In any commodity based marketplace there are two truths:
1) "All commodity markets, including real estate markets, are composed of two distinct groups of participants. First there is the group of participants who are able and willing to purchase the commodity --- the demand side of the market, which represents the consumers. Second, there is a group that is able and willing to produce and make the product available for sale -- the supply side of the market. There are distinct and often unique demand and supply characteristics for each specific real estate submarket." -Real Estate Market Analysis (Carn / Rabianski / Racster / Seldin)
2) There is an "under-supply / over-supply continuum" which exists within which are two potential extremes. One which signifies severe under-supplied market conditions and one signifying extreme over-supplied market conditions. Assuming this continuum exists, then within the continuum there is also a range which signifies a balance between supply and demand. At this point there is no upward or downward trend in property values. As market conditions fluctuate between the extreme ends of the continuum, prices will trend downward as prevailing pressure moves toward over-supply and, conversely, prices will trend upward as prevailing pressure suggests conditions in which the market place is under-supplied.
Market Pressure
-The quantification and tracking of real estate market pressure fluctuations within the over-supply / under-supply markeplacet continuum.
Real estate practitioners have long used metaphor in an attempt to describe prevailing market conditions. Ask a realtor "How's real estate?" and the responses typically revolve around the use of metaphors and vague generalizations.
ie: "The market is really hot", "It's really picked up" "It's really fast", "It's really crazy", It's going nuts", "It's booming", "I'm really busy" or if things have not been so great, "It's cooled off a bit", "It's slowed down a bit", "It's a bit quiet", "It's not so crazy".
In all cases, these generalizations are more a reflection of the realtor's own personal level of activity at that time. They don't speak to the condition of the real estate market in measurable, quantitative terms.
The Real Estate BarometerTM method of tracking the market views the marketplace through the filter of supply and demand statistics and absorption. We take an econometric approach to the market and understand the continuum between a marketplace which is over-supplied with inventory and one which is under-supplied, relative to prevailing demand.
Subject only to the availability of data, we compile and track raw data and express the market in quantitative terms within the context of a resale market classification system that consumers can relate to. While we can, and do, often express the market stats through a broader, general overview for each city, we teach participating realtors how to use "disaggregation" to re-define their real estate market by price range and product characteristics. Disaggregating their marketplace into smaller, neighbourhood, property class and price specific "sub-markets" sharpens their assessments and better serves the needs of their clients. ("Disaggregation" is a term used to describe dividing a larger general region (marketplace) into many smaller distinct sub-markets according to housing style, location, price, area, etc. It sharpens the analysis by segmenting the market into specific sub-markets.)
Commodity based markets are driven by economic conditions and collective consumer confidence levels. While understanding and tracking the marketplace at this deeper level is so incredibly revealing, the implications of influencing consumer buying and selling patterns with this information are far reaching, therefore, these services can only be offered on a "For Client's Only" basis through the licensed realtor affiliates within our network. Our realtors are hand selected by their experience and reputation and have the highest degree of personal integrity. Please review our disclaimer which outlines the limitations to our service.
