If you have been paying attention lately to local chatter about real estate, you may have heard that “sales are slowing down.” While it is true that there are fewer home sales in our market this year than last year, that’s not the best metric for determining the health or direction of the market.
Let me illustrate. If someone showed up in Times Square on a Monday with 100 tickets for the musical Hamilton and sold 85 tickets, then showed up on Tuesday with 90 tickets and sold 80, then showed up Wednesday with 80 tickets and sold 75… would you summarize by saying: “Ticket sales for Hamilton are slowing down!” True, five fewer tickets sold each day. But on Monday 85% of the tickets sold, followed by 89% and 94% the next two days. (Of course, this is not a real-life example. If you know anything about Hamilton, you know that 100% would have sold all three days.)
Likewise, the best indicator for the real estate market is not the raw number of home sales, but the percentage of the available listings that sold. And we can draw some valuable insights when we compare how that percentage moves over time. When we look at the data this way, there is a different story. For example, in June 2018 there were 174 home sales. In June 2019 that number dropped to 131. Seems like a big difference – is the sky falling? No, because in June 2018, 47% of the available inventory sold and in June 2019, 51% of the available inventory sold. When we compare the month May from the two years the difference is even more drastic (37% versus 57%).
If you are a data nerd and want to do some of your own exploring, check out our brand spanking new interactive dashboard. Unlike other local market reports you may be used to seeing, this is a dynamic report… you can easily and quickly view real estate market data based on type of property (attached or detached) and locality (city or county).
Don’t let anyone tell you unnecessarily that the sky is falling. If it is, we’ll try to give you advance notice that is backed by a correct reading of the data. Stay tuned!