INTRODUCTION TO THE MARKET CONDITION REPORT
LAS VEGAS VALLEY
Courtesy of Nevada Title Company
The Market Condition Report (MCR) is used to analyze residential real estate markets. The proper use of the report requires the reader to understand how the various measures work together to accurately analyze the target markets.
The MCR has a central philosophical foundation that “The role of the agent is to provide information, and the role of the client is to make decisions.” The Las Vegas macro market should be a central part of the agent’s information provided to the client or prospect.
MECHANICS
AREA: The market is segmented into several areas and is in harmony with the area structure of the MLS.
LISTED (SUPPLY): A count of the active resale properties on the day of the report. These are the properties offered to the market by sellers. Each property is represented by a listing agent who is responsible for managing the property in the market.
CLOSED MONTH (DEMAND): The number of closings per month. This is the number of properties demanded by buyers and is the average over a two-month period.
FAIL MONTH: The average number of properties failing per month, comprised of expired and withdrawn. These properties have been either rejected by buyers or withdrawn by the seller/agent.
PENDING/CONT: The number of properties in escrow. Pending is a clear indicator of current and future demand, since future closings are a function of current pendings.
PERCENT SELLING: Closed per month divided by closed per month plus failed per month (total market resolutions). This measure generates the market driven probability that a property will close as opposed to fail. Seller’s markets generate selling probabilities above 60%. Buyer’s markets typically perform below 45%.
CDOM (CLOSED): The total number of days from market entry to escrow entry for all listing periods.
MONTHS SUPPLY: Current supply (LISTED) divided by current demand (CLOSINGS). This is the number of months required to exhaust current supply given current demand. As Months Supply rises, the market is moving toward the buyer. As it constricts, the market is moving toward the seller.
MARKET SPEED: Speed is a force that is usually felt directly. However, because of the nature of real estate markets, the movement of listings to closings is difficult to sense. Market Speed returns the conversion of listings to closing as a rate. This rate considers supply, demand, and time. The greater this number, the quicker the market is converting listings to closings. As an example, if Market Speed in the West is 22, while in the East it is 11, this would imply that West is converting listings to closings at twice the rate of East (22/11). This also entails that, all other things being equal, the West is more attractive to buyers. It goes without saying that those areas with the highest Market Speed are the most desirable to agents.
PRICES
Market price is an economic concept with commonplace familiarity. It is the price that a good or service is offered at, or will fetch, in the marketplace. Conversely, there are many other prices in real estate, but only one market price. There is original price, current price, pending price and closing price. Prices tend to migrate from one price type to another through time—sometimes quickly, sometimes slowly, sometimes not at all. By definition, the seller wishes to maximize his equity and the buyer wishes to pay the lowest price. These two will meet at “market price” and a deal will be struck.
MEDIAN PRICE DEFINED: Median price in statistics is called a “measure of central tendency.” It is a one number calculation that represents many underlying values in a data set. The median price is the point in a list of properties which divides the list into two equal halves when that list is ordered from the lowest to highest value. It is therefore a place on a list that moves up or down according to conditions. It is not the average or the mean value. It is the common measure of central tendency used in real estate practice.
MEDIAN LIST ALL: The median price of all active listings (SFR). Median list price may or may not be the original price offered by sellers to the market. Typically, the price of any one property will migrate from original price in stages according to the motivation of the seller and the skill of the listing agent. The goal? The price that stimulates showing activity and offers.
MEDIAN PENDING/CONT: The median price of properties that are sale pending. This is the price that stimulated the buyer’s agent which resulted in showing activity. If this price is less than current closing price, price weakness can be expected in the future.
MEDIAN CLOSE: The final median price of all closed properties.
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The data related to Real Estate for sale on this website comes in part from the INTERNET DATA EXCHANGE (IDX) program of the Greater Las Vegas Association or REALTORS® MLS. Real Estate listings held by Brokerage firms other than this site owner are marked with the IDX logo. |
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GLVAR deems information reliable but not guaranteed.
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