True confessions time. I admit I am an out and out real estate data wonk. I love mucking around in the MLS database. Yes, I did say “love.” If I were to make an even truer true confession, I would admit that I wholeheartedly, obsessively love mucking around in real estate data. If I linger in there long enough, twist my queries in enough different ways, look at the market through a wider lens and then a narrower lens and then turn it upside down and look at it from a completely different angle, something wonderful happens: the data whisper their secrets to me. And (whispered boom!) there’s another fabulous “eureka” moment!
Sometimes it is something simple, like, “Look at that…while condos of all sizes have been selling in this particular market, NOT A SINGLE ONE with less than 2 full baths has sold in over three years. Over three years!!” Oh! Good to know. The seller stopped waiting around for the buyers who weren’t out there, put in a shower, and was repaid for the cost of the shower installation in a shortened market time and an improved selling price. Thank you, data!
But while I love it when the data reveal important insights to us, I am also highly wary of statistics that tell us something…but not enough.
The graph I’ve attached fascinates me. It shows the supply of homes that have been for sale in Cincinnati area for the last several years. And the “for sale” supply right now is very, very low. Lower than it has been all year. Lower that it has been at any moment in any of the 4 preceding years on the chart. Crazy low.
Why does this matter? When we have about a 6 month supply of homes available, it is considered a “balanced” market between buyers and sellers. When there’s a longer supply of homes out there, it becomes a buyer’s market (lots of sellers competing to be in the good graces of buyers, and prices often slip). When the supply dips lower, it becomes a seller’s market (since lots of buyers are competing for such a limited supply of homes, and sellers have more leverage to name their price). Basic “supply and demand” issues here. So the data in this graph SHOUT that with a supply of homes only able to fill the needs of 4.5 months of buyers…Cincinnati has a serious SELLER’S MARKET going on.
But chances are that you are not average. (See, your mama was right: you ARE special!)
The 4.5 month statistic is not irrelevant, but it is important to realize that it is an average. It reflects a big clump of everything…from condos to cape cods to “castles.” The statistics throw everything into one pot— 1 bedroom homes, 6 bedroom homes, neighborhoods as different as Norwood and Kenwood, Mt. Adams and Mt. Healthy, Madisonville and Maineville. And everything around them and in between.
ON AVERAGE, the Cincinnati market shows just a 4.5 month supply of homes for sale. But what about your neighborhood? And what about homes like yours? You may be far from average. Just this week I analyzed market data for two sellers, and found them to be in widely divergent situations. For one home, there was a TWO YEAR supply of like, nearby homes for sale.(Ugh!) For the other house, there was less than a one month supply.(OMG!) These two houses are not that far from one another. But their real estate scenarios are worlds apart. If either of these owners thought they were “average,” they could be making serious mistakes about the marketing and pricing of their homes.
The headlines about the current real estate climate are captivating. In broad brush strokes, the headlines tell an engaging story about the wider trends in real estate. But the data upon which the headlines are based are almost always averages. And chances are you’re not average. The headlines shout, the market info specific to your situation whispers. Are you competing with a 2 year supply of other homes for sale? Or a one month supply? You need to know. That’s why I love mucking around in the data…because these numbers really matter to you, and I want to know that we’re paying attention to the right whispers.