Real Estate Market 101: 3 Key Statistics to Understand Before Buying or Selling

Posted by Ed Machart on Friday, February 5th, 2021 at 3:48pm.

The real estate market is data-driven and, as a REALTOR®, it is my job to not only be familiar with this data, but also to understand how it will impact both my buyers and sellers at any given time so that I can protect their best interests. There are those who will rely entirely on the experts to advise them, which is why I continually focus on this aspect of my job. But if you're at all interested in the basics, understanding what is happening in the real estate market for yourself before you dive in could give you an advantage over the competition.

Let’s take a look at just a few key market stats that will help you learn more about what is happening in your current real estate market:

Sale-to-New-Listing Ratio

Whether you are buying or selling, the first statistic to understand is called sales-to-new-listing ratio. This is the ratio between the number of homes sold and the number of new listings entering the market, and shows the balance between supply and demand in local real estate. The sales-to-listing ratio is normally around 50% during a balanced market.  A higher ratio implies a seller’s market, while a lower ratio implies a buyer’s market.  

Let me break that down a bit for you—if the percentage shows more new listings than sales (40% and below), this shows more supply than demand. Therefore, it would be a buyer’s market. Buyers will have their pick of homes with seller’s competing for the few buyers that are looking, relatively speaking.

On the other hand, if the percentage is showing more sales than new listings (60% and above), this indicates more demand than supply and, therefore, a seller’s market. In this case, there will be more buyers looking than homes available. So, it will be the buyers that are competing and the sellers will have the stronger negotiating power and could even command a higher price for their home!  

Home Values

Of course, whether you’re selling or buying you will also want to know the value of homes sold in your area. There are 3 statistics that real estate agents look at when they are analyzing current home values:

Average price is just that—the average price of all homes sold in a given time period. For instance, if 10 properties sold in the city of Saskatoon in the last 30 days, you could find the average home price by adding the sale prices for all 10 properties and dividing that figure by 10. However, this would be factoring in everything from that $4 million dollar property all the way down to that $22,000 trailer. And depending on a wide range of factors—from square footage to number of bedrooms to the year it was built—your home could fall either well above or below the average price. 

Median sale price, on the other hand, provides the sale price in the middle of the data set when you arrange all of them from low to high. The median sale price would be the value that is found right in the middle of the list.

Both average sale prices and median sale prices can be valuable when determining sale prices for home in a particular area, and your trusted local REALTOR® will know how both will influence either your buying decisions or selling price.

Benchmark price is the price of an "average” home with the same attributes (i.e. square footage, lot size, number of bedrooms and bathroom, etc.) in a given area. This value is far more accurate than both the average price and the median price because, as the saying goes, this price is comparing “apples to apples.”

Remember these statistics are all meant to simply give you a quick look at the market. A Comparative Market Analysis (CMA) prepared by a professional Saskatoon REALTOR® is the best way to value your home, as the report takes the specifics of your home into account and compares the data of other properties currently on the market and recently sold in your specific area. 

Sale-to-List Price Ratio

The last statistic that we will discuss is the sale-to-list price ratio. This ratio is the final sale price divided by the last list price expressed as a percentage. If it’s above 100%, homes are selling for more than the list price. If it is below 100%, homes are selling for less than the list price. Looking at sale-to-list percentages can help both buyers and sellers get a sense of how to negotiate on pricing.

 

Understanding these 3 real estate market statistics is a big step into understanding the market overall. You can go into a transaction knowing your bargaining power. But know that you are never alone. As your REALTOR®, understanding the market is one of my most important tasks. Knowledge is power and I take this part of my job very seriously. I am here to protect your interests and the way that I do that is by using every tool available to me to protect your interests and get you the best deal possible.

Ready to chat more about the local Saskatoon real estate market and how it could affect your buying or selling plans? Contact me today to get started!

 

 

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