Housing Market Micro-Statistics

[Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced.]

Yeah, yeah, I know all about the S&P/Case-Shiller index, the National Association of Realtors’ Pending Home Sales Index, the Minneapolis Area Association of Realtors’ monthly sales statistics — and a host of other housing statistics you’ve likely never heard of.

But, my favorite is what I call, “the front desk index.”

Busy, Busy

How do you find that out?

data miningIf you’re an Edina Realty – City Lakes agent, by walking up to the front desk and asking how busy it’s been.

According to Edina Realty’s Mary Sukov, by noon yesterday there were already 50+ showing requests; that compares with about two dozen on an average Saturday morning.

Last Friday, Edina Realty – City Lakes’ front desk logged 104 showing requests — an office record!

Leading vs. Lagging Housing Indicators

While anecdotal, current showing activity is HUGELY indicative of market conditions, especially if your snapshot spans a reasonably long time period (like patterns over a few weeks).

Unlike so-called lagging housing statistics such as pending sales, which tell you how much business has been done recently, showing activity is a purely leading indicator.*

In my experience (going back over a decade), something like 10% of all showings ultimately lead to an offer.

For 2nd showings, that number jumps to about 33%.

Obviously, not every offer leads to a consummated sale, but about two-thirds of the time — at least in Minnesota — it does:  if crystal ballnot from the first offeror, from someone waiting in the wings.

(Note:  those statistics only apply to showings by Realtors — specifically, Buyer’s agents — representing well-qualified Buyers.  Activity at weekend open houses is much less predictive of  future market sales.  In some situations, I imagine it may even be inversely correlated, as when the economy is rocky and would-be Buyers are content to merely look instead. )

Data Mining — Housing Market Edition

Combine good, real-time data on showing activity for any given housing market, and a good (empirically-based) ratio for showings-to-deals . . . and suddenly you have the ingredients for a very intelligent projection of local housing sales, one quarter (three months) out.

Take that, Professor Shiller!

(And don’t bother trying to find that data on Zillow or Trulia; if you can’t even get historical data right, good luck with forward-looking projections.)

P.S.: Thanks to Mary — and Edina’s other front desk staff, Mary Nygaard and Laura Linser — for professionally and graciously fielding all those showing requests.

*Another way to think about housing statistics is as “upstream” and “downstream.”

Closed sales are the latter, showing activity is the former.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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