Note: Please feel free to request a more in-depth analysis by text/email of a particular neighborhood. (206.537.3393, mei.then@windermere.com). The consultation is free and is for your education.
Understanding the Market Trends
Understanding the dynamics of local housing market will empowers you to make informed decisions, whether it’s buying, selling or investing.
- For buyers, it helps predict prices, find opportunities, and evaluate offers.
- Sellers can optimize pricing, timing to list, and negotiation strategies.
- Investors can assess investment potential, risks, and market timing.
There are 3 trends that I encourage you to take a look. The trends are:
1. Sale vs Sold
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The sale vs sold graph is a fundamental tool for understanding the supply and demand dynamics of a housing market. By visually representing the number of properties listed for sale (sale) against the number of properties sold over a specific period, it provides invaluable insights into market conditions:
- Supply and Demand Imbalance:
- A rapid increase in properties for sale while sold properties remain relatively stable indicates an oversupply or potential buyer’s market.
- Conversely, a steady decline in properties for sale with a consistent level of sold properties signals a tight market or potential seller’s market.
- Market Trends:
- By tracking the graph over time, you can identify emerging trends like seasonal fluctuations, economic impacts, or shifts in buyer preferences.
- Pricing Trends:
- A seller’s market often correlates with rising prices, while a buyer’s market tends to have more stable or declining prices.
- Investment Opportunities:
- Understanding market cycles can help investors identify opportune times to buy or sell properties.
- Supply and Demand Imbalance:
2. Average CDOM (Cumulative Days on Market) and Sold/List Price %
- CDOM (Cumulative Days on Market) is a measure of how long a property has been listed for sale on the Multiple Listing Service (MLS). Essentially, this tells you:
- An indication of market demand: A low DOM generally suggests high demand, while a high DOM might indicate lower demand or potential issues with the property.
- Potential for negotiation: A higher DOM might signal a seller who is more open to negotiation.
- Sold/List price %: is a simple yet powerful metric that reveals the relationship between a home’s original listing price and its final sale price. It’s calculated by dividing the final sale price by the original list price and multiplying by 100. What it tells you:
- Market Competition: A percentage significantly above 100 indicates high demand and a seller’s market, while a percentage below 100 suggests a buyer’s market with more negotiation room.
- Pricing Accuracy: A consistent percentage above 100 suggests sellers are underpricing their homes, while a consistent percentage below 100 might indicate overpricing.
- Buyer and Seller Behavior: Analyzing trends in sold/list price percentages can provide insights into buyer and seller behavior over time.
3. Average Price per Sqft
- This will establish the price in the current market and help you to navigate the fluctuation of the home price.
- Note for average price per sqft: Square footage does not include garage. If the home has a larger than normal lot, a special amenity, or is located in an area of special demand, the home price must be adjusted upward.
