LOS ANGELES, CA – Local Records Office is going to define some of the basic real estate statistics that get thrown around on a regular basis. To do that, we will use one real estate market, located in Los Angeles County. Even more granular, we will use the single-family numbers for homes in Long Beach, CA, a medium size city of approximately 500,000 residents, which has seen substantial real estate growth in the past 12 months. It is important when reviewing real estate statistics to use a group of numbers large enough for consistency, but granular enough to tell your story.
Real Estate Statistics for Newbies
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 Long Beach, CA as our example because the growth of the local real estate market makes the statics stand out.
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 says, Local Records Office.
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 Long Beach, CA, 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, it’s 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 Long Beach, California.
These Are Basic Real Estate Statistics
Number of Sales – This one is pretty self-explanatory. It is simply the number of single-family homes sold in a particular month. In January 2015, they had 51 single-family homes sold. One thing to pay attention to when looking at this statistic is whether are they using the Under Contract date or the day the property actually went to closing.
These two dates are usually between 30 and 60 days apart, so it’s critical that you know which one is being referenced. In addition, many of the homes that get calculated, if you are using the “under contract” number may not actually close! In our example, we are 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. Growth of that level is very seldom ever seen.
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 too.
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 homes in Long Beach in January 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 2016 than in 2015.
Months of Inventory – This is a commonly referred to statistic when examining a real estate market. This statistic refers to at 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 2015 the level of inventory was 9 months and in January 2016 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 Long Beach, CA, it will be a little tougher in 2016 as there are fewer inventories available to buy.
Median Days To Sell – This stat simply refers to how long it takes for single-family properties to be put under contract. Don’t let the “to sell” confuse you. To accurately show the demand for active homes, you really want to track how long it takes to go “under contract”. The process of acquiring final lender approval, insurance, and getting to a closing can vary on a variety of factors. In January 2015, the Median Days to sell was 88. That number dropped by over 30% to 61. Once again, this tells you if you are looking for homes in Long Beach, CA, you better get your offers in quickly as the most desirable homes are going fast.
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 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 says, Local Records Office. You will want to look at the Average Price of SOLD homes. In January 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. Check out videos here.
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. The 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.
There are hundreds of ways to look at the same numbers when referencing to real estate, so be very careful to read the fine print on exactly what numbers they are using. When making comparisons, you will want to make absolutely sure that both are referencing the same property types, dates, etc. Like the old saying says… there are lies, damn lies, and statistics.
In an effort to describe some of the most basic real estate statistics, we are using the market statistics from Long Beach, California as they have seen some extraordinary growth.
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