Maintaining solid real estate trend analysis allows us to have a great understanding of where the housing market will head in the near future. Too often, we see the real estate lobby or the national media report on housing market changes from one month to another, with no regard to normal seasonal fluctuations that usually occur each and every year. We see reports of recovery that are skewed, mostly due to the ignorance (or the bias) of the reporting entity.
I like to use historic data and follow a real estate trend analysis that considers year over year changes as significant in the housing market. For example, I have found that closings that occur in September are almost always fewer than closings that occur in August, thus seeing a drop from August to September is expected. This is a seasonal market change that should surprise nobody.
The real important consideration is how many real estate closings occur in September 2010 versus September 2009. This removes all seasonal effects and allows us to get a much more valid opinion on the direction of the housing market. This long-term real estate trend analysis is the most accurate way to understand what is happening now and what is most likely to happen in the near future.
4 Great Real Estate Trend Analysis Graphs
The four graphs above provide an excellent glimpse into the current movements of the Tallahassee housing market. The first graph shows that overall activity is dropping in every key component, while the second real estate graph shows that roughly 60% of home sellers who listed a property for sale over the past year failed to sell their home.
In the second row of graphs, the purple (pending home sales) graph shows how new purchase agreements have slowed tremendously since the end of the Homebuyer Tax Credit, and the final graph (green) shows that closed home sales are now slowing too. All of these graphs are running trends (trailing 365 days) so none of the results are based upon seasonal influences and thus represent the true direction of the Tallahassee real estate market.
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.