Cheat Sheet for Understanding Real Estate Sales Numbers

We report a lot of Daytona Beach real estate sales and market numbers on our website and blog on a regular basis. If you watch television news, read the paper, or where ever you catch your news, you’re likely to hear a great deal more about real estate sales and the real estate market. These numbers can be confusing, especially when they are taken out of context, so to make the process easier, we’ve created this cheat sheet of real estate sales and market terms.

First, before checking out the cheat sheet, please read these few lines.

1. All real estate sales are local
2. All real estate sales are an agreement between a buyer and a seller

Why are these two statements important? Simply, when individual sales in a local area are combined into state, regional or national numbers, a lot of the detail important to that local market are lost. You are not buying a home in the South or in the United States, you are buying a home in Daytona Beach or another locale.

We provide local market reports that can be found here ==> Daytona Beach Florida Real Estate Market Reports.

Median Sales — is the half-way point of sales over a period of time. In statistical terms, it defines the distribution of sales, not any measure of home values. For instance, we’ve seen more and more sales in the lower end of the market in Daytona Beach. About 69% of our sales in October were under $200,000. With fewer sales in the higher price range, the median price falls because more homes are selling for less. The median price does not define sales value, but the exact half way point of all sales recorded.

Average Selling Price — The selling price of all sales for a period of time, say a month, added together and then divided by the total number of sales. So if 10 homes sold for a total of $1,000,000, the average selling price would be $100,000. Now, this could be 10 homes selling for $100,000 each or 9 homes selling for $50,000 each and one home selling for $550,000. In our area, this number fluctuates with the number of higher priced homes sold during the period.

Home Inventory Numbers (Months of Inventory) — The total number of homes available to be sold during a period divided by the total number of homes sold during that period. In the Daytona Beach MLS, there were about 6,000 residential homes for sale at the end of October. With sales of 224 homes and condos, the Months of Inventory is found by dividing 6,000 by 224 to equal 26.8 months. A buyer’s market is considered to be more than 6 months of inventory, so we are in a mega-buyer’s market.

New Home Starts — Simply, the number of homes started during a period. Another number is New Home Permits which is a number that generally is treated as a suggestion or leading indicator for new home starts.

When considering these numbers, three questions are important:

1. Compared to What?
2. What period is being considered?
3. Where?

For instance, you might read or hear that median sales fell 4.6% in March (an example, not real). Does this means compared to February, last March, or another period? Without a reference period, the number can be misleading. Where did median sales fall? If it’s an average for the US, it doesn’t tell us much about Ormond Beach or Chicago.

We hope this post is helpful. If you have any questions or comment, just ask in the comment field below, or, you can call Lynn at 386-566-7503 or 888-519-9579.

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