How to Understand Real Estate Data to Better Your Home Search
Information is power. Being able to make an informed homebuying decision can give you confidence in knowing you made the right choice in the biggest purchase many of us ever make. Because we want you to have that feeling, Neighborhoods.com includes important real estate data at the bottom of ever neighborhood page. Whether you’re looking to put down roots in Philly, Miami, LA, or anywhere in between, we’ve got the data to help you start out your homebuying journey as informed as possible.
Say you’re curious about trends in the Buckhead neighborhood of Atlanta, Georgia. You could go to the neighborhood’s page and click the "Trends" tab above the neighborhood overview. This will take you to where we include real estate data that’s helpful for homebuyers and sellers alike.
How does it work?
The pricing trends graph will show you the fluctuations in a neighborhood's median sale price over time. Neighbohoods.com has three time-frames set: one year, two years, and three years. This charts the data for the median home sale price in any neighborhood.
But what does “median sale price” mean? Great question. Medians are often confused with averages (aka means), but they are different. You calculate an average by adding up all the values in a given data set. Say you have 10 homes that sold in a neighborhood, you’d add up all 10 of those sale values. Then, you’d divide by the number of homes—in this example, 10.
A median, on the other hand, is calculated by listing all the values in ascending order—for the example listed, you would put the 10 home sales in order by sale price. The one smack dab in the middle is the median.
Why use a median vs. an average?
When you’re dealing with a median value, 50 percent of the homes you find will be above that value and 50 percent of the homes you find will be below that value. The advantage of a median value over an average is that a median is not as affected by extreme numbers.
What can pricing trends tell us?
Pricing trends can be essential information for prospective homebuyers. Todd Warshauer, VP of Sales for Neighborhoods.com, explains, “Pricing trends will give guidance on if the market in a particular town or neighborhood is a buyer’s market, seller’s market, or a balanced market.”
A buyer’s market is when you have an influx of inventory that keeps the prices down, benefitting the buyer. A seller’s market is when the demand is high, which drives up the price to the benefit of the seller. A balanced market is when the demand from the homebuyers matches the inventory from the sellers.
How can this data help you with your homebuying process?
There are natural fluctuations in the housing market. By watching the trends, you can see which way the housing market is trending. Are values in your neighborhood steadily appreciating? Are there consistent months where prices are low, signaling the best time in this neighborhood to buy a home? Does it appear to be a buyer’s market, seller’s market, or balanced market? The longer you watch the data, the more likely it is to reveal a story.
Average Sale Time
How does it work?
The graph depicting average sale time shows you the number of days a home was on the market before it sold. Again, you can choose your settings to show data over a period of one, two, or three years. “The days on market for homes you’re looking at and any pricing changed will give you some initial data on the trends of the neighborhood,” Warshauer explains.
What can the number of homes sold tell us?
The third set of data you can see is the number of homes sold over a one-year, two-year, or three-year period. Warschauer highlighted the benefits of knowing how many homes were sold on a month by month basis.
“It will show you the amount of activity in a neighborhood in a given historical timeframe. The popularity or size of a community can lead to low or high numbers of homes sold,” he says.
The number of homes sold in a neighborhood can also help qualify the pricing trends in a given month. If you see an uncharacteristic spike in home prices in a month, you may want to check that against the number of homes sold. If there were only a couple of homes that sold that month in the neighborhood, a single home sale price may be affecting the data.
What can’t real estate data tell you?
As intoxicating as the thrill of new information can be, it’s important to note that all data has its limits on what it can tell you. While pricing trends, average sale time, and the number of homes sold can give you important information about a neighborhood, they can’t tell you everything.
According to Warschauer, you won’t find information on how to spend your weekend, where to go grocery shopping, or the distance to nearby parks. He says, “Buying a home—and the preferences they have for that home—is different for everyone.”
Many people ask themselves where they want to settle down, which in turn affects how they live in their community. As Warschauer puts it, “The neighborhood you live in is as important, if not more important, than the home you live in.”
So, if you’re lucky enough to have found a neighborhood (or neighborhoods) that you think you could call home, we hope you’ll use this data to your benefit during your homebuying process.