the number of homes currently for sale and divide that by the number of homes sold per month. Six months of supply is considered the benchmark for a balanced market. Less than six months of supply favors sellers, while more than six months of supply favors buyers.

Most of these statistics are provided by local chapters of the National Association of Realtors, so if you’d like to take a look at these numbers, just call and ask a local Realtor. Otherwise, you can also see them on websites such as Zillow and Trulia.

If you have any more questions or you’re thinking about buying or selling a home in our market, don’t hesitate to reach out to me. I’d be glad to help you.