So many different news agencies report how the real estate market is doing, yet few offer usable information that can help us determine the real direction of the market. Inventory flow tells us whether the market is picking up speed or if it is slowing down, and these four key housing trends will give you a market awareness to help guide you in your real estate investment decisions.
Four Critical Housing Trends
The easiest way to track the real estate market is to watch four critical housing trends. This simple tracking, over time, will give you all the insight you need to know whether prices will be rising or falling, and whether now is the time to buy or sell.
- New Homes Listed - Simply measure the number of homes that are coming onto the market. This includes new home listings as well as homes that are re-listed after they "fail to sell" under a previous listing contract.
- Failed To Sell - When a home listing leaves the market without actually being purchased by a Buyer, we refer to these listings as a "fail to sell." Whether the home runs through the entire course of the listing agreement without being sold "expired," or if the seller changed her mind "cancelled," tracking failures is a very important part of the housing trend analysis.
- New Pending Sales - Homes that have recently come "under contract" do not actually affect the current inventory of homes, as they have not left the market, nor have they added to the number of homes on the market. However, they are still critical because over time the number of homes that are sold is always going to be a subset of the number of homes that have previously come under contract. The "pended" trend allows us to roughly predict the future sales trend.
- Sales - The number of homes that successfully sell each period is the one stat that everybody seems to report. While this is the most important of the four key housing trends to track, it can be greatly enhanced by following the three other trends previously measured.
Tallahassee Housing TrendsWe can observe the four key housing trends in a real world example from the Tallahassee real estate market.
With new home listings falling and failures on the rise, we are seeing inventory reducing for the first time in years. Additionally new contracts and sales have leveled off and are actually starting to recede (normal seasonality), so I am concerned that inventory reduction might slow for the next six months or so. By keeping a close eye on these trends, we will know what is happening in the Tallahassee housing market.
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Joe Manausa, MBA is a 26 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.