Indicators

My No BS Real Estate system is comprised of many indicators, data points, trends, charts, and my commentary (blog entry to accompany charts).  (“No BS” stands for “No Bad Service”.)  My proprietary tracking and reporting is split into two sections: Major and Zip Code.  The proprietary Swing Indicator is an aggregation of all Zip Code and County median price momenta and is considered a Major Indicator. 

Almost all of my indicator charts depict the momentum of changes in the underlying raw data to help forecast direction (e.g., Sacramento Median Price and the momentum (p) of the change in that price). These are not a guarantee of future direction but aid in the prediction of cause/affect in the various market forces. No single indicator tells the whole story.  Also charted is the raw data itself.

See my blog entry for my explanation of Momentum.

For an explanation or for a monthly subscription to this periodic report, call or email me.   The data is deemed reliable but not guaranteed.  Sources include Sac MetroList, Property Radar, and public information.

Major Real Estate Market Indicators

Real estate is local.  That is a truth especially for California.  But the various forces that push and pull on supply and demand can be national or even global.  Forces that cannot be tracked or quantified (e.g., election years) may have a greater impact than the forces I track.  Please tell me what you see or read in these indicators.


Major indicator definitions:

  • Summary – this is a summary showing my main indicators which make up most of the “story” describing the market.  Some indicators drive the results of others.  That means some are symptoms of others.  For example, inventory always affects price; not always vice-versa.
  • Resales – charts showing 19 years and the last 3.25 years of homes sold (Resales) in Sacramento metro area.  The chart also shows the momentum of the change in sales.
  • For Sale, Sold, Pended – charts showing 19 years and the last 3.25 years of homes For Sale (inventory), Sold, and Pended (pending at least once during the month; may not have closed and may have failed).
    • The For Sale numbers are the snapshot of the number of property for sale at the end of the month.
    • The Pended numbers represent the number of properties that went into the “pending” status in that month.
    • The New Listing numbers represent the number of properties that are new listed in a particular month.
    • The Sold numbers represent the number of properties that are sold on a particular month.
    • It helps determine the trend of market supply and demand.
    • It helps determine whether the current market is a seller or buyer market.
    • It helps determine the minimum length of the listing period.
    • It helps identify which price range the majority of the properties are in, within a given area.
    • It helps focus on where the buyer’s activities are and the market condition in those areas.
      How to Use For Sale vs. Sold Report?
    • Use with Average Price Per Sqft Report to set competitive listing price.  (CAUTION)
    • Use current inventory level to determine market condition. The current inventory level is derived by dividing the monthly listing number by the monthly sold number which is shown in Months of Inventory graph. As a rule of thumb, an inventory level of less than three indicates a strong seller market while an inventory level greater than six indicates a buyer’s market.
    • A download trend of listing inventory and an upward trend of the number of properties sold indicates the seller is in a better negotiating position.
    • An upward trend of listing inventory and a downward trend of the number of properties sold indicates the buyer is in a better negotiating position.
    • The properties sold figures are derived from recorded transactions.
    • Current monthly sold figures might be adjusted upward on the next month’s report. This is to account for any closed transactions that are reported late.
  • Sacramento Median Price – charts showing 19 years and the last 3.25 years of the median price for the homes sold in Sacramento County.  Also shown is the momentum of the change in median price.
    • (These bullets apply to all Median Price charts.)
    • The report shows the median price at which an equal number of homes are sold above or below that price.
    • Median price helps identify where the market activity is the strongest.
    • If the property’s listing price is closer to the median price then there are more potential buyers available for the property.
    • Momentum is shown to help gauge direction and force of that direction.
  • El Dorado Median Price – charts showing 19 years and the last 3.25 years of the median price for the homes sold in El Dorado County.  Also shown is the momentum of the change in median price.
  • Placer Median Price – charts showing 19 years and the last 3.25 years of the median price for the homes sold in Placer County.  Also shown is the momentum of the change in median price.
  • Mortgage Rate – charts showing 19 years and the last 3.25 years of the average (national), 30 year, fixed mortgage rate published each month.  Also shown is the momentum of the change in the rate.
    • The general cost of borrowed funds represents a major force of demand.
  • Inventory – charts showing 19 years and the last 3.25 years of the homes for sale as published each month.  Also shown is the momentum of the change in the inventory.
    • The For Sale (Inventory) numbers are the snapshot of the number of property for sale at the end of the month.
  • Months of Inventory (MoI) – charts showing 19 years and the last 3.25 years of the number of months required to sell the Active listings based on the “throughput” of today’s market.  Also shown is the momentum of the change in the MoI.
    • Refer to For Sale vs. Sold Report for the number of properties for sale, pended and sold that are used to calculate the Months of Inventory report. As a rule of thumb, an inventory level of less than three indicates a strong seller market while an inventory level greater than six indicates a buyer’s market.
  • Distressed – charts showing 19 years and the last 3.25 years of the number of Resales which qualify as Distressed (REO, Short Sale).  Also shown is the momentum of the change in the number of Distressed sales.
    • The presence of Distressed sales has all but disappeared from the current market.  The re-appearance is 1) hard to avoid and, 2) can indicate economic malaise beyond the real estate market.
  • Financing – charts showing 19 years and the last 3.25 years of how the Resales were purchased; all cash, using a conventional, FHA, VA, or other loan or financing.
    • The presence of cash says 1) the inventory is priced such that investments provide a healthy return for investors, or 2) the inventory cannot qualify for a loan due to property condition, or 3) owner-occupant buyers are opting to use cash instead of other people’s money (OPM).
    • The presence of VA financing says 1) the buyers are returning from service or are finding that sellers are favoring these buyers, and/or 2) the inventory is well-maintained and prepared for clean inspections.
    • The presence of FHA financing says that the government is guaranteeing loans, which is not a good use of tax dollars, in my opinion.
    • The presence of conventional financing says that 1) the definition of ‘conventional loan’ has been broadened, or 2) home ownership is alluring to those who have saved and prepared themselves to ‘put skin in the game’.
  • Swing – charts showing 19 years and the last 3.25 years of an aggregation of the Zip Code momenta.  Like an EKG, this can be used to support or further define the market story – a “heart monitor” of sorts.
    • The Swing Indicator shows an aggregation of momenta changes for all of the 54 Median prices tracked in my No BS System.
    • The 3 Counties and 51 zip codes comprise the total of 54 Median prices.
    • See my blog entry about Momentum for a brief explanation.

Zip Code Indicators

Although a good evaluation may be much more concise than a broad zip code average or median, it would take more time to define boundaries within a zip code that would be in agreement with every other seller, agent and appraiser.  Since that is highly unlikely to happen, we’ll go to zip code and drill where you request.  Each of the charts for the zip codes are found on the individual Community pages.

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 Zip Code indicator definitions:

  • Summary – this is a summary showing the zip codes which are my favorite.
  • Details – this is a list of tracked zip codes and counties sorted by the current month’s median price and a lot of other details not reflected in the charts.
  • [Area] – shown for each Area and/or Zip Code, there is a summary (block), a total, a 3-year, and momentum of change in the median price for that Area.  These are shown on the Community pages.
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