When I was thirteen or fourteen, I had a button that read, “If you can’t dazzle them with your brilliance, baffle them with your bullshit.” That works in middle school, but I grew out of it. Some of my peers didn’t. Because my clients and I sign into open houses with my email address, I get put on agent’s email “newsletter” lists. (P.S., I was not asked whether I want this advertising.) I usually unsubscribe when I see it. I am writing this because I opened one.
Along with a request at the end for help with my real estate search, I got a note about the market in July:
- Rhode Island home transactions fell -4.2%, while median price increased 1.8%. Pending sales were up 6.6% year-over-year.
- Massachusetts showed a decrease of -5.6% in total transactions year-over-year. The median price increased 3.1%. Pending sales were up 77.8% over July of 2013 – once again, the highest in the region. [italics and bold are mine]
- In New Hampshire, home transactions decreased -0.1% year-over-year, and median price remained flat. Pending sales were up 11.3% year-over-year.
- Vermont showed an increase in total transactions, up 4.3%, while median price increased 1.4% year-over-year. Pending sales were up 7.2% year-over-year.
- In Connecticut, the number of total transactions is down -2.4% year-over-year and median price declined -0.7% Pending sales were up 24.4% year-over-year.
Allow me to translate:
- Comparing the year-over-year data – that’s intended to even out seasonal fluctuation – the total number of sales are down 5.6%.
- There are fewer sales, but the median price of houses sold is up 3.1%. (If you took all the houses sold, listed them by price then chose the one smack in the middle, you have the median.)
Bafflement begins when the irrelevant figure of 77.8% is introduced. Pending sales – sales that have accepted offers but have not closed yet – was up drastically compared to July last year. This could mean so many things, but there is not enough data to explain why this might matter. Yet, my adrenaline shot up when I saw “77.8% over July of 2013 – once again, the highest in the region.” Did yours?
What does that mean?
- July 2013 had far fewer pending sales than July 2014.
- The large number of pending sales in July is included in the year-over-year data – or is it? The data does not say whether or not this whopping 77.5% increase is already accounted for or not. If the pending sales are not yet counted, then sales volume will rise in the next report. So, why do you need to know about sales volume, anyway?
Why does sales volume matter to a house hunter?
It doesn’t! The number of sales does not directly affect the typical buyer. Whether there’s a large number of sales or a small number of sales, it does not change the prices or level of competition for buyers. If there are more buyers than houses or condos, it’s a seller’s market. If there are more houses and condos than buyers, it is a buyer’s market.
Advice to house hunters:
- Watch for data on price.
- Watch for data on level of inventory, time on the market, and other indicators of supply and demand balance.
- Sales volume only matters to agents and brokers. You are buying one place this year; it matters not a whit how many other houses or condos are being sold.