Tips for using a CMA to understand the temperature of the real estate market

Описание: Here are some tips for using a CMA to understand the temperature of a neighborhood market. I'm all about county and regional stats, but what's going on in a neighborhood? That's what this short video is about. By the way, CMA stands for Comparative Market Analysis. It's a form available in MLS and it can be quite useful if we use it well.

This is a little tedious, but there is no escaping that because we have to know how to think through the numbers. There isn't just one way to do this of course, but here is how I quickly use a CMA. Earlier in my career I didn't really know how what to look for, so I hope this will be helpful.

In this video I walk through three neighborhood examples where I assess the temperature of the market in the neighborhood. I look at three specific metrics among recent sales, pendings, and listings. I'm essentially watching out for differences in days on market, the sales to original price ratio, and whether there is balance or not between listings and sales.

One thing I didn't mention is on the high end of the market it's common to see more listings than the lower end. This is where we have to be careful when seeing 20 sales and 30 listings. If we saw that at the lowest prices in town that might be a clue the market is starting to become imbalanced. In other words, we might call that an oversupply of homes because the market is only absorbing 20 homes in 90 days and there are currently 30 listings. This essentially means there are more listings than the market has been able to absorb lately. But in a higher-end neighborhood this could actually be a normal level because it's common to have more listings at the higher end of the market. For instance, in my stats for the Sacramento region we often see 5-8 months of housing supply above $1M. Trust me, if we had 5-8 months of supply under $300K, the market in that price range would be tanking. This just reminds us the market isn't the same in every neighborhood or price range, so when using a CMA we need to be in touch with these dynamics. Otherwise we might unfairly judge a market.

If anyone wants to see the entire hour-long presentation, you can do so here. Just enter your email and it's free. I'm not sure how long this link will be good for, but it's good right now. https://education.sacrealtor.org/offe...

If you have any questions or insight, let me know. I'd love to kick around ideas in the comments.

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Ryan Lundquist
Certified Residential Appraiser
TEL 916-595-3735