[This week, our graphmaster Jonathan Miller introduces his very own real estate index, the Real Estate Urgency & Resolve Index, which tracks the relationship between buyers and sellers. He lays it out below. Click on the image to exand.]
Since there are a number of well-known consumer related indexes often quoted?confidence, comfort, and sentiment?as well as a lot of crazy indexes like Tall Latte, Big Mac, and Living Extremely Well, I thought it would be neat to come up with an index looks at the relationship between buyers and sellers. I am not aware of such an index, so I decided to make one up in a very non-academic way. Lets call my effort the Real Estate Urgency & Resolve Index for the sake of argument (REURI).
I don't believe there is one specific piece of actual data or index that tracks buyer and seller attitudes so this chart is completely subjective. I basically looked at the intensity of buyer and seller behavior from our firsthand experience and rated each quarter time period on a scale of 1-10 (note the period where 10 is exceeded) and deemed 4-10 the normal range of behavior.
Some key definitions:
· Buyer Urgency: How badly does a buyer wish to purchase a home?
· Seller Resolve: How firm is a seller on their list price and how realistically are they pricing it?
· Zone of Rational Behavior: The range (4-10) that "normal" real estate activity between buyers and sellers normally operate within. Even within the zone, there is plenty of irrational behavior but that in and of itself is "normal."
The gap between buyers and sellers is wider than ever right now which has translated into a lower number of sales. Sellers are slowly catching on to market conditions but have a ways to go. Buyers just recently seemed to be a little more interested in purchasing than they were in the past year but have a ways to go. Perhaps falling mortgage rates and gasoline prices are starting to have an impact.
· 'Buyer Urgency' vs. 'Seller Resolve' [Miller Samuel]