That is a question all Realtors, Appraisers, Builders, Lenders, etc. get every day from the public. It can be in the elevator, cocktail hour, or any other casual venue. There is only one answer to that question, however… And, surprisingly the answer is always the same no matter which cycle we are in or what city.
Are you ready for the answer?????
OK – and the answer is…. drumroll please… “Which Market?” That’s right, the first question cannot be answered without at least one or two clarifying questions. We need to know, geographically which market, and pricewise which market. Intuitively, most Real Estate Professionals know that the markets are segmented but how can this be quantified? One of my favorite statistics to get a quick gauge on a market is to look at the Hotness Factor. The Hotness Factor is simply a ratio of the houses which are pending to the total houses on the market (including pending listings). If the agents always put a “Pending” rider on their sign as soon as it goes pending, then you could get a feel for the strength of the market by just driving up and down the streets. If you saw 10 signs and 5 had pending riders, the hotness factor would be 50%. If you saw just 1 pending rider, the hotness factor would be 10%. We created an Infographics for several sub-markets in the D/FW Metroplex. Below, we illustrate the McKinney Market and compare and contrast the strength of the market by price range. Clearly, the sub $200K price ranges are much stronger than the $500K+ price ranges in McKinney. Stay tuned… Next week we will discuss, “What is a normal market and what is a “HOT” market.”