“Don’t think of the market in terms of good/bad or buyer’s/seller’s market. Think of it as ‘what strategy can I employ to have a succesfull real estate transaction based on the current market conditions?”
Have you ever asked a real estate agent, “How is the Market?” Well, the answer to this question is a little more complicated than the generic “good/ bad” or “buyer’s/seller’s market” answer people often receive; however, the answer is only a few stats away.
Introduction
With an explanation of six regularly used real estate stats, you will have a clear understanding of the current market, which will put you on the right path to a succesful real estate transaction. Don’t think of the market in terms of good/bad or buyer’s/seller’s market. Think of it as ‘what strategy can I employ to have a succesfull real estate transaction based on the current market conditions?’ The six stats include:
Where Can I Find DC Real Estate Stats?
Current statistics, updated daily, can be found at the DC Market Watch page within The DC Real Estate Guide, and past statistics, reported every month, can be found at Greater Capital Area Association of Realtors Home Sales Statistics.
Our example statistics, taken from the DC Market Watch on Dec. 7 2006, are shown below.
[December 7 2006]
| Total | Single Family Homes | Condo/Co-Ops |
| Listings | 1345 | 1410 |
| Under Contract (last 30 days) | 376 | 308 |
| Avg. DOMP* for Under Contract | 69 Days | 60 Days |
| SOLD (last 30 days) | 257 | 246 |
| Avg. Sold Price | $624,244 | $397,527 |
| Absorption Rate* | 28% | 22% |
*DOMP=Days a property has been on the market.
*Absorption Rate=Properties Under Contract (last 30 days) divided by Listings
*Data gathered from Metropolitan Regional Information Systems and reflects statistics for properties listed in the MLS
Total Number of Listings
Also known as supply or inventory, the total number of listings are the options for buyers and the competition for sellers. The number of listings on the market will also help us calculate the absorption rate later on.
Total Number of Properties Under Contract in the Last 30 Days
Also known as the demand, the number of properties that have gone Under Contract in the last 30 days represents the amount of properties buyers are willing and able to buy. The amount of properties that have gone Under Contract within the last 30 days will help us calculate the Absorption Rate later on.
Average Days on the Market for Properties Under Contract (Within the Last 30 Days)
The average days on the market for properties Under Contract (within the last 30 days) represents the average time it takes sellers to have a ratified contract. This data can tell you alot about how to price a property. If your neighbor with an identical house waited 60 days to receive a contract that was ratified yesterday, you will need to price it lower if you have to sell within 30 days. In other words, if you have to sell faster than the average days on the market, you need to price it below market value for your best chance at a quick sale.
Total Number of Sold Properties Within the Last 30 Days
The total number of sold properties (within the last 30 days) represents how many properties have gone to settlement and transferred ownership. Unlike properties Under Contract, Sold properties indicates the number of completed real estate transactions. Just because a property is Under Contract does not mean it will make it to the settlement table. On the other hand, the number of Sold properties reflects the market activity of 30-60 days ago. In a changing market, it could be costly to rely only on data from 2 months prior.
Average Sold Price
The average Sold price represents the average price buyers are willing and able to pay for properties. This is very different from what sellers are asking, which is the average list price. When the average Sold Price goes up, it means that buyers are willing and able to pay for more. When the Average Sold Price goes down, it means that buyers are willing and able to pay for less.
Absorption Rate
The absorption rate is calculated by taking the number of properties Under Contract over the last 30 days and dividing it by the number of listings currently on the market. This ratio provides us with a snapshot of the current supply and demand of a real estate market. With a decreasing absorption rate, we see more offers below asking price, more contingencies in contracts, and properties remain on the market for a longer period of time. With an increasing absorption rate, we see fewer offers below the asking price, fewer contingencies in contracts, and properties remain on the market for a shorter period of time.
Conclusion
With an explanation of six key real estate stats that can be accessed anytime, you now have the ability to understand the current market. And, you now know better than to settle for a “good/bad” or “buyer’s/seller’s market” response.
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Neighborhood Spotlight: Capitol Hill | The D.C. Real Estate Guide // Jan 25, 2007 at 12:22 pm
[…] To learn more about DC Real Estate Stats read, ‘How to Use DC Real Estate Stats to Understand the Current Market.’ […]