Real Estate Statistics - What Real Estate Statistics Need to Tell Us!

By
Real Estate Agent with Crye-Leike REALTORS® 165062

Real estate statisticsThere 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:

  1. Are prices holding, rising or declining? What are Prices Trends Compared to Previous Years?
  2. Active Listings Levels as compared to the same time frame in previous years?
  3. Numbers of Expired, withdrawn, and pending sales as compared to previous time frames?
  4. Compared to the last several years how does the volume of sales compare? Units sold?
  5. Days on Market Rising or Falling?  Substantiate with previous statistics.
  6. Inventory Levels Higher or Lower?
  7. Seller Contributions Higher or Lower?
  8. Dollar Sales Volumes of sales are they Up or Down?
  9. Inventor Price Points - What is selling?  First time buyer?  Luxury homes?
  10. Absorption Rates?  What are they compared to previous long term data?
Posted by

James Crawford ABR, Broker Associate

 

 

 

 

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Tags:
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Rainmaker
1,526,955
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Real Estate

Jim, agree and disagree.  Your graph above just goes back too far and then tries to use scare tactics as eye candy.  Of course this market is below all years before this!  It's a given, but to go back 2 years?  That's ancient history in real estate & appraisal terms & you know it!  What's the point of saying that sales are down 49% FROM 2 YEARS AGO?  Truthful, yes, but what are you trying to say to both buyers and sellers?  My own stupid MLS does that and it makes me crazy.  I think you should reconsider a more reasonable time frame like a year maximum.  They would still show your 'downturn' that it seems you are after to present.  This is the 2nd time I've noticed you mentioning the crash of the condo market in your area.  Are you relishing in it?  Not mine - it's chugging along at a half life but at least it's still got a pulse!  Please don't group us all together in the same 'market share' washing machine.  I present the facts as best I can for my area and I know alot of others do the same.  As they say on Dragnet:  'Just the facts maam, just the facts'.

Jan 20, 2009 08:18 AM #50
Rainmaker
563,893
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

I loved Randy's graph in the comment above -- it doesn't get much easier than that.  I see sellers glaze over when you explain the basics of how commissions are shared amongst the two brokers, let alone statistics.  You know what they say about statistics:  There are lies, dam*&&^ lies and there are statistics!  Or however that saying goes.

I do think that statistics when put into context of what it means to ONE actual consumer, can make a huge difference, for both the agent and the consumer.

Our MLS has limitations in that we cannot go back and see retrospectively what was active a year ago, which is unfortunate.

Exceptionally well-written and informative post Jim!

Jan 20, 2009 09:34 AM #51
Rainmaker
224,121
Laurie Mindnich
Centennial, CO

Jim your graphic above is PERFECT. As a guilty party reporting #'s, it's been less about hiding any truth than it's been about uncovering it- without the clarity that is now (NY) becoming more and more evident. I respond much better to a simple graphic than I do to 2008 vs. 2007 written (no graphic). How much clearer can it be? Thank you.

Jan 20, 2009 09:54 AM #52
Rainmaker
808,819
Anthony Stokes-Pereira
Better Homes and Gardens Rand Realty - Nanuet, NY
Realtor

Hi Jim;

Great post and I do appreciate the information, thank you for sharing.

Jan 20, 2009 10:17 AM #53
Rainer
22,970
Carin Arrigo-Zimmer
TopBroker Network Real Estate - Orange, CA
TopBroker Network Real Estate

Jim~ As a newbie, would you mind clearing up a few things, please? =)

  • What, exactly, does the word "absorbtion" mean?
  • And where are the best resources for local numbers, graphs, etc?  I've been digging through stats from my local board, doing my finest to find relevant information to better prepare and educate myself before I talk to a client. If I don't understand the numbers and what they truly mean, I'm of little help to those who depend on my knowledge of an area.
  • Kind of agree with what Lyn wrote. Though it's difficult to find 1 year stats, at least they're a bit more realistic, at least in my neighborhood.

Thank you for such a detailed post and helping out.

 

Jan 20, 2009 10:23 AM #54
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Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
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Kimo Stowell (Home Staging & Interiors JDS Consulting)  Kimo, it is all about truth.  If I present my data, and the seller says this isn't going to work, I purchased the home will 100% credit and after 2 years tapped it out with a HELOC and I am upside down, what is the point of me listing it anyway?  The statistics are as much for myself and for a seller or a buyer, 

Jan 20, 2009 10:51 AM #55
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Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
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Lyn Sims - Northwest Suburban Chicago Homes (RE/MAX Suburban)  Lyn thank you for your thoughts.  I totally disagree.  The gap is 2 years back you think that is excessive?  2 years is also the peak in the market?  You know when most people were purchasing their homes wiht no money down?  There are 3 graphs that accompany this one.  The others are price, days on market, and List Price Sales Price.  Back in the early 90's when real estate was sitting on the market for several years without a sale, in real estate there was a line that was used.  "See my bumper sticker?  It says..."If You Bought in 88' I Cannot Help You!"  A lot of agents could not handle the truth then either. Homes sat on the market for literally years.  It also took a decade before many of those home owners could sell and break even.

On listing presentations many of the would be sellers routinely quote 2 year ago prices.  They think it is still the good times.  In fact many agents are listing at the prices from 2 years ago.  How does avoiding the reality of the trend help?  Who does it really serve not giving the trends?  Realtors?  I think more Realtors are unconfortable with the truth then sellers.  They cannot look themselves in the eye that their buyers overpaid two years ago, and now their Realtors cannot sell the home for them. 

BTW, it is a crash in the condo units.  Believing it is otherwish is as foolish as you can get.

Jan 20, 2009 11:04 AM #56
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Jan 20, 2009 11:05 AM #57
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Options Realty  Thanks, I have helps several homeowners last year that had to sell, and I was able to assist them by being realistic.  Other homes in their neighborhoods are still for sale, and the average price has plummeted.

Jan 20, 2009 11:08 AM #58
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Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
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Options Realty  Thanks, I have helps several homeowners last year that had to sell, and I was able to assist them by being realistic.  Other homes in their neighborhoods are still for sale, and the average price has plummeted.

Jan 20, 2009 11:08 AM #59
Rainmaker
595,326
Lisa Hill
Florida Property Experts - Daytona Beach, FL
Daytona Beach Real Estate

Good points about the statistics. However, it really isn't reasonable in a normal market, to expect to see an annual increase every single year. Typically, a 3% increase is the norm ( as a national average), and that's not accounting for the down markets. YES, we do need to provide the statistics. Agents need to be clear about the market conditions, but I think it should be stated that the consumers need to be reasonable in their expectations.

Bu you're right. I just felt the need to add my 2 cents =P

Jan 20, 2009 11:37 AM #60
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Lisa Hill (Daytona Beach Real Estate) (Adams Cameron and Company)  Lisa thanks.  There is no rule on real appreciation. Most of the appreciation in real estate comes in the United States came in the past few years.  That was totally abnormal.  Then it climbed like the Matterhorn.  It is going to readjust, it has to.  We may not give up all the gains, but it has to correct.  It is an economic thing.  Between July of 1998 and June of 06' is an incredible historic rise in the value of real estate.  Prior to that it flat-lined throughout the 80's.

Jan 20, 2009 11:59 AM #61
Rainmaker
388,619
John Walters
Frank Rubi Real Estate - Slidell, LA
Licensed in Louisiana

Like a football game Jim.  Statistics can be seen many different ways.  It's the end that counts.  How many homes sold and for what price.

Jan 20, 2009 12:18 PM #62
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 John Walters (7824 Real Estate of Louisiana)  John that is it...it is just numbers.  Some are afraid of them, they should not be.

Jan 20, 2009 12:30 PM #63
Rainer
79,894
Nelya Calev
John L Scott - Bellevue, WA

Excellent post!!

I always use graphs in my presentation. People are visual. They see it in a graph and it registers better. Show them same info w/ numbers and clients go huh..

Jan 20, 2009 01:19 PM #64
Rainmaker
510,026
Ann Heitland
Retired from RE/MAX Peak Properties - Flagstaff, AZ
Retired from Flagstaff Real Estate Sales

Great post! I'm not great at creating graphs, but I'm addicted to tables.

Jan 20, 2009 02:36 PM #65
Rainmaker
1,765,826
John Novak
Keller Williams Realty The Marketplace - Las Vegas, NV
Henderson, Las Vegas and Summerlin Real Estate

I see a lot of agents that only report part of the stats (such as 'sales are up') without bothering to figure out what's causing it. Some of the conclusions would really make my college economics professors cringe.

Jan 20, 2009 02:45 PM #66
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 Nelya Calev (John L Scott  Graphs are an easy to comprehend visual.

Jan 20, 2009 11:40 PM #67
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John Novak - Las Vegas and Henderson NV Real Estate (Keller Williams Realty The Marketplace)  I agree.  There was an example years ago.  A newborn rabbit weight .5 oz, and the end of 1 week it is 2 oz.  At the end of a month it is 1 pound, and in 2 months the rabbit now weighs 2.5 lbs..."What is the projected weight of the rabbit in 4 years?  Well the answer is not a 500 lb rabbit.  There are limits in life, and there are ups and there are downs.  Statistics cannot be construed to be lies or propaganda.

Jan 20, 2009 11:47 PM #69
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