Almost every time I’m in public, I get the question, “How’s the market?” People are interested in whether housing prices are going up or down. They want to know what I think will happen with interest rates. Basically, they want to know whether this is a good time to buy or sell.
My office invests in a service called VisionTrend which analyzes data from the Multiple Listing Service. It provides several data points which, taken together, create an accurate picture of real estate trends in our area. The information below reflects Mendocino County’s 101 corridor: Hopland, Talmage, Ukiah, Calpella, Redwood Valley, Willits, and all the way up through Laytonville and Branscomb. The data includes properties under $1.5 million through the end of May. So, big ranch properties aren’t included, but most single-family homes are.
Before I dive in, allow me to provide a quick statistics refresher. The mean is the average of a set of values, calculated by dividing the sum of all values by the number of values. The median is the middle value in a data set when the numbers are arranged in order from smallest to largest. (If you have an outlier on the high end or low end, it can skew the mean and median, so outliers are often discarded.) The mode is the value that appears most frequently in a data set.
Sales, pending sales and listings
The first data points compare real estate sales, pending sales, and listings. Sales are up in the last few months, which reflects both the seasonal bump we typically see in spring, but also the current market conditions. In late May, we had 183 listings, 34 pending sales, and 33 closed escrows. As logic would dictate, pending sales and closed escrows are what we call trailing statistics. We start with an increase in listings, which is then followed by more pending and closed sales.
Average price per square foot
The price per square foot is a great way to compare real property for sale. As long as you’re looking at properties in a similar location with similar attributes, price per square foot is a good indicator of value. When people ask a Realtor to estimate their home’s value, the Realtor will often multiply the region’s average price per square foot by the home’s square footage to get a rough number. This number bounces around a lot. In January, it was $285. In February, it dropped to $247. In March, it jumped to $313. In April, it dropped back down to $277, and in May, it was up to $303.
Average days on the market
Average days on the market indicates how robust the market is. Properties are typically on the market for more time in fall and winter and less time in spring and summer. In January, the average days on the market was 119 days. In May, it was 74 days. Market conditions like interest rates can shift this number quickly. If interest rates dropped back to 2% like we had a few years ago, the housing market would heat up overnight and the time on the market would plummet.
Note, the average timeframe for properties to sell reflects both overpriced properties and bargain basement properties. If your house is priced right, that is, within 5-10% of the final sales price, it should sell relatively quickly.
Median price
The median price in the 101 corridor (not including properties over $1.5m) had a surprising drop in April but otherwise hovered between $491,000 and $470,000. The trend is downward during the last few months.
Months of inventory based on closed sales
The final stat is how many months of inventory we have based on closed sales, which is calculated by dividing the number of properties on the market by the number of sales. We started the year with a 7-month supply. In May, we were down to a 5.5 month supply. This stat shows us how fast the market is moving. How many months’ of inventory we have is determined by how quickly properties sell and how many listings are on the market, making it a reasonable estimation of how the market is doing.
If you have questions about property management or real estate, please contact me at [email protected] or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery.
Dick Selzer is a real estate broker who has been in the business for more than 45 years. The opinions expressed here are his and do not necessarily represent his affiliated organizations.
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