, Reading Trend Reports – A Quick Guide, NorCal Homes & Development

Reading Trend Reports – A Quick Guide

Reading Trend Reports – A Quick Guide


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WHAT DOES THIS ALL MEAN?! …

Well let me tell you. ūüėČ

Nearly every Tuesday we use stats pulled directly from MLS to provide insight on how the Real Estate Market preformed the month before.

While these numbers and figures are interesting, they’re not always easy to fully understand. Heck, I had been posting about them for months before Josh realized I had no clue what I was doing (which is pretty standard) and explained to me what they really mean for the market.

 

Reading Trend Reports - A Quick Guide

An actual picture of me at work

 

Since there are 5 weeks in October, I figured we’d kick this month (and the 4th Quarter!) off with a guide to help us better comprehend what we’re looking at in the coming weeks.

Disclaimer – This post is a little longer than our average post BUT,¬†the information is super valuable and it’s worth the read!

Each report is broken down into 5 Major Categories:

  • For Sale vs. Sold
  • Average Price Per Square Foot
  • Days on the Market – Sold vs. List Price Percentage¬†
  • Average Price For Sale & Sold
  • Months of Inventory

Now, let’s break them down!

For Sale Vs. Sold

About the For Sale vs. Sold Report

  • For Sale¬†numbers are the snapshot of the number of property for sale at the end of the month.
  • Pended¬†numbers represent the number of properties that went into the “pending” status for that month.
  • New Listing¬†numbers represent the number of properties that are new listed for that month.
  • Sold¬†numbers represent the number of properties that are sold for that month.

What Does For Sale vs. Sold Report Do?

  • It helps determine the trend of market supply and demand.
  • It helps determine whether the current market is a seller or buyer market.
  • It helps determine the minimum length of the listing period.
  • It helps identify which price range the majority of the properties are in, within a given area.
  • It helps focus on where the buyer’s activities are and the market condition in those areas.

How to Use For Sale vs. Sold Report?

  • Use with¬†Average Price Per Sqft Report¬†to set competitive listing price.
  • Use current inventory level to determine market condition. The current inventory level is derived by dividing the monthly listing number by the monthly sold number which is shown in¬†Months of Inventory¬†graph. As a rule of thumb, an inventory level of less than three indicates a strong seller market while an inventory level greater than six indicates a buyer’s market.
  • A download trend of listing inventory and an upward trend of the number of properties sold indicates the seller is in a better negotiating position.
  • An upward trend of listing inventory and a downward trend of the number of properties sold indicates the buyer is in a better negotiating position.

You Should Know

  • The properties sold figures are derived from recorded transactions.
  • Current monthly sold figures might be adjusted upward on the next month’s report. This is to account for any closed transactions that are reported late.

 

Average Price Per Square Foot

How do you calculate the Average Price per Sqft?

  • Average Price per Sqft¬†is the average of sold price divided by square footage of sold listings.

What Does Average Price per Sqft. Report Do?

  • It helps establish the market price for an average home.
  • It helps determine if there is any change in property value for a specific area in a specific price range.

How to Use Average Price per Sqft. Report?

  • Use the highest and lowest monthly average price per square foot on the chart to establish the most marketable price range in a specific area.
  • If the home has a larger than normal lot, a special amenity, or is located in an area of social demand, the home price must be adjusted upward.
  • Refer to¬†For Sale vs. Sold Report¬†for the number of properties sold per month. If there are less than five properties sold per month for a specific price range, the average price per square foot might be skewed and is not as useful. In this case, an average of the fifteen month’s or more figures should be used in setting the price.

You Should Know

  • The garage area is not included in the square footage price calculation.
  • Individual listings in the MLS system without square foot information are excluded in the average square foot price calculation.
  • This report is not available where reporting of property square footage information is prohibited by the local MLS or if you selected Lot and/or Land property types.

 

Days on the Market РSold vs. List Price Percentage 

What is DOM?

  • DOM¬†stands for days on the market, how long a property is on the market. It generally is between the day the property is listed and the day it becomes off market (for example, when it becomes pended).

Is Average DOM calculated based on sold listings?

  • Yes, it is.¬†Average DOM¬†is the average of DOM of sold properties.

What is CDOM and how is it calculated?

  • CDOM¬†stands for continuous days on the market and tracks consecutive listing periods.
  • While all MLSs are a little different, the generally accepted rule is that, if a property is re-listed within a 30 day period of it’s previous expired, withdrawn, or canceled period, CDOM kicks in and tracks the aggregated listing time of the property. If the property is off the market for 30 days it resets the CDOM. CDOM is usually only measured for a maximum period of two years.
  • If you have questions about how CDOM is calculated in your region, please contact your primary support person for Trendgraphix or speak with a representative for your local MLS.

What is Sold/List Diff. %?

  • Sold/List Diff. %¬†represents the percentage difference between sold price and list price of sold properties.

What is Sold/Orig. List Diff. %?

  • When a property is listed on the market, the list price may change couple times before it gets sold. Original list price is the price that is first entered to the MLS database when a property is listed on the market.¬†Sold/List Diff. %¬†represents the percentage difference between sold price and original list of sold properties.

What Does Days on Market and Sold/List Price % Report Do?

  • This report shows the percentage of sold price / list price at which an equal number of properties are sold above, equal or below the list price.
  • It indicates how long it has taken to sell those properties.
  • Percentage of sold price / list price helps identify where the market activity is the strongest.
  • Days on market figure helps establish the minimum listing period.
  • It helps identify the best match for a buyer’s price range.

How to Use Days on Market and Sold/List Price % Report?

  • If the percentage of sold price / list price is closer to 100 then there are more potential buyers available for the property.
  • If a property’s listing period is less than the average days on the market, the listing will have a greater chance of expiring before it is sold.
  • Use this report with out-of-town or relocation buyers to assist then in making their investment decision.

 

Average Price For Sale & Sold

What Does Average Price For Sale & Sold graph mean?

  • Average Price For Sale¬†is the average of list price of the properties for sale in a particular month.¬†Average Price Soldis the average of sold price of the properties sold in a particular month. Displaying both¬†Average Price For Sale¬†and¬†Average Price Sold¬†line charts in a graph portrays the relationship between on and off market pricing.

What Does Average Price For Sale & Sold Report Do?

  • It helps determine whether the market is a buyer or seller market. If the average listing price and average sold price are the closest, the area has the healthiest market.
  • It helps identify where the softest market is and where the buyer can find the biggest price concessions.
  • It helps determine if there is any change in property value for a specific area.

How to Use Average Price For Sale & Sold Report?

  • Refer to¬†For Sale vs. Sold Report¬†for the number of properties sold. If a very expensive or very cheap home has been sold, these statistics can be skewed up or down, and the trend line can fluctuate with less consistency.
  • If the average sold price is below the average listing price, and falling, the market is moving toward a buyers’ market. If the average sold price trend is up or above the average listing price, the market is moving toward a sellers’ market.

 

Months of Inventory

What Does Average Price For Sale & Sold graph mean?

  • Average Price For Sale¬†is the average of list price of the properties for sale in a particular month.¬†Average Price Soldis the average of sold price of the properties sold in a particular month. Displaying both¬†Average Price For Sale¬†and¬†Average Price Sold¬†line charts in a graph portrays the relationship between on and off market pricing.

What Does Average Price For Sale & Sold Report Do?

  • It helps determine whether the market is a buyer or seller market. If the average listing price and average sold price are the closest, the area has the healthiest market.
  • It helps identify where the softest market is and where the buyer can find the biggest price concessions.
  • It helps determine if there is any change in property value for a specific area.

How to Use Average Price For Sale & Sold Report?

  • Refer to¬†For Sale vs. Sold Report¬†for the number of properties sold. If a very expensive or very cheap home has been sold, these statistics can be skewed up or down, and the trend line can fluctuate with less consistency.
  • If the average sold price is below the average listing price, and falling, the market is moving toward a buyers’ market. If the average sold price trend is up or above the average listing price, the market is moving toward a sellers’ market.

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