Understanding Neighbourhood Market Update – Part 2
Understanding Neighbourhood Market Update (Part 2)
Today, I will show you how to interpret graphs and numbers on my NMU.
On the upper-right corner, you will see the month it is issued. In this case, it was issued in November 2019. You will see the month of information the market update is based on in a bracket right below. It is using the statistics for October 2019.
We want to see the forest the big picture. This is a trend graph for GTA. You can see the average home price in blue bars from 2015 to 2019. The price reference is on the left axis. The number of sales is expressed in a red line for the same period. The reference is on the right axis.
Next up is regarding condo average price and the number of sales for York region and Durham region. York region is in light red. Durham region is in light blue. The stepped area chart shows the average price from 2016 to 2019. The reference is on the left-hand side. The number of sales is drawn in a dotted line. One thing I need to point out is that all other graphs shows monthly data while this condo graph shows quarterly data. It is because the condo data is issued quarterly by TREB, Toronto Real Estate Board.
Down below can you see the two graphs: one on the left is for Oshawa and one on the right is for North York. These are two cities of my focus. Graphs here are the same type of graphs as for GTA. You might be interested in just one city where you live. However, the beauty of having two cities like this format is that you can compare between the two.
Lastly, let’s take a look at this table. It has a good chunk of information. If you are really interested in the market I encourage to listen carefully and understand what each of these columns means. It will increase your understanding of how the market is moving substantially.
– The sales number is the number of sales for the month, obviously.
– The average sale price is calculated by adding all the sale prices for homes sold in an area within the month and dividing that total by the number of properties sold.
– Average Sale Prices can be skewed if one or more properties within that area sold at a extraordinary high or low price, it could be somewhat unreliable. In this case you might want to evaluate your median price and compare. Because the median price is a price lying at the midpoint of the price frequency distribution.
– New listing is the number of new listings in the month. The ‘New listings’ is an indicator of how much activity is happening within a given area.
– SNLR means Sales to New Listings Ratio.
This ratio indicates what’s occurring in terms of supply and demand. It compares the number of sales within a given area to the number of listing going on the market. This shows how ”in demand” the houses are in that area and how many qualified buyers are on the “hunt”.
If the ratio is generally at 55% or more, you can interpret this as Sellers Market.
If the ratio is between 35% and 55%, it means a balanced market.
If fewer than 35% of the new listings sell, it means a Buyers market.
– Active listings is the number of active listings at the end of the last day of the month.
– Months of Inventory is calculated using a 12-month moving average (active listings / # of sales).
– Avg SP/LP: It shows how much more or less a property is getting over the listing price. For example, 99% means properties are getting 99% of listing prices on average.
– Days on market refers to the length of time a listing remains active on MLS before it is sold in a firm deal. The DOM also provides both buyers and sellers important insights for individual properties. A seller can use the information to determine how well their listing is performing in comparison to similar properties. However, this DOM number can be very deceptive. To find out why it can be deceptive please watch my other videos which I will put a link at the end.
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