Real Estate Transaction Process Explain in Simple English - Local Records Office
LOCAL RECORDS OFFICE - We are going to define some of the basic real estate data and statistics that get thrown around on a regular basis. To do that, we will use one real estate market.
The statistics that we will be referencing are true and accurate for the year discussed but are being used to define the real estate statistic itself.
We have chosen Norwalk, CA as our example because the growth of the local real estate market they make the statics stand out says, Local Records Office.
Anytime you are evaluating statistics, especially in real estate, the source of the numbers is extremely important. In most instances, the MLS (Multiple Listing Service) provides the most accurate numbers when referring to real estate.
This is because they have all listings by all local real estate brokers in their database. For the sake of explanation of the data, we will be looking at the numbers for home sales in Norwalk, CAL, directly from the MLS. These numbers are meant to give an example of how to read the statistics themselves.
Anytime you evaluate real estate numbers, its important to pay close attention to how the numbers are gathered. In this instance, we will be using ONLY single-family properties in the city of Norwalk, CA.
Basic Real Estate Data and Statistics
Sales Volume - Sales Volume is simply the total amount of dollars spent on single-family housing within that month. Once again, when reviewing this statistic, it’s important to keep the property types consistent.
If you are comparing two areas to see which one has grown more and you include vacant land in the number for one area, you must include it in the other two. As previously mentioned, our examples only include single-family properties.
With the Number of Sales looking at the units, you would expect the Sales Volume to go up appropriately, but in this instance, it went up even more than the units (by percentage). The total Sales Volume of single-family homes in Norwalk, CA in January of 2019 was $15,191,500 as opposed to the January of 2018 number of $9,281,915.
That is an increase of over 63%. Because the Sales Volume went up at a larger rate than the number of units, this reflects the average home sale being much larger in 2017 than 2018.
Months of Inventory - This is commonly referred to as statistics when examining a real estate market. This statistic refers to the current rate of sales, how long will it take to sell through the existing level of inventory.
This reflects the supply and demand for the market. In our example, in January of 2015, the level of inventory was 9 months and in January of 2016, it had dropped to 6 months. That is a 33% drop in available inventory! This means if you are looking to buy a home in Tallahassee FL, it will be a little tougher in 2016 as there is less inventory available to buy.
Average Price - This statistic can be derived in a variety of ways. We are going to use it in its most raw form and simply be the Average Price of Homes Sold within that month. Be careful when looking at this statistic printed anywhere as to how the user defines the date sold can vary.
Needless to say, Average Price can be used for active homes for sale or for the homes that sold. The Average Price of ACTIVE homes for sale is generally a pretty useless number as you can list a home for any price, without any possibility of it ever selling.
Many homes listed for sale are at unrealistic prices thus the Average Price of Active homes for sale can fluctuate dramatically and give little insight into the market. You will want to look at the Average Price of SOLD homes.