There is an old accountant joke that goes like this..."How much is 2+2=?" The accountant answers, "How much do you want it to be?" I read a lot of real estate statistics that seem like they were prepared by that same accountant in the joke. The statistics we provide in our industry are a joke most of the time, and very self serving. They make a statement, but avoid the truth. Partial numbers only give us a half the truth. Sometimes no numbers would be better at all than a manipulation of the numbers. It is not about negative news, it is about truth, and being non manipulative in dealing with the public. It is about transparency that we all demand form the government, but do not want it to apply to our own real estate business. The fear is it will hurt our business.
In some markets agents will boast of sales increases in their market place but neglect to tell you the entire truth. "Sales are up!" However if the prices are a 150K less than last year, that really isn't great news. If you look at numbers from a short term perspective they avoid trends. It is sort of like the line "You cannot see the forest though the trees!" That means mathmatically you are too close to the events to be able to see the trends. Short term statistics deal with the tactical side of our business. Can we pay the bills, can we survive, can I meet my personal or financial obligations? It does not show us the health of the economy by a comparison to same time frames in previous years.
A broader perspective in statistics allows us to see the events unfolding. It is sort of stepping out side the forest and being able to see all that surrounds it. A general that is viewing a battle, would prefer to have the position of the battlefield form a higher ground to see things and encompass all the events. A vantage point would best suit his needs. It is sort of like having a 'panoramic view!' It avoids all guess work and conjecture. In real estate we need that, and so do clients. They need to know what is occurring in my market, and what is likely to occur give past trends and recent events. They are all easily demonstrated if the events are compared to previous same time frames.
I find the easiest wat to see the trends is creating graphs. I try to uses as many years as possible. I compare the numbers of sales in a given month this year, to the past 4-5 years. I can look at days on market, list price sales price ratios, expired listings, withdrawn listings, average sales prices, medium sales prices, units sold and if I want to go into the records manually I can view seller contributions to buyer.
This allows us to see the real trends in real estate:
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Are prices holding, rising or declining? What are Prices Trends Compared to Previous Years?
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Active Listings Levels as compared to the same time frame in previous years?
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Numbers of Expired, withdrawn, and pending sales as compared to previous time frames?
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Compared to the last several years how does the volume of sales compare? Units sold?
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Days on Market Rising or Falling? Substantiate with previous statistics.
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Inventory Levels Higher or Lower?
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Seller Contributions Higher or Lower?
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Dollar Sales Volumes of sales are they Up or Down?
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Inventor Price Points - What is selling? First time buyer? Luxury homes?
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Absorption Rates? What are they compared to previous long term data?
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