Anyone that knows me, follows this blog or visits the market reports section of my website knows that I am a numbers guy. Prior to entering real estate in 2001 I held several senior executive position and whether is was forecasting sales, preparing budgets, business plans or explaining financial statements I had to know the numbers. In order to best serve real estate clients I feel that statistics and other financial or legal pieces of information are equally as important in real estate. In addition, I am one of a few that has my Market Value Appraiser designation (MVA) for residential properties so statistic data gathering and review is an important part of establishing current market value of properties that I may list for sale or advise Buyers on regarding a purchase.
Real estate Sellers and Buyers especially those for higher priced properties do a lot of market research and information gathering before they make a decision to buy or sell. Real estate consumers at all price levels need to to the same and that’s where we as REALTORS® need to know our business including current market conditions. Frankly I believe it’s an increasingly important aspect of our jobs and it’s just one more way that we bring “value” to the real estate transaction.
In my prior post “Real Estate Sales Soften in June” I shared some statistics that clearly demonstrated that to the end of June, the market has started to or has shifted. In April through June, sales slowed down and for the first time in over a year we are once again seeing price reductions. One of the key indicators that I look at is the list-to-sale price ration. Measured as a percentage, this ratio is what properties are selling for relative to their listed or asking price on the MLS® System. For many years the overall list-to-sale price ratio for properties sold on the MLS® System of the Southern Georgian Bay Association of REALTORS® was 95% to 96%.
Example: If a property was listed at $749,000 and it sells for 95% to 96% of the asking price that’s $711,550 to $719,000. Yes, it might sell for more but it could also sell for less both of which would be determined on how accurate or realistic the $749,000 asking price is combined with current marketing conditions at the time.
In the past few years we have had a very robust real estate market. In many cases, properties have attracted multiple offers and often sold for over their asking prices. As such from 2017 through to now, the overall list-to-sale price ratio has increased and at the end of June it stood at 100.0% even. That number is actually down from the year-to-date May list-to-sale price ratio of 102.2%. We are still seeing some properties getting multiple offers but not to the same degree as a few months ago. This number is yet further evidence that the market has shifted and I suspect we will continue to see this number fall back down to the 98% range or less through the remainder of 2021.
So why is a number like this relevant? First it is one of several ways to gauge market activity and to answer important questions such as, are sales going up, down, what’s happening with pricing, how long will it take to sell my home etc? When I am working with Buyers that are submitting an offer on a property, one of the first questions they ask me is “what price should we go in at? As a REALTOR® it’s my role to counsel then through the entire process and this is one way to accomplish that.
I need to know this information and so do you. Buying and selling real estate is for many of us the largest financial transaction we will ever make. Don’t go in blind or with word of mouth information you heads on the street or at a cocktail party that isn’t backed up with some reliable statistics. Doing so whether you are a Seller or a Buyer weakens your ability to negotiate and everyone wants, needs and deserves to feel comfortable that they got the best deal they could. That’s why I do what I do, why I know the numbers and it’s what you need to know in order to helps you reach your real estate goals.