How to Research Your Real Estate Market

As the industry continues to grow, staying informed about your local real estate markets is more important than ever. Whether you're buying or selling a home, understanding the trends and nuances of your area can make a huge difference in achieving your real estate goals. Get the most out of your next home purchase or sale by learning how to interpret real estate trends.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.

Important Real Estate Terms to Understand

When researching a local real estate market, there are a few important terms to keep in mind, including:

Days on Market

Days on market (DOM) refers to the number of days a property has been listed for sale on the market. This metric is used to gauge the level of interest in a property and how quickly it is likely to sell. A high DOM could indicate that a property is overpriced or unappealing to buyers.

Pending Transactions

Pending transactions refer to the number of properties that have accepted offers and are currently in the process of being sold. This metric provides insight into the current demand for properties in the market.

Mortgage Rates

Mortgage rates refer to the interest rate that a borrower will pay on a mortgage loan. These rates can significantly impact the local real estate market, as higher rates can make it more difficult for buyers to afford properties, which can lead to a decrease in demand and ultimately lower home prices.

Year to Date

Year-to-date (YTD) refers to the period of time from the beginning of the calendar year up to the present day. In real estate, this term is often used to describe the total number of sales or the median sales price for a particular area during the current year. Tracking YTD data can help provide a more comprehensive understanding of the local market's performance over time.

Historical Trends

Most buyers will start with the area's average sale and listing price to get a general sense of what they can afford and which homes they're most likely to run across in their price range. What's so helpful about past data is that it's irrefutable. There is no guessing about certain facts and figures: buyers can see exactly what recent buyers spent on each property and when each property was sold.

Buyers can see how sale prices fluctuated from one month to the next and how long homes sat on the market before they were sold. It can give buyers an indication of what they need to do to get the home, even if the odds aren't in their favor. Take Toronto and Vancouver, for example. Real estate market analysis shows they're entering buyers' markets right now, providing new opportunities for buyers.

Caveats for Past Data

There are a few things that historical data can't reveal, so it's important to keep those unknowns in mind:

• Bidding data: Buyers won't be able to tell if the sale price was the result of an intense bidding war or a contingency battle. They won't know if the seller covered all the closing costs or if the buyers agreed to forego the sewer repair cost.
• Practical matters: Historical data won't tell a buyer who conducted the home or title inspection or whether the home has unpermitted work on the property.

These facts can shed a lot of insight into the discrepancies between homes, and may or may not apply to the buyer's sale. If a seemingly perfect home sold for well undervalued, it may be because the seller sold it to a relative or because their plumbing system needed extensive work.

What's Next? How to Draw Conclusions From Real Estate Market Analysis

Raw real estate data only provide part of the picture. The next step is to investigate in the real world and draw conclusions supported by your research to learn more about the future of the area. Are younger people moving in because of a tech boom in the area? Are property owners desperate to sell because of new legislation? Are home sellers likely to see unreasonable demands because they're in a buyer's market? Is there speculation over a new company coming to the area?

Once home buyers know at least some of these answers, they can better formulate a strategy as to how and when they should bid. Typically, the buyers who have the luxury to comb the neighborhood are most likely to find a quality home in their price range.

Learn More by Talking to a Real Estate Agent

Local information can be difficult to find if you're not living in a city with easily accessible data. Leveraging the benefits of a real estate agent can be a great way to round out the pricing data and news stories that buyers can readily find online.

For example, a real estate agent may be able to share discounted condo fees, or that a proposed housing development is unlikely to be built in the area or that buyers who compromise on certain features are more likely to have their bid accepted. These perspectives can be invaluable to a homebuyer who wants to arm themselves with as much information as possible before heading off into the market.

Make Better Choices With Real Estate Market Analysis

When buying or selling a property, research your local real estate market is essential. You can better understand the market's current state and make informed decisions by keeping track of key metrics such as days on market, pending transactions, mortgage rates, and year-to-date data. It's important to stay up-to-date with the latest trends and changes in the market, as this can help you identify opportunities and avoid potential pitfalls.

For informational purposes only. Always consult with a licensed real estate professional before proceeding with any real estate transaction.