Monday, March 19, 2007

Need to know numbers...

What are the best metrics to evaluate a real estate market? Some thoughts...

1. Ratio of demand to supply. Count the number of homes for sale in your market and divide that number by the number of sales contracts from the previous month. If there are 18 active listings and six (6) transactions under contract then you essentially have three (3) sales per month or a six month supply of homes.

2. Selling/Asking price ratio. This is used by both buyers and sellers. Add all the sales prices over a certain period and divide by the number of actual sales. Do the same for the asking price. Then divide the average asking price by the average selling price and you'll have the Selling/Asking price ratio. This is most helpful in terms of gauging Buyer offer prices.

3. Marketing time. The average number of days on the market before listings are sold will tell sellers how long they can expect to wait until they receive an acceptable offer. Base this on sales, not listings.

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