We will outline some of the basic real estate statistics that are regularly distributed. To do this, we will use a real estate market located in Hood County Texas. Even more granular, we will use single family numbers for homes in Granbury Tx, a small town of approximately 8,000 residents that has seen significant real estate growth in the past 12 months. It’s important when reviewing real estate statistics to use a set of numbers large enough for consistency, but granular enough to tell your story.
The statistics we will refer to are true and correct for the year discussed, but are being used to determine the real estate statistics themselves.
We have chosen Granbury Tx as our example because the growth of the local real estate market there makes the statics stand out.
Anytime you evaluate statistics, especially in real estate, the source of the numbers is extremely important. In most cases, the MLS (Multiple Listing Service) provides the most accurate numbers when referring to real estate. This is because they have all the listings from all the local real estate agents in their database. For the sake of explaining the data, we will look at the numbers for home sales in Granbury Tx, directly from the MLS. These figures are meant to give an example of how to read the statistics yourself. Whenever you’re evaluating real estate numbers, it’s important to pay attention to how the numbers add up. In this case, we will ONLY use single family properties in the city of Granbury.
Basic real estate statistics
- Number of Sales – This is pretty self-explanatory. It is simply the number of single family homes sold in a given month. As of January 2015, they had sold 51 single-family homes. One thing to note when looking at this statistic is that they use the contract date or the day the property actually went to closing. These two dates are usually between 30 and 60 days, so it is critical that you know which one is being referred to. Additionally, many of the homes that are listed if you use the “under contract” number may not actually close! In our example, we’re using the number of homes that actually closed. In January 2016 they had an increase of over 49%, which brought the total to 77 from 51. An increase of this level is very rarely ever seen.
- Sales Volume – Sales volume is simply the total dollar amount spent on a household’s housing within that month. Once again, when reviewing this statistic, it is important to keep property types consistent. If you are comparing two areas to see which has grown more and you include vacant land in the number for one area, you should also include it in the other. As previously mentioned, our examples only include single-family properties. With the number of sales looking at units, you would expect Sales Volume to increase accordingly, but in this case, it increased even more than units (by percentage). The total sales volume of single family homes in Granbury in January 2016 was $15,191,500 compared to the January 2015 number of $9,281,915. This is an increase of over 63%. Because Sales Volume grew at a greater rate than the number of units, this reflects that the average home sale was much higher in 2016 than in 2015.
- Months of inventory – This is a common statistic when examining a real estate market. This statistic refers to the current sales rate, how long it will take to sell through the existing level of inventory. This reflects market supply and demand. In our example, in January 2015 the inventory level was 9 months and in January 2016 it had dropped to 6 months. That’s a 33% drop in available inventory! This means if you are looking to buy a home in Granbury Tx, it will be a little more difficult in 2016 as there is less inventory available to purchase.
- Average days to sell – This statistic simply refers to how long it takes for a family’s properties to go under contract. Don’t let “for sale” confuse you. To accurately show demand for active homes, you really want to track how long it takes to go “under contract.” The process of obtaining final lender approval, securing and achieving a closing can vary due to a number of factors. In January of 2015, the average days to sell was 88. That number dropped over 30% to 61. Once again, this tells you if you’re looking for homes in Granbury TX, you better get your offers in fast as the most desirable houses are going fast!
- Average price – This statistic can be derived in different ways. We’ll use it in its most raw form and just be Average Home Price Sold within that month. Be careful when looking at this statistic printed anywhere, as how the user determines the sell-by date can vary. Needless to say, the average price can be used for active homes for sale or for homes that are being sold. The average price of ACTIVE homes for sale is generally a pretty useless number since you can list a home for any price with no chance of it ever selling. Many homes listed for sale are unrealistically priced, so the average price of active homes for sale can fluctuate dramatically and provide little insight into the market. You’ll want to look at the median price of homes sold. In January 2015, the median home sale was $181,998 and jumped to $199,888 in the same month in 2016. That’s an increase of nearly 10%. This is not a number that really shows the increase in home values across the board, but simply for the homes sold that month, what the average was.
- Average price – The average home sale price can be skewed by a number of factors. All it takes is one $5 million home sale to throw those numbers off. To get a better picture of the overall increase in value, it may be best to look at the average sales price. The average selling price takes the number that is completely in the middle. For example, if you have 11 houses that you are using in your stats, you would get the sale price of all 6. That leaves 5 higher sold homes and 5 lower sold homes. In this case, they are quite close as the average sale price increase from January 2015 to 2016 was 9.69%. This shows that the average price has not been skewed too much due to an unusually large or unusually small sale.
There are hundreds of ways to look at the same numbers when referring to real estate, so be very careful to read exactly what numbers they are using. When doing comparisons, you’ll want to make absolutely sure that both refer to the same property types, dates, etc. As the old saying goes… there are lies, damned lies and statistics.