LOCAL RECORDS OFFICE – We are going to define some of the basic real estate data and statistics that get thrown around on a regular basis. To do that, we will use one real estate market. The statistics that we will be referencing are true and accurate for the year discussed but are being used to define the real estate statistic itself.
We have chosen Norwalk, California as our example because the growth of the local real estate market their makes the statics stand out says, Local Records Office.
Anytime you are evaluating statistics, especially in real estate, the source of the numbers is extremely important. In most instances, the MLS (Multiple Listing Service) provides the most accurate numbers when referring to real estate. This is because they have all listings by all local real estate brokers in their database.
For the sake of explanation of the data, we will be looking at the numbers for home sales in Norwalk, California, directly from the MLS. These numbers are meant to give an example of how to read the statistics themselves. Anytime you evaluate real estate numbers, its important to pay close attention to how the numbers are gathered. In this instance, we will be using ONLY single-family properties in the city of Norwalk, CA.
Basic Real Estate Data and Statistics
Sales Volume – Sales Volume is simply the total amount of dollars spent on single-family housing within that month. Once again, when reviewing this statistic, it’s important to keep the property types consistent. If you are comparing two areas to see which one has grown more and you include vacant land in the number for one area, you must include it in the other two.
As previously mentioned, our examples only include single-family properties. With the Number of Sales looking at the units, you would expect the Sales Volume to go up appropriately, but in this instance, it went up even more than the units (by percentage). The total Sales Volume of single-family real estate homes in Norwalk, California in January of 2016 was $15,191,500 as opposed to the January of 2015 number of $9,281,915. That is an increase of over 63%. Because the Sales Volume went up at a larger rate than the number of units, this reflects the average home sale being much larger in 2019 than 2018.
Months of Inventory – This is commonly referred to as statistic when examining a real estate market. This statistic refers to the current rate of sales, how long will it take to sell through the existing level of inventory. This reflects the supply and demand for the market. In our example, in January of 2019, the level of inventory was 9 months and in January of 2018, it had dropped to 6 months.
That is a 33% drop in available inventory! This means if you are looking to buy a home in Norwalk, CA, it will be a little tougher in 2016 as there is less inventory available to buy.
Average Price – This statistic can be derived in a variety of ways. We are going to use it in its most raw form and simply be the Average Price of Homes Sold within that month. Be careful when looking at this statistic printed anywhere as to how the user defines the date sold can vary. Needless to say, Average Price can be used for active homes for sale or for the homes that sold. The Average Price of ACTIVE homes for sale is generally a pretty useless number as you can list a home for any price, without any possibility of it ever selling.
Many homes listed for sale are at unrealistic prices thus the Average Price of Active homes for sale can fluctuate dramatically and give little insight into the market. You will want to look at the Average Price of SOLD homes. In January of 2015, the Average Home Sale was $181,998 and it jumped to $199,888 in the same month in 2016. This is an increase of almost 10%. This is not a number that truly tells the increase in home values across the board, but simply of the homes sold in that month, what the average was.
Norwalk, CA – Local Records Office
Median Price – The Average Home Sales Price can be skewed by a variety of factors. All it takes is one 5 million dollar home sale to throw those numbers off. To get a better view of the overall increase in value, it can be better to look at the Median Sales Price. Median Sales Price takes the number that is perfectly in the middle.
For instance, if you have 11 homes that you are using in your statistic, you would take the sales price of the 6th one. This leaves 5 homes sold higher and 5 homes sold lower. In this instance, they are pretty close as the Median Sales Price increase from January 2015 to 2016 was 9.69%. This shows that we didn’t have the Average Price skewed too much because of an extremely large or extremely small sale.