Gauging the real estate market is more than collecting sales data and median prices. Property location, potential ROI, and other factors determine the state of the market now and where it could go shortly. Successful real estate agents know how to assess these figures to best help their clients. Discover how top industry earners gauge the current real estate market to ensure their clients get the best possible deals.
Construction Spending Activity
Each month, the U.S. Census Bureau issues a report on the construction activity in the country. The report outlines residential and non-residential spending. Check out public and private expenditures. Plus, the report shows the movement for the past month and year to make educated comparisons. Another government report examines residential construction through houses builders worked on and the number of permits issued. The National Association of Home Builders releases an NAHB/Wells Fargo Housing Market Index every month. By surveying home building, NAHB gathers input about current sales, the volume of buyer traffic, and expected sales for the next few months. An increase in construction spending typically shows there are more buyers than available inventory.
Home Sales Data
Another monthly report to watch is from the National Association of Realtors® (NAR). The report reveals the number of existing homes sold every month. Numbers are also provided for the previous month and year for houses, co-ops, and condos. The report is based on home sale closings, with info about prices, inventory, and sales statistics in various regions. NAR also puts out a pending home sales index each month with comparisons to the previous month and year. Some state real estate groups also issue localized reports on sales activity and home prices. The government reports on the sale of new homes across the country, based on how many sales contracts were signed. Savvy agents study these reports each month to keep a finger on the pulse of the current real estate market, where it’s been, and where it is likely to go based on past data.
The Price is Right
Real estate agents focus on local real estate prices to better serve the buyers and sellers they represent. It is also important to find out the home prices nationwide to determine buyer interest and the state of the housing market now. The Federal Housing Agency provides a House Price Index using data from Freddie Mac and Fannie May to determine the price of single-family homes. Standard & Poor’s S&P/Case Shiller Home Price Index is also released monthly. The report examines national trends and some of the pricing in metropolitan places. Studying this research helps agents who are working with buyers and sellers looking to relocate.
The Number of Buyers and Sellers
The nature of the market focuses on the number of buyers and sellers. More buyers than sellers create a seller’s market. There is limited available inventory for buyers. Often sellers can command top dollar for their properties. It is a market where multiple offers might come in on the same property, leading to bidding wars. When there are more sellers than buyers, the housing prices may go down. Buyers have more room for negotiation when a seller lists a property for weeks or months without any meaningful offers. A balanced inventory levels the playing field. Agents who understand the basics about all the conditions remain profitable, whether the current market favors buyers or sellers.
Get a Holistic Local Picture
While the state of the nation has a significant impact on the real estate market, so do local conditions. Research inventory, local attractions, and the state of the economy in the area. Areas near transportation, shopping, and entertainment are a top choice for seniors, millennial buyers, and investors who rent properties. Young people and retirees save money on owning a car if they can walk to restaurants, transit, doctors, and grocery stores. Parents appreciate homes near educational services, libraries, and healthcare. Also, a sense of community and comfort make a neighborhood more valuable. Beyond the number of bedrooms in a house, agents must have a holistic local picture to provide the most accurate data to clients.
How Is the Weather?
One of the first concerns buyers and sellers express is the condition of a property. The condition determines the bottom line price and level of interest in the property. Wear and tear is a common reason why houses need repairs or are referred to as “handyman specials.” However, weather conditions also play a role. Areas subject to coastal flooding, hurricanes, earthquakes, and other natural occurrences will have damaged homes. From the cost of homeowners insurance to future risk factors, these factors are a consideration when gauging the local housing market.
With research and insight, agents can become top earners by gauging the current real estate market. Buyers and sellers want to work with agents who possess this knowledge and expertise. And satisfied clients are more likely to recommend an agent to their friends, neighbors, and associates.