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It seems that pricing of real estate is backward looking; comps that sold within last 90 days and perhaps listed 30 days+ prior. Is there a way to use forward looking data?
For example, sold a property in 2012 after on the market for two years. No hurry to sell and rejected low ball offers based on homes sold in foreclosure. Accepted a reasonable offer and shortly after that, had a renewed interest in property. Didn't realize at the time that the market was turning.
So, could the market be turning again? Do realtors consult forecast data for an area?
Yes, we know if you are an active agent working with clients. We generally look at homes going under contract for that forward-looking data. They aren't technically sold so they don't go into sold data, but that data also tells a story of what is coming up.
I don't think the Realtors fared any better in the crash than the general population, and being so much closer to the disaster put them at even greater risk. The difference in one year, say 2008 vs 2009, could wipe out the average Americans net worth on one single piece of real estate. You can always run their names through the assessors website, and see what kind of smart or dumb moves they made.
There are no crystal balls, so to speak, so everything we see is history of one type or another. We can see inventory changes, days to contract, number of pending properties and their list prices relative to other listings, and selling prices over time, of course. We often talk about how things “feel” but those impressions are anecdotal and dependent on what is going on with that particular agent at that particular time. I also look at things like new construction in my area; how much they have and the builder incentives.
If you are asking whether we know things about what is coming, though, my answer would be no.
The National Association is the largest private compiler of housing data in the country and that information is collected from the MLS and state associations around the country. NAR lobbying fought against many of the banking reform actions taken in the late 90's and early 2000's but lost most of them to the ABA. I worked on one such effort as an intern in the Summer of 2001. At that point the express argument against the reforms the bankers wanted was that the present system was stable and created a situation where it was only valuable for bankers to foreclose on a homeowner(rather than work with them) if the homeowner was just flat out unresponsive and or uncooperative. Like "********* I ain't ever paying".
In other words the process of foreclosure was so expensive it was a better deal for a lender to delay someone's payments than foreclose. There were very frank conversations from the NAR economists that disturbing that balance would lead to a catastrophe down the road since so much of the stability of the market depended on a fairly steady and predictable supply of housing keeping prices growing at a decent clip. A big round of foreclosures spurred by a recession would crash the market.
So yeah they called it almost a decade in advance. Now this info is generally available to agents and brokers who read the newsletter and follow the data. As in all professions there are those that pay attention and those that don't.
Yes, we know if you are an active agent working with clients. We generally look at homes going under contract for that forward-looking data. They aren't technically sold so they don't go into sold data, but that data also tells a story of what is coming up.
Quote:
Originally Posted by bbronston
There are no crystal balls, so to speak, so everything we see is history of one type or another. We can see inventory changes, days to contract, number of pending properties and their list prices relative to other listings, and selling prices over time, of course. We often talk about how things “feel†but those impressions are anecdotal and dependent on what is going on with that particular agent at that particular time. I also look at things like new construction in my area; how much they have and the builder incentives.
If you are asking whether we know things about what is coming, though, my answer would be no.
If you are looking for some kind of "iron clad certainty" in any sort of economic issue the fact is ONLY "backwards looking data" is 200% reliable -- that precisely why when the various kinds of economists that work on such issues always agree to certain "definitions". Classic example is "what is a recession" -- https://www.investopedia.com/terms/r/recession.asp It is interesting that there are other ways to potentially assess people's perceptions of "economic conditions that are not making folks like thy're getting ahead" -- https://www.thestreet.com/story/1279...recession.html
I strongly believe that MOST good real estate agents, whether primarily working with buyers or sellers, have multiple ways to assess the "market sentiments" -- as both Silverfall & bbronston wisely posted much of that is based not just on the 'hard data' of closed sales but the far less complete information that involves inventory, time to contract, and other stats like failed to meet closing...
I would argue that IF economists used more of this data, and properly understood some of the trends that influence this stats, they very likely could create a model that is at least as useful as other measures of "consumer sentiment" and with appropriate inputs from builders could also be used in some ways as existing measures of "business sentiment" -- https://www.nber.org/papers/w9926 & https://www.investopedia.com/terms/b/beigebook.asp In some ways such data might be more "statistically valid" than other surveys, as the information compiled from "manufacturing purchasing managers" -- https://www.investopedia.com/univers...eases/napm.asp
For what is worth there are plenty of "technical analysts" who do try to predict stock prices using a variety of statistical tools, especially the four components of the "Composite Index of Coincident Indicators" -- https://www.investopedia.com/terms/t/tcioci.asp There is nothing that is 100% reliable when trying to formulate predictive estimates of the price of any asset...
I think generally speaking they can make more accurate educated guesses than the general public. Of course no one can predict the future with 100% accuracy but if your job is selling real estate I'd just assume you'd have a better idea of where the market is headed than the general public. Of course there are plenty of incompetent RE agents who I wouldn't trust but the good ones I'd trust more than someone who isn't in real estate like myself.
I think generally speaking they can make more accurate educated guesses than the general public. Of course no one can predict the future with 100% accuracy but if your job is selling real estate I'd just assume you'd have a better idea of where the market is headed than the general public. Of course there are plenty of incompetent RE agents who I wouldn't trust but the good ones I'd trust more than someone who isn't in real estate like myself.
everything starts in CA
if it sounds too good to be true, it probably is
watch for people with no experience in the market trying to make money on the market
If you are looking for some kind of "iron clad certainty" in any sort of economic issue the fact is ONLY "backwards looking data" is 200% reliable -- that precisely why when the various kinds of economists that work on such issues always agree to certain "definitions". Classic example is "what is a recession" -- https://www.investopedia.com/terms/r/recession.asp It is interesting that there are other ways to potentially assess people's perceptions of "economic conditions that are not making folks like thy're getting ahead" -- https://www.thestreet.com/story/1279...recession.html
I strongly believe that MOST good real estate agents, whether primarily working with buyers or sellers, have multiple ways to assess the "market sentiments" -- as both Silverfall & bbronston wisely posted much of that is based not just on the 'hard data' of closed sales but the far less complete information that involves inventory, time to contract, and other stats like failed to meet closing...
I would argue that IF economists used more of this data, and properly understood some of the trends that influence this stats, they very likely could create a model that is at least as useful as other measures of "consumer sentiment" and with appropriate inputs from builders could also be used in some ways as existing measures of "business sentiment" -- https://www.nber.org/papers/w9926 & https://www.investopedia.com/terms/b/beigebook.asp In some ways such data might be more "statistically valid" than other surveys, as the information compiled from "manufacturing purchasing managers" -- https://www.investopedia.com/univers...eases/napm.asp
For what is worth there are plenty of "technical analysts" who do try to predict stock prices using a variety of statistical tools, especially the four components of the "Composite Index of Coincident Indicators" -- https://www.investopedia.com/terms/t/tcioci.asp There is nothing that is 100% reliable when trying to formulate predictive estimates of the price of any asset...
It appears info is largely fragmented and educated guesses. Could analytics using rising interest rates, unemployment statistics, disposable income, housing inventory and others which I am not privy to provide a forecast. Of course, a forecast is just that -- a probability based on various inputs. The issue of whether this would be more reliable than backward looking data is unproven.
It occurs to me that would be helpful as a experienced local realtor tried to get me to reduce selling price based on backward looking data. This would have been a mistake as I received a reasonable offer and renewed interest a couple of months later as the market was turning.
THanks for the feedback.
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They're are different kinds of "knowlege"...
