August 27, 2006 at 6:12 PM #7346
Cancelleds Expireds Withdrawns
Okay Powayseller this one is for you. I was gonna reply to your post regarding the discussion you and I were having about the best indicators for market conditions but that thread had gotten long and I wanted more people to see this piece of data. As usual the ratios you were proposing made alot of sense.
I do want to underscore though what I feel is one WHOPPER of unrealized data which are the listings that go to the graveyard (not sold). These classifications are expired, cancelled, and withdrawn. In all cases these classifications indicate the home did not sell. However, listings that achieve this status frequently are relisted with the same or another realtor.
I think we all agree that median price as an indicator more or less sucks. However we all or at least I do pay close attention to year over year sales. So the past two months I think they were close to 30% reductions in year over year comparisons yeah? (if I know this site well someone will correct me….)
Anyways I think that a very good indicator of the market besides months inventory, or maybe even BETTER then months inventory, is the relationship between listings that sell and listings that didn’t.
I took a sample from 92064! I used detached homes only and the data is presented by 4 month increments. The first number is expired/cancelled/withdrawn total and the second is solds.
4/15/06 – 8/15/06 — 185 Solds 149
12/15/05 – 4/15/06 — 132 Solds 146
8/15/05 – 12/15/05 — 133 Solds 133
4/15/05 – 8/15/05 — 43 Solds 220
12/15/04 – 4/15/04 — 26 Solds 171
8/15/04 – 12/15/04 — 42 Solds 173
4/15/04 – 8/15/04 — 35 Solds 204
12/15/03 – 4/15/04 — 12 Solds 242
So this data is pretty face slapping bad isn’t it? To me though what is really ugly is the number of places that DO NOT SELL. The minimum sales total is 133 which is down about oh 60% (forgive my math) from the peak of 242. However the number that didn’t sell 185 is up 15 TIMES THE LOW PEAK OF 12 unsolds.
The cancelled/expired/withdrawn totals are important in our study of the market because they are the indicator that tells you what happened to ALL THAT EXCESS INVENTORY! Nothing else does. Furthermore these classifications will be useful in measuring the stickiness factor and when the market starts to turn. Just because sales rise may not indicate a bottom. We need to see sales rise, and cancelled/expireds/withdrawns go down… (IMO)
PS you see what I am saying now? I think your indicators are great ones. I especially have a soft spot for actives to pendings because that is the best snapshot a person could get…I would augment the stats that you compile with this data as well. I do agree that you can pretty much accomplish the same thing with simple sales and inventory but this helps really put the nail in the coffin so to speak.
Well the kids are waking up from the naps so my time is over…August 27, 2006 at 8:01 PM #33585JESParticipant
Great analysis. Do you think it would be valuable to add a correlation to inventory levels for the various time periods as well?
Perhaps ratios for:
This might give us insight into the impact inventory levels have on your data.August 27, 2006 at 9:02 PM #33590
For sure JES. Actually, (as a guess) the correlation should be proportional right? As the inventory levels have rose, we should see in the absence of increased sales, that these 3 classifications should run up as well. In fact they will track inventory very well as long as sales stay flat. If inventory rises and sales decline these classes will continue to ramp up. I think the Inventory/Sold is the most telling ratio.
Note again though that these are lagging indicators. In the thread of the previous post, Powayseller had some very good ideas about the ratios she liked and I agreed with her. I think she will find a good way to utilize these points as well.
The ones I use the most when I am trying to show potential sellers the depth of the market conditions are the ones above, the actives to pending ratio, and the months inventory.August 27, 2006 at 9:27 PM #33591
SD Realtor, I still don’t get why we have to know anything about people who cancel their listings. If they cancel, expire or withdraw and list again, then inventory will stay unchanged. If they don’t list again, inventory is down by one.
Either way, their decision ultimately shows up in inventory and sales numbers. Why do we need to know the reason for falling off the MLS? Couldn’t you take this to extremes, and start tracking how many people were removed off the MLS due to job loss? I mean, do we need to know the exact reason that a listing came off the MLS?
Or are you trying to say that in a climbing market, the c/e/w are very low, so their high numbers indicates a distressed market? But if so, do they tell you anything that you wouldn’t already get in the other ratios? In other words, what is the value added of using these measurements? I just don’t get it.
What’s the difference between cancelled and withdrawn?August 27, 2006 at 10:13 PM #33600
PS I think they are value added pieces of data that give further evidence of in our case a heavily depreciating market. If I am a seller and I know that there are 100 homes on the market in my zip, but that last month 10 of them sold that is useful. However if I know that 10 sold and 25 more dropped off the market entirely that would potentially encourage me to price my home even more aggressively.
Yes as you also stated, c/e/w numbers go down in an appreciating market and rise in a depreciating market. What has me concerned as I said is a 15x increase from the low in the data I presented. The trend also shows no sign of weakening.
Again, I use it to show potential sellers more data. It may not be useful in any ratios, as you are indicating.
Cancelled – you are no longer under contract with the broker.
Withdrawn – you are still under contract with the broker but not active on the MLS.August 27, 2006 at 10:21 PM #33602
I still don’t see what this information tells the buyer or seller. So what if the c/e/w is 15x last year? What is the impact of this? Numbers by themselves are meaningless; I only use them if they are correlated with an outcome, or they tell a story. I still don’t get why it matters how many people pull off the MLS but keep their contract with their realtor, or how many listings expire just to relist? that long listing time is completely reflected in days on market.
Does anybody else get it and want to explain it to me? I’m not being difficult, I simply don’t see the value of those numbers.August 27, 2006 at 11:11 PM #33614greekfireParticipant
I think these numbers give a general indication of how quickly the products are moving off the shelves, if you want to look at it that way. If each piece of fruit or vegetable in the supermarket had this type of information on a sticker, wouldn’t that affect your decision to buy it? The “born-on” date for beer is another similar example. It’s there to show you how fresh the product is. Do you want to buy a stale item that many others have passed up on? Why did so many others pass up on it? If I decide to purchase it, are there any concessions that I can gain? On the sellers side, you know that others know your product is old and that many have passed up on it, therefore you might be more likely to agressively price it so that it sells. Now I see why this information isn’t readily available to many buyers.
Where can an average Joe like me get this information and is it free? I would like to make a map showing these figures.August 28, 2006 at 5:54 AM #33637
greekfire, it’s more like this: c/e/w is the soup cans that were moved off the shelf because the manager moved it out to make room for different merchandise, he is holding it in the back for some other use, or it is past its expiration date. Either way, what does it matter to me as a shopper? All I care about is the price and selection of what is on the shelf today, not the stuff he took off the shelf.
Again, I think all the data we need is in the inventory, pending, sold.
I think c/e/w is a lagging indicator, an indicator that turns when the market changes. So it is as useless as keeping track of commission rates, which also increase as the market turns, but doesn’t tell me anything new. So many factors go in the other direction when the market turns, but they are the result of the market turning. Why track them all?
Another example is builder commission to realtors. It’s gone from 0 to almost 100%. Track that also?
I don’t mean to be too cynical, SD Realtor, I’m just trying to make sense of it out loud. You know I’m your biggest fan:)August 28, 2006 at 9:51 AM #33670sdduuuudeParticipant
SD Realtor – this is an interesting analysis, but I’m not sure if it adds a whole lot of information.
The question to ask is – Do you ever see this c/w/e – to – solds ratio indicate a bad market while number of months of inventory indicate a good market?
I mean, if the two items are directly corrrelated, one doesn’t really add any more information to the picture.
However, if one leads the other consistently, maybe you have something useful.
If you get a chance, plot them on the same plot and see.August 28, 2006 at 9:53 AM #33671sdduuuudeParticipant
Powayseller said – “I still don’t get why it matters how many people pull off the MLS but keep their contract with their realtor, or how many listings expire just to relist?”
I agree, PS !!!
“That long listing time is completely reflected in days on market.”
Well, not when they get relisted because the days on the market resets.
I think it is better reflected in the “months of inventory” because if an expired property drops out of inventory, then comes back into inventory, this (appropriately) doesn’t affect the “months of inventory” calculation.August 28, 2006 at 10:57 AM #33688sdrealtorParticipant
Here is why that number is important. The questions that sellers used to ask is how much will my house sell for and how long will it take. I believe that I touched on this several months ago when I said sellers will soon start asking Can I sell my house at anything close to market value? The answer is increasingly, maybe not or you have a less than 50/50 chance. With such a high failure rate, people looking to move up with plenty of equity to do so will stay put. Most homes on the market will be motivated sellers which will drive down prices but inventory could moderate.August 28, 2006 at 11:47 AM #33695PDParticipant
I went to an open house yesterday in Coronado and talked to the realtor. He told me that prices would not go down in Coronado because everybody here has so much money that they will just take their house off the market if they can’t get their target price. I told him that was true of many Coronado owners but there were a certain few who really stretched to buy their home and are going to be forced to sell. Those few will then set the value for the whole market.
I then asked him what he thought of the fact that there was an 18 month supply of single family homes in Coronado. With a great deal of unconcern, he replied that instead of taking 30 days to sell a house here, now it takes 60 days. 60 days with an 18 month supply?! I’m not so sure that he passed Junior High math!August 28, 2006 at 11:57 AM #33700
Sdduuuuude and PS I agree that the correlations to display the market decline can be made without this information. However, as I said, when I meet people and display information to them, these additional statistics are indeed very useful.
Show a the same picture to different people and you get different interpretations right? Sometimes I need to show a few different pictures to get the point across.
If I show someone the inventory and say, “look you have 18 months worth of inventory here.” that is a strong statement. If I show them that and go by the way alot of this inventory is people not getting it, people who have listed and expired, repriced, then relisted, then did it again… then the term chasing the market starts to make more sense to them.
So I guess my point is that this data may not be useful to any of us here as we have more then enough stats to correlate market performance.
Not all sales appointments I go to have that savy.August 28, 2006 at 1:18 PM #33733tangouniformParticipant
Isn’t the CEW rate psychological? I would think that comparing CEW numbers to inventory and DOM would show the mood of the sellers, no? High CEW/sold rates with a high inventory over the same period and a smallish DOM (~90, say) would tell me that sellers are willing to sit out the market in the hopes of a recovery in their favor. Low CEW/sold rates with a high inventory over the same period would show motivated sellers?
See, I think that the CEW numbers add something to the squishy side of a market analysis. They could be used to make some sort of “want to sell” vs. “need to sell” metric maybe.August 28, 2006 at 5:34 PM #33785Steve BeeboParticipant
Your calculation of an 18 month supply of homes on the market in Coronado is not accurate right now. It’s true that the last month has been very slow for SFR sales in Coronado, with I believe only about 4 closed sales.
There are currently 133 SFRs listed there, (33 are $3 million plus). But there are 18 in escrow right now – all under $3,000,0000. There have been 60 sales in the last 6 months, and 114 sales in the last 12 months. So the average is about 10 sales per month – a 13 month supply.
The $3M+ market is really not selling well at all – 33 active listings, 6 sales in the last 6 months, and 9 sales in the past year. But even when the market was great, there were always a lot of high-end homes on the market there.
If you take the high-end listings out of the equation, there is about a 10 month supply on the market, but there is a surprisingly large number in escrow right now.
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