Have you ever noticed that experts in many professions speak in a language which is sort of familiar and understandable but not really?Real state agents do the same thing. We take for granted it is common knowledge what we are talking about.
For example MLS what is it and what does it do?
Well is the Multiple Listing Service. It is a coperative marketing system owned by realtors that helps the public buy and sell real estate. It's a system for sharing information between realtors on homes for sale, and it has become the most powerful real estate marketing system in the country. For over 65 years housing information originating from it has long been reconized as the most reliable and comprehenssive data available for those looking to buy or sell a home.
But what other terms do realtors like myself use taking for granted that you understand what I am talking about?
Well lets look at three of my favorites:
1. MLS Home Price Index (HPI)
2.Sales to listing ratio (SAR)
3. Days on the Market (DOM)
The MLS Home Price Index (HPI)tracks changes of the "middle -of-the range or typical homes and excludes the extreme high-end and low-end properties. It uses various quantittive property attributes such above ground living space in sq.ft,# of bedrooms ,# of bathrooms and qualitative housing features such as distance to schools,shopping,transportation.Using these features together it establishes a BENCHMARK price. The benchmark price could be for specific segment i.e. condos, townhomes or for an entire community such as Vancouver or Burnanby. It can also be a mixture of both type and neighborhood.The benchmark price is the most reliable . It is important to keep in mind that the Lower Mainland real estate market is highly dynamic and benchmark prices can vary drastically by segment and location.
2. Active sales to listing ratio (SAR)
Unlike the HPI the active sales to listing ration measures supply and demand of the market. It does that by looking at the total number of homes for sale compard to sales during the month. It is considered a sellers market if the SAR is 20% or better. A ratio of 13-19% is a balanced market and below 12% it is a buyers market. So it is a very good ration to pay attention to whether you are buying or selling.
3. Days on the Market(DOM)
I always pay attention to days on the market because the number of days a home spends on the market directly affects the price of the home. The longer the home sits on the market can work to the buyer's advantage. On the opposite end of the spectrum the shorter time the house is on the market is usually a indicator that the seller will get his asking price or better.
I hope this blog is helpful as you traverse the process of buying or selling a property.