What do Market Stats mean for you as a Seller or Buyer?
Once you make the decision to sell your house or buy one, you are going to keep hearing from your agent about “Market Stats”, but do you really know what they mean for you as a seller or buyer? Do you know how they affect your transaction? Here’s a quick breakdown of the most common terms you should know and understand:
Absorption rate: Absorption Rate is calculated by dividing the total number of available homes for sale by the average number of sales per month (rate of consumption). Absorption rate shows the “rate of sales” and shows the overall supply and demand for a particular real estate market. In a very hot real estate market, you will see inventory levels at 1 or 2 months---meaning homes are being sold very fast and inventory is limited.
DOM-Days on Market: When looked at as a market statistic DOM counts the average or median days it takes for a home to go under contract in a particular real estate market area. DOM is also looked at from the individual home perspective to simply see how long the home has been listed. In a strong sellers’ market, the DOM is small meaning that homes are going under contract quickly.
CDOM-Continuous Days on Market: This is the same figure as DOM, but takes into account a home being removed from the multiple listing service (without a sale) and being relisted.
Average Price vs Median Price: The average sale price is calculated by adding all the sale prices for homes sold in a specific area within a specified time frame and dividing that total by the number of properties sold. The problem with the average sale price is that if one or more properties were sold at an extraordinarily high or low price, the average is skewed higher or lower as a result. In this case, the average becomes a somewhat unreliable metric.
The median sale price, on the other hand, is the sale price in the middle of the data set when you arrange all the sale prices from low to high. The median sale price, then, represents the figure at which half of the properties in the area sell at a higher price and other half at a lower price.
Price Per Square Foot: This is simply the price divided by the living area of the home. You will generally see this as an Active price per square foot and a Sold price per square foot.
List to Sell Ratio: This is a common stat used to see how much of a discount is taken from the asking price of a home to the actual sales price of a home and is shown as a numerical value with 100 representing the home selling at exactly its asking price.
Keep in mind that understanding the real estate market makes you a more empowered buyer or seller, If you’re a buyer, understanding these factors can help you determine your negotiating and purchasing power. If you’re a seller, they can help you price your home and anticipate your number of offers and selling timeline.
If you have any questions or would like to receive a monthly report with Jacksonville’s Market Statistics, call me, text me or e-mail me and I’ll be hapy to help!
Dany Amparano Realtor (Daniela Amparano, Fresh Start Realty).
Sources: Elevate Realty Group, Trulia, Opendoor, Zenlist.