Every quarter…
There is a lot of talk about the quarterly reports, such as our glossy 1st quarter report. These numbers are what make the most noise in the press. Average sale prices, Median sale prices, aggregate sales volume. It is fun and interesting, but relying too much on these numbers results in a terrible mismatch in expectations on the part of buyers and/or sellers, depending on where we are in the sales cycle. I’ll cover a few of the ways in which the quarterly report simply does not do the trick.
The results are VERY late
The quarterly reports cover CLOSED prices, not what goes into contract. Compared to other markets, the time between signed contract and closing is an eternity. So what gets reported in Q1 of 2021 really is more discussing what was happening either in Q4 of 2020, or worse yet, covering what happened in a new development perhaps one, two, three years in the past- and it just happened to close in a particular quarter, skewing all of that quarterly report’s results! You really can’t know what’s going on from them.
I’m late to the market!
Closing Dates Do Not Line Up With When They Went Into Contract
In short, townhouses close the fastest, followed by condos, with cooperative sales bringing up the rear. The closing dates, then, are all muddled, giving an incomplete, or plain wrong, picture of what is actually going on. It’s a disaster.
What Happens When the Results of Quarterly Reports are Misinterpreted?
Let’s discuss the ways in which quarterly reports completely blow up the expectations of buyers and sellers:
In A Falling Market, Sellers are WAY behind the curve
We’re not here now, but when the market is falling, sellers don’t realize they are accidentially overpricing units. As their homes sit, there is no context about what is selling today and at what prices. The misjudge the velocity of the price point of their apartment, especially if the market is softening.
In A Rising Market, Buyers are WAY behind the curve
Buyers see closing prices and determine that they can make offers below where the market is. They lose deal after deal to people using different metrics (which we’ll discuss). The frustration builds- they just can’t understand why sellers aren’t interested in their offers. Hint- they’re too low.
In A Rising Market, Sellers Who Rely on the Quarterly Report May Misprice their Homes, too
Sellers who simply look at the quarterly market report look at too small of a sample set over too long a period of time, and believe any number of fallacies. That the average sale price for a unit of their size should match up to theirs. Meaning- they might look at condos across a neighborhood, without enough regard to which condos were selling. It’s too generalized. And they simply miss the mark. Or…they may actually misprice their apartment on the low side, though in a rising market, too-low prices end up finding their level, too- with bidding wars, which are all-too-common right now.
So What Can You Do??
You need to rely on information that is more in real time. This can mean conversations with agents like me. This can mean referring to other websites or reports going through the weekly velocity of the market in terms of contracts signed (reports like this). Or you can look at monthly inventory reports, which cover somewhere in the middle- what’s moving to contract now, with a rolling average over six month periods. Then, you can see a bit more directionality of the market, and make more punctual market decisions based on trends happening NOW!
If you’d like to dig into more detail, call me or email me! I can’t wait to connect! -Scott