Report Definitions
Report Definitions
Median Sold Price by Month
This chart shows the middle price point of a group of properties that successfully Sold (i.e.
closed escrow) for each month during the time period. Thus, half sold for more than the median
price and half sold for less. Tracking the movement of median prices over time provides a good visual
indicator of the direction market forces are pushing prices. The chart subtitle clearly states the
percentage change between the first month’s value and the last month’s value (notice they are the
same month but in different years). This “same” month comparison over different years is a popular
real estate “yardstick” because there is no “seasonality” involved in the measurement. Thus, any
changes that have taken place are primarily due to market “forces”, i.e. the collective behavior of all
consumers participating in the market.
Invoking the “linear” trend line can be a very helpful tool for visualizing the overall direction
that prices have been moving over the entire time period. An upward sloping trend line
indicates that median prices have risen over time. A downward sloping trend line means that
median prices have fallen over time. A flat trend line indicates market stability.
Median For Sale Price vs. Median Sold Price
This chart shows the median price of properties listed For Sale (a measurement of seller
expectations) compared with the median price of properties that have successfully Sold (a
reflection of buyer activity) for each month during the time period chosen (1YR or 2YR). The
difference in these two median prices speaks volumes about how buyers and sellers perceive
the same set of market conditions. In a balanced market most properties “sell” within 10% of
their “final” list price (the one that draws the offer, not necessarily the original price). Thus,
when the market strategic price difference is substantially greater than 10% it indicates that
buyer and seller expectations are out of balance, i.e. they are not on the same page.
The chart subtitle clearly states the percentage change between the first month’s value and the
last month’s value (notice they are the same month but in different years). This “same” month
comparison over different years is a popular real estate “yardstick” because there is no
“seasonality” involved in the measurement. Thus, any changes that have taken place are
primarily due to market “forces”, i.e. the collective behavior of all consumers participating in
the market.
Invoking the “linear” trend lines can be a very helpful for visualizing the overall direction that
median For Sale and median Sold prices have been moving over the whole time period.
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Converging trend lines indicate that buyer and seller expectations are moving towards one
another. Diverging trend lines indicate that buyer and seller expectations are moving away
from one another. Parallel trend lines indicate market stability.
The Number of Sold Properties by Month
This chart shows the number of properties that sold (closed escrow) each month for the time
period chosen (1YR or 2YR). This sales metric (#Sold properties) provides useful insight into how
consumer demand is changing over time. The chart subtitle clearly states the percentage
change between the first month’s value and the last month’s value (notice they are the same
month but in different years). This “same” month comparison over different years is a popular
real estate “yardstick” because there is no “seasonality” involved in the measurement. Thus,
any changes that have taken place are primarily due to market “forces”, i.e. the collective
behavior of all consumers participating in the market.
Invoking the “linear” trend line can be a very helpful tool for visualizing the overall direction
that market demand has been moving over time. An upward sloping trend line indicates that
market demand (buyer activity) has risen over time. A downward sloping trend line means that
market demand (buyer activity) has fallen over time. A flat trend line indicates stable demand.
The Number of Under Contract Properties by Month
This chart shows the number of properties that went under contract each month for the time
period chosen (1YR or 2YR), i.e. a buyer and seller have successfully negotiated a purchase
contract and have opened escrow. This metric (Number of Under Contract properties) is a
direct measure of current sales activity and a leading indicator of market demand. The chart
subtitle clearly states the percentage change between the first month’s value and the last
month’s value (notice they are the same month but in different years). This “same” month
comparison over different years is a popular real estate “yardstick” because there is no
“seasonality” involved in the measurement. Thus, any changes that have taken place are
primarily due to market “forces”, i.e. the collective behavior of all consumers participating in
the market.
Invoking the “linear” trend line provides a good visual indicator of how buyer activity is
changing over time. An upward sloping trend line indicates an increase in buyer activity; a
downward sloping trend line indicates a decrease in buyer activity; and a flat trend line
indicates that buyer activity is stable.
The Number of For Sale Properties by Month
This chart shows the number of properties that were For Sale each month during the time
period chosen (1YR or 2YR). This sales metric provides useful insight into the overall supply of
properties that exist on a monthly basis (i.e. the competitive landscape). Remember that a
property is “counted” as For Sale if a buyer could have purchased the property during the
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month, i.e. written an offer for first position on at least one day of the month. This is the most
precise measure of inventory supply that was available for buyer consideration during the
month.
***It is, however, a very different figure than the number of properties that make up the
remaining inventory pool on the last day of the month (this is the figure that is customarily used
in MSI calculations and is often erroneously quoted as the number of active listings for the
month).
The chart subtitle clearly states the percentage change between the first month’s value and the
last month’s value (notice they are the same month but in different years). This “same” month
comparison over different years is a popular real estate “yardstick” because there is no
“seasonality” involved in the measurement. Thus, any changes that have taken place are
primarily due to market “forces”, i.e. the collective behavior of all consumers participating in
the market.
Invoking the “linear” trend line provides a good visual indicator of how the monthly supply of
inventory is changing over time. An upward sloping trend line indicates an increase in supply; a
downward sloping trend line indicates a decrease in supply; and a flat trend line indicates that
there has been very little change in supply.
The Number of New Properties Listed by Month
This chart shows the number of properties that came into the market each month for the time
period chosen (1YR or 2YR). This metric (# New Properties Listed) is a leading indicator of the
“rate” at which new inventory is entering (resupplying) the market. A useful exercise is to
compare it with the “rate” at which properties are leaving the market (the number of under
contract properties which represents current demand). When these “rates” are diverging (new
supply up and current demand down) there will be downward pressure on prices over time.
When these rates are converging (new supply down and current demand up) then there will be
upward pressure on prices over time. When they are in relative equilibrium over time market
prices should remain reasonably steady.
The chart subtitle clearly states the percentage change between the first month’s value and the
last month’s value (notice they are the same month but in different years). This “same” month
comparison over different years is a popular real estate “yardstick” because there is no
“seasonality” involved in the measurement. Thus, any changes that have taken place are
primarily due to market “forces”, i.e. the collective behavior of all consumers participating in
the market.
Invoking the “linear” trend line provides a good visual indicator of how “new supply” is
changing over time. An upward sloping trend line indicates an increase in new listings; a
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downward sloping trend line indicates a decrease in new listings; and a flat trend line indicates
that the number of new listings per month has been stable.
The Number of Expired Listings by Month
This chart shows the number of properties that expired and came off the market each month
for the time period chosen (1YR or 2YR). This metric (Number of Expired Listings) is an indicator
of the “balance” between supply and demand in the market. When the number of expired
listings is increasing over time it is a sign that prevailing market prices have shifted downward;
when the number of expired listings is decreasing over time it is a sign that prevailing market
prices have shifted upwards. When the number of expired listings remains constant over time
it is an indicator that market pricing is in an equilibrium condition.
The chart subtitle clearly states the percentage change between the first month’s value and the
last month’s value (notice they are the same month but in different years). This “same” month
comparison over different years is a popular real estate “yardstick” because there is no
“seasonality” involved in the measurement. Thus, any changes that have taken place are
primarily due to market “forces”, i.e. the collective behavior of all consumers participating in
the market.
Invoking the “linear” trend line provides a good visual indicator of how the number of “expired
listings” is changing over time. An upward sloping trend line indicates an increase in expired
listings; a downward sloping trend line indicates a decrease in expired listings. A flat trend line
indicates a stable condition.
Supply & Demand by Month
This chart shows the basic supply and demand relationships that existed each month for the
time period chosen (1YR or 2YR). This combined metric (Supply & Demand) provides valuable
insight into current market conditions because it reflects the collective actions of all
participants (buyers and sellers). There are two components to this metric: Supply = #For Sale
and Demand = #Sold. When these forces are moving together “in harmony” (flat trend lines)
market pricing remains relatively stable. It is when they come out of balance due to changing
consumer behavior that prices are impacted, i.e. when the number of buyers and sellers are
changing disproportionately to one another. From a sales rate perspective this metric is an
“inverse” indicator, i.e. when the MSI is decreasing the sales velocity is increasing and vice
versa.
The chart subtitle clearly states the percentage change between the first month’s value and the
last month’s value (notice they are the same month but in different years). This “same” month
comparison over different years is a popular real estate “yardstick” because there is no
“seasonality” involved in the measurement. Thus, any changes that have taken place are
© 2009-2010 Terradatum | Page
primarily due to market “forces”, i.e. the collective behavior of all consumers participating in
the market.
Invoking the “linear” trend lines helps you recognize whether supply and demand forces are
changing over time or not; and to what degree. The relevant question to ask is, “Are the trend
lines diverging, converging, or running in parallel?” Diverging trend lines indicate an increase in
supply and a decrease in demand signaling that market forces (collective consumer behavior)
will be pushing prices in a downward direction. Converging trend lines indicate a decrease in
supply and an increase in demand signaling that market forces (collective consumer behavior)
will be pushing prices in an upward direction. Parallel trend lines indicate that the market’s
price equilibrium is stable.
Month’s Supply of Inventory (MSI)
This chart shows the time, in months, that it would take to “sell” the remaining inventory for
the month in question. This metric (Month’s Supply of Inventory) is a “one number summary”
of how market supply and demand are changing from month to month. By definition the
remaining inventory for any month is the number of properties that were For Sale on the Last
Day of the month (this is the For Sale figure we alluded to earlier). This figure is then divided by
the number that went Under Contract during the month (the most contemporaneous measure
of buyer activity) to obtain the MSI figure for the month. Calculated this way MSI becomes a
“leading” indicator of sales activity. When the number of properties that closed escrow (Sold)
during the month is used MSI becomes a trailing indicator of sales activity. From a sales rate
perspective this metric is an “inverse” indicator, i.e. when the Avg DOM is decreasing the sales
velocity is increasing and vice versa.
The chart subtitle clearly states the percentage change between the first month’s value and the
last month’s value (notice they are the same month but in different years). This “same” month
comparison over different years is a popular real estate “yardstick” because there is no
“seasonality” involved in the measurement. Thus, any changes that have taken place are
primarily due to market “forces”, i.e. the collective behavior of all consumers participating in
the market.
Invoking the “linear” trend line helps you recognize whether the rate of sales activity is
changing over time or not; and to what approximate degree. An upward sloping trend line
indicates an increase in MSI (sales rate is slowing); a downward sloping trend line indicates a
decrease in MSI (sales rate is increasing); and a flat trend line indicates that there has been very
little change in MSI (the rate of sales).
Average Days on Market by Month (Avg DOM)
This chart shows the average amount of time, in days, that it has taken to get a property Under
Contract during any given month. DOM, for any individual property, is defined as the list to the
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