Trends
The Importance of Trends
We want our clients to be informed and knowledgeable.
Our agents leverage market data to answer questions like, “Is this a good time to buy?” or “Is this a good time to sell?” We want our clients to make decisions that will both benefit them financially and enable their quality of life.
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Trend #1
Months of Inventory
The inventory of available houses is one of the most key indicators of market balance. When inventory is low, price tend to rise. When inventory rises, price acceleration tends too slow.
Inventory is measured in months of available homes, meaning if no new homes were brought to market, then how many months do we have until all of the available inventory is absorbed. Its computed by looking at the prior month’s sales and dividing into the number of available listings –– meaning that both supply AND demand can impact the metric.
QUICK Tip
6 to 8 months of inventory is considered to be ‘balanced’ and will generally allow for moderate price appreciation.
When inventory levels creep down to 3 months or less, look for rapid price appreciation, shorter marketing times, and increased instances involving multiple offers.
Trend #2
Market Behavior
Many people assume that the conditions in the Richmond region apply equally across all of its sub-markets – they don’t. Each area of the overall market behaves differently and understanding the differences between a starter home in Byrd Park vs. a newly constructed home in Hallsley is essential to better decision making.
Furthermore, it is especially important to see where markets tend to break – in other words, where does demand drop quickly and home sales above a certain price become problematic. This chart shows 3 metrics –– the time it takes a home to sell at a certain price, the discount sellers must take to get the home sold, and the number of sales at that price. When combined, the price at which a market tends to change behavior becomes evident.
QUICK Tip
When you use this chart to see where the market is strong / weak –– look for where you see a sharp increase in marketing times and a sharp decrease in how much a seller makes on the sale of their home.
When you purchase a home that exceeds the area’s natural maximums, you might get a deal on the way in, but you will likely have a harder time when it comes to selling.
Trend #3
Bidding Wars
At One South, we track each individual region’s market balance so that we can help our clients make informed decisions – especially in regions where homes have higher tendencies to receive multiple offers.
Our Bidding Wars chart tracks not just the number of homes that sell above, at, or below their asking price, but it also tracks the distribution of those offers.
QUICK Tip
Knowing the number of homes that sell above the asking price is hugely important, but knowing how much above asking price the offers tend to go is also critical.
Structuring a winning offer in inventory challenged markets requires the agent and the client to see the world with the same set of eyes.
Trend #4
10 Day Sales
The speed at which homes sell is a defining characteristic. Our 10 Day Sale chart illustrates what percentage of homes come to market and are absorbed in less than 10 days. The higher the percentage of homes that are being absorbed quickly, the stronger the buyer side demand is.
Please note that this chart tracks the days from which the home is listed as ACTIVE (available) to the day the status in MLS changes to PENDING (under contract). During the 10 day window, many things happen – several days of showings, a contract review period, a day or two to secure all of the necessary signatures, and a day or two before MLS is updated to show the status as PENDING. In other words, a home that sells in less than 10 days in MLS is pretty much an immediate sale that likely meant multiple offers and/or a sale price in excess of the listing price.
QUICK Tip
Do not assume that if 45% of homes are selling in 10 days that you can wait for 9 days before touring the home –– and then wait a few additional days before submitting an offer.
A home that ‘sold’ in 10 days in MLS most likely sold in 2-3 days, yet it took up to 10 days to complete negotiations, secure the signatures, and update the status in MLS.
Trend #5
Availability Matrix
While available inventory levels vary by areas within the Metro, they also vary by price. Just because an area might have a certain number of homes for sale, does not mean that they will be distributed equally across all price points.
New construction opportunities can provide relief to an area that is lacking in available inventory, however, new construction is far more prevalent in areas further from the urban core where undeveloped land opportunities are greater.
QUICK Tip
When a new home is listed for sale, it does not mean it is completed and available for occupancy.
Many new homes are entered into MLS as ‘To Be Built’ and thus drive up inventory numbers without actually providing additional inventory. Most new homes take anywhere from 6 to 12 months to be completed.
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