Lately it seems everybody wants to know how long this market will last. Thankfully, we developed an indicator for that years ago that predicted the changing market. It is called the Ellis Team Current Market Index Indicator or Market Direction.
We analyze a series of numbers and from that it spits out a number. The lower the number, the better the real estate market is for sellers. As the number changes significantly, it signifies a shift in the market.
Past Current Market Index Indicator Performance
Look back at the current market index indicator from 2005. Back in 2005 we went on air and told people the market was about to change. While this chart shows 2005-2012, we were taking readings years before that showed a change was coming. After the TV story broke, agents and consumers thought we were nuts. They commented that the current market back then was like a train on the tracks, and nothing could stop it. Fast forward a year later and nobody was questioning what was happening in the market.
In September 2005 the CMI number was 2.11 but headed up. That’s when we knew the market was headed for trouble. Today the number stands at .51, so it shows you how much healthier our market is today versus back in 2005. We knew the market was not healthy in Fall of 2005, but few agreed with us. When the money is pouring in and people were flipping homes making $100k per transaction, sometimes you don’t want to see reality. Greed is an emotional reaction. We are not saying greed is bad, but it is not always hatched from data or logic.
Numbers Not Based on Emotion
Fortunately, we study the numbers so we can impartially see what is really going on. If you ask an agent how the market is, the answer you get will be in direct relation to how many sales they have the past month. But that wasn’t the question. The question is, how is the market, not how well are you doing in this market.
You see, the agents answer is also born out of emotion. It is a feeling, and they feel good about the market when they are making sales. When a client is paying you for real estate advice, they aren’t paying for how good you feel as an agent. The agent doesn’t mean any harm by it, it’s what they know.
We will report our CMI numbers from time to time, but we do reserve this data in real-time for our current clients. Our clients are the most informed about what is going on in the market.
Gary Keller runs the nation’s largest real estate franchise operation in America, and we can tell you what he watches. Gary looks at three indicators. 1. # of Homes sold. 2. Change in median price 3. Change in inventory.
We also look at these metrics as we agree with Gary, they are excellent indicators. They are not the exact same as our index, but you can never go wrong with advice from Gary who looks at the national picture. There is more than one way to analyze a market, and many are worth studying.
So where is the market headed? We have some headwinds to contend with, but we also have some things in our favor in Florida as well. It seems everybody wants to be here, and demand is high. How high and how long that continues is the question.
See the Trend and Move Before the Market Moves
While the answers may not be apparent just yet, we can say we will see the trend before the market feels it. Closed sales are a lagging indicator in a changing market.
The last several market changes we were able to advise our clients and make their move before the change was felt. When our market changes again we hope to do the same.
If you’re considering making a move in this market, call Brett or Sande Ellis 239-310-6500 or visit www.SWFLhomevalues.com to get an instant idea of your home’s value in today’s market.
If you need advice and want to plan your next move, it pays to talk to us!
Good luck and Happy Home Selling!
Where are home prices going as the Fed raises rates? https://video.foxbusiness.com/v/6305514610112