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.”
How do you find that out?
If 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 not 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.