Local Market Conditions

Local Market Conditions

The most common question we get asked when clients are trying to make the purchase or sale decision - "Where is the market headed?"  The truth is that nobody has the perfect crystal ball.  However, in our area, pricing is relatively stable and loans have been stringently underwritten for years.  This means, short of an overall economic meltdown, a significant downward price adjustment is unlikely.

Understanding the current market is important in any transaction.  Below are the two data groups that give the greatest insight.  Most people understand the importance of the trend in pricing.  It indicates stability and seasonality.  However, it is backwards looking.  To answer the question above, the leading indicator is Months of Inventory.  This statistic considers the current inventory level and rate of sale.  The lower the number, the more power the Seller holds, and the more upward pressure on pricing.

We love to "talk shop".  So, if you have any questions, do not hesitate to contact one of Our Agents to look more closely at your specific location or to dig deeper into current conditions.  The statistics below are a live load which sometimes does not pull up.

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Price-Per-Square-Foot numbers show the overall pricing trend.  Fluctuations are partially driven by seasonality or "time-of-year" pressures.  Looking at the long trend and "same-month-last-year" is the best way to consider this data for real movement either direction.

Listing, pending, and sales volume are an indirect indication of who holds the negotiating power as well as overall market health.  Sales volume indicates overall market liquidity with higher sales indicating lower barriers to buying and selling.  Comparing to the same month a year ago is also insightful.  The gap between "active" and "pending" sales speaks to negotiation strength.  A widening gap favors the Buyers and a narrowing gap favors the Sellers.

Months-Of-Inventory numbers indicate both pricing pressure and who holds the most negotiating power.  This statistic takes the current inventory level and divides it by the current sales rate, essentially calculating how long it would take to sell out of homes if no more came to market.  A number under 3 months indicates low inventory with negotiating power in the hands of the Seller.  3- 6 months of inventory is considered a balanced market.  Above 6 months of inventory is considered a flooded market with negotiation strength in the hands of the Buyer and downward pricing pressure.

Sales price compared to listing price helps Buyers identify what it takes to be competitive in the current market.  Anything close to 100% would suggest you should be prepared to pay list price on a fairly priced home.  CDOM (Cumulative Days On Market) is a reflection of the average number of days it takes from when a property is listed until it goes into contract.  This helps set Seller expectations and gives Buyers a comparative bar whereby listings that exceed that timeframe typically are either unique and waiting for the right buyer or overpriced.

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