Recently, I developed several CMA and Market Trends reports for clients to view this past week. The market trends section has been invaluable in helping to forecast potential market time, scenarios and develop strategies.
However, in some of these cases, strategies and expectations were almost the opposite of what the metric data was showing. Why?
Depending in which market segment and price tier you are looking at, the data could be susceptible to variances due to the tax credit. This is especially true for smaller starter condos, from studios to two bedrooms. With the expiration of the tax credit which was a vast motivator for buyers in this tier, the expiration caused sellers to either become more aggressive in attracting buyers, with many buyers postponing their purchase.
There are market segments that may not have been affected by the tax credit as much, but metric data still shows inconsistencies. Looking past the data and relying on insight and experience helps create insight. In one report, the absorption rate and months supply of inventory seemed slightly inaccurate. Viewing the properties pulled, and buyer demographics, it was noted that several developments in receivership placed more units on the market, and added to the overall market time, as several of these units were being marketed since preconstruction. Additionally, several HOAs were also undergoing large scale projects or special assessments. Accounting for spring/summer markets also further helped explain the partial spike in inventory.
In one instance, adjusting for developments removed almost half of the available inventory in the area. It’s not to say that they should not be considered as competing units in the market, and overall inventory; but rather it adds depth to the information as you realize several of these units have added several hundred days to the market. Creating a strategy can be significantly different depending on whether the expectation is a two month market duration, ten month or more than one year.
Sometimes it’s not just the data, but how it is interpreted which is essential to successful strategies.
Sherwin is a REALTOR® in the Chicago & Suburban area with @properties. Questions can be forwarded to Sherwin Sucaldito
”Analyzing the Data” by Sherwin Sucaldito is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Based on a work at Realty Evolved
