Real estate trend analysis is the process of collecting historical real estate sales information and attempting to spot a pattern, or trend, in the information. If we are vigilant, we can identify trends and trend changes even as they happen. I think we often are surprised with market movements when key trend tracking should have had us ready for the moves that are upcoming.
The Tallahassee Real Estate Blog has made a commitment to continually monitoring the Tallahassee housing market. We post all kinds of charts, graphs, and analysis of the Tallahassee real estate market and we report trends and trend changes as we start to see them occur. We feel that our real estate market forecasts will be more accurate than any others due to this commitment. Additionally, we publish a free real estate newsletter to which you can subscribe in the right sidebar of the Tallahassee Real Estate Blog.
During the course of the past two years, we have received a lot of feedback and correspondence from readers, home buyers, home sellers, and real estate professionals. Often times, I have seen many of these people are a little confused with some of the analytical processes that I employ so I thought I would use today’s blog to explain the importance of real estate trend analysis and how to differentiate between short term trends and long-term trends.
Tallahassee Housing Inventory Trend Analysis
In order to demonstrate the differences between short and long-term trend analysis, we will look at the changes in housing inventory levels in Tallahassee. This first real estate graph can be found on the Tallahassee Real Estate Market Bulletin, a site updated twice per week with charts, graphs, and analysis of the Tallahassee housing market. It shows the changes in Tallahassee inventory of homes for sale on a daily basis.
We will look at each trend in this graph one at a time, in order to describe the affect of seasonality and odd behaviors (noise) that occurs in the market all of the time. We will start with the short-term inventory levels in Tallahassee housing and conclude with the long-term inventory levels. These graphs show the net resulting inventory growth due to homes being added to the market (new listings) combined with homes leaving the market (sales, canceled and withdrawn listings, and expired listings). So, on a day that had 10 sales, and 10 listed that expired or canceled, we would record a zero “0″ for inventory change. Days where inventory change is positive, we see the glut of homes for sale growing; days where we see inventory change is negative, we know that the glut of homes for sale is being reduced.
Each graph will include a description of what we are seeing as well as conclusions that are justifiable from the graph. The left margin of each graph shows inventory change on a daily basis. The values go from +4 down to -16, so as an example, if the point on the graph you are viewing is at -6, that means the trend that day showed the number of homes on the market was 6 fewer per day for the entire trend period (30 days in the graph below).
[click to view each trend graphed and explained separately…]
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