If a standard market report from a real estate company or agent reads like a foreign language, this blog post is for you. We've got you covered with simple, clear explanations and practical examples.
New Listings
The number of properties that have been listed for sale within a specific period.
Importance: Indicates the supply of homes entering the market, helping you gauge market activity and competition.
Example: If there were 50 new listings in your neighborhood this month, it means 50 homes have just been put up for sale.
Average Sales Price Per Square Foot
The average cost of homes sold within a period, divided by the total square footage.
Importance: Useful for comparing property values across different neighborhoods and assessing affordability.
Example: If a 2,000 square foot home sold for $400,000, the price per square foot would be $200 ($400,000 ÷ 2,000).
Average Days on Market (DOM)
The average number of days a property stays on the market before going under contract.
Importance: A lower average indicates a seller's market, where homes sell quickly, while a higher average suggests a buyer's market.
Example: If the average DOM in your area is 30 days, it means homes are typically selling within a month.
Number of Properties for Sale
The total number of homes currently available on the market.
Importance: Helps understand the current inventory and balance between supply and demand.
Example: If there are 200 properties for sale in your city, that's the current inventory of homes available to buyers.
Average List Price
The average price at which homes are listed for sale. This is what the seller is asking but may not be what it actually sells for. Price is negotiable.
Importance: Provides insight into market trends and seller expectations.
Example: If the average list price of homes in your area is $500,000, it gives you an idea of what sellers are expecting to receive.
Median List Price
The middle value of all listed home prices, where half are priced higher and half lower.
Importance: Offers a more accurate picture of the market by reducing the impact of extremely high or low prices.
Example: If the median list price is $450,000, half of the homes are listed for more than $450,000 and half for less.
Average Sales Price
The average price at which homes have sold within a period. This is what they actually sell for once the seller accepts a buyer's offer.
Importance: Indicates what buyers are actually paying for homes, reflecting current market conditions. Averages can be skewed by properties selling for far above (luxury homes) or far below (tear downs) the norm. If a high number of those property types are present or there are fewer sales to contribute to the data average may be an unreliable indicator.
Example: If the average sales price in your area is $480,000, that's the typical price buyers are paying.
Median Sales Price
The middle value of all sales prices, where half the homes sold for more and half for less.
Importance: A useful measure for understanding market trends without the distortion caused by very high or low sales prices. Because median sales price falls in the middle and isn't impacted by sales far above or below the norm it can be a more accurate indicator for certain markets.
Example: If the median sales price is $470,000, half of the homes sold for more than $470,000 and half for less.
Sales Price/List Price Ratio
The ratio of the sales price to the original list price, expressed as a percentage.
Importance: A ratio above 100% suggests a competitive market where homes are selling for more than the list price. Consider this number when setting your search criteria. If you can expect to pay above the original list price do not search for homes at the top of your budget.
Example: If a home was listed for $450,000 and sold for $454,500, the sales price/list price ratio would be 101% ($454,500 ÷ $450,000). Conversely if the top of your budget was $450,000 and the sale/list price ratio was 105%, you may want to shop for homes listed at or below $428,571. ($450,000/1.05)
Number of Properties Sold
The total number of homes sold within a specific period.
Importance: Reflects market activity and demand.
Example: If 100 homes were sold in your area last month, that's the number of properties that closed escrow that month.
Month's Supply of Inventory
The number of months it would take to sell the current inventory of homes at the current sales pace.
Importance: Indicates market balance; 6 months is considered a balanced market, less indicates a seller's market, and more a buyer's market.
Example: If there's a 3-month supply of inventory, it means it would take 3 months to sell all the current listings at the current sales rate.
Absorption Rate
The rate at which available homes are sold in a specific market during a given time period.
Importance: Helps gauge the speed at which homes are selling and the overall health of the market. Traditionally a seller's market is above 20% and a buyer's market below 15%. This indicator may not be helpful if homes in your area selling extremely fast.
Example: If 50 homes are sold each month and there are 200 homes available, the absorption rate is 25% (50 ÷ 200).
Keep these definitions handy as you navigate the real estate market, and always consult with your real estate agent for insights specific to your area.
For further questions or personalized advice, feel free to reach out. We're happy to do a deep dive on these stats for your specific neighborhood and property type.
