Understanding Market Stats Part 2
Great, I'm glad to see you're back!
After our first foray into market stats I completely understand when people are overwhelmed by the load of information that gets dumped on your head like a sack of potatoes. That said, if you sit down and really allow the information to soak in you start to realize it's not quite as crazy-pants as you initially thought. This is why I've decided to make my Understanding Real Estate Stats in to multiple parts after all...
Before moving along I would like to say that I did a podcast episode pertaining to part one, which you can listen to HERE for further commentary and information. Now on to the vocabulary words for this particular post!
Further diving in to DOM...
ADOM (Active Days On Market): Active Days On Market (ADOM) simply means how many days the listing has been active. This stat excludes days the property was not actively on the market for reasons like the listing contract had expired, time the property was Pending, etc. I will add though, if a contract falls through and the property goes active again the amount of time Pending will be added back to the ADOM.
CDOM (Cumulative Days On Market): This stat is the total amount of days the property has been for sale on the market. It includes all time frames until the property has been closed.
ADOM/CDOM EXPAMPLE: If you see a Pending property on the market that says ADOM 186, CDOM 201 there is a high likelihood that the house was ACTIVELY on the Market for 186 days, and has been Pending for 15 days. For a listing that said ADOM 186, CDOM 365 I would say the listing probably expired and was off the market for a period, then was put back on the market by another realtor. These are just two examples with tons of other possibilities.
Listing Price: Something many folks get hung up on is the concept of Listing Price. The way I tend to think of Listing Price is when you're at an auction and the auctioneer says "Bidding starts at $4.50!". Depending on the market it could go up, it could go down, it could stay put; just like the auction I mentioned. So more accurately, you could think of Listing Price as the "Starting Price".
Sold/Sale Price: Conversely the Sold or Sale Price of a property is what the property actually sold/closed/exchanged ownership for.
Price Per Square Foot: Again this is something people tend to over complicated from time to time. A square foot is exactly that, a 12" x 12" square. Price Per Square Foot is simply how much you pay per square foot of a building. You can use PPSQFT to compare other properties to what you're purchasing, or even to set a Listing Price for a house. I will caution anyone reading this, Sqft-age pricing is not always the best way to consider pricing, but is certainly an interesting tool to gain further perspective.
Now that we've furthered our real estate vocab I'd like to bring your attention to a few statistics that are directly linked to what we just covered...
Average Days On Market: Not to be confused with Active Days on Market, AVERAGE Days on Market is derived from averaging the length of time it took for all Sold Listings on the MLS to close. While this stat doesn't necessarily mean you'll be on the market for that long, or short, of a time it does give you a ball park idea of what to expect if you're selling. It also allows you to guess at how appropriate the price is if it goes significantly over the Average DOM if you're buying.
(Always keep in mind there are exceptions to every rule and that when talking Market Stats you're speaking in more "broad brush strokes" as opposed to "laser precision".)
Median Days On Market: Similar but not the same as Average Days On Market, the Median Days On Market is derived from calculating the Median length of time on the market using all the Sold Listings during a period of time on the MLS. Being a fan of the slight edge Median figures have over Average, I prefer this stat when working with customers.
Average/Median Days On Market EXAMPLE: As I type this the current Average DOM for Port Charlotte, FL is 55 days, and the Median DOM is 22. After reading Part 1 of my Understanding Market Stats posts, you know is because of the drastically different way Median and Average are calculated. I always prefer Median if applicable, because in my experience it reflects reality a little closer.
Average Sale to Original Listing Price Ratio: Though this stat is a mouthful, it's one of the BIG stats we use in the real estate industry. Simply put, this is the percentage of the listing price property is selling for on average. I.E. if you list your house at $200,000.00, and sell it for $188,000.00, you sold it for 96% of the listing price. This stat comes from doing that same math for all the residential property sold in an area over a set amount of time, and averaging them out. Currently in Port Charlotte this ratio is at 96.2%. So when figuring out a Listing Price or Offer for a home, as you can imagine this ratio comes in handy for what would be the goal price or appropriate offer.
Finally we've arrived to where I'm going to let you stew and absorb the ton of potatoes dropped on your head this time. As mentioned before none of this is particularly difficult if you take the time to read and look over what I've given to you. If you'd like to look statistics for most of the cities I serve simply look on the left hand side of this blog and you'll see city names with "market stats" after them. Click on any city you like and the current market stats will pop up for you to read and absorb. If you ever have any questions or would like to discuss buying or selling I'm always happy to talk. Call me at 941-202-1995 or email me at email@example.com!