It’s not always easy to understand how the market sees a property, right? This is especially true for something unique. Well, let me share two things I sometimes do to pick up a deeper perspective on a property. Nothing replaces current data of course, but understanding how the market has historically responded to a home can be really valuable when sifting current trends.
1) Previous Sales: If a house has sold any time after 1998 on Sacramento MLS, you can do a search for other nearby properties at the time of the respective sale. If before October 2008, then use the “Archive” search feature on MLS (you can draw a polygon map there too). As an example, I was talking with a Realtor friend about a tricky property he was hoping to list, and after looking up the sales history for this house, I saw it had sold previously in both 2005 and 2008. There were very few recent sales in this custom neighborhood other than larger and more upgraded homes, so having two previous sales to research was like a gold mine to help answer questions like: What types of houses did the market see as comparable during the sales? What was the price difference between the subject and homes with uber upgrades? How much more did the market pay for larger-sized homes? Assuming there was nothing funky about the previous sales, this search can help give a little more context for historic neighborhood trends and even help support choosing the right comps today. Take this for what it’s worth and realize it’s just one more way to help gain a little more insight.
Example: The graph below shows two previous sales of a property in a particular neighborhood. How did the market respond to a newer property with less charm in an older area of Sacramento? What does the graph tell us? This might give us some insight for choosing comps today, right?
2) Past & Current Market: Secondly, if you’re been following trends, you’ve probably noticed current values in the Sacramento area are similar to levels somewhere around 2002 and 2009 (as the graph below illustrates). While it was unfortunate to see the market collapse in previous years, it’s actually useful from a data perspective to be able to compare current price levels to two previous time periods when values were similar. For instance, if you research sales around 2002 and 2009 in a neighborhood, you might be able to glean a better understanding of how the market has traditionally viewed similar properties or even value aspects such as location or size. This is also a bit of a check to see if your pricing is mostly in sync with trends or if you’re getting too aggressive by using 2005 price levels. Ultimately, this is only to gain more context, so take it with a grain of salt. Be sure to use caution too because not every neighborhood or property type is at the same historical value level right now.
Thank you Brian: By the way, I want to thank Realtor/Broker Brian McMartin for sharing some incredible graphs with me this week. The data geek in me was rejoicing when he sent over a stuffed Excel file of trends he watches closely to share with his clients. I made the graph above based on his information, and I really appreciate his generosity to share some of his hard work with me (and you). Click the thumbnail to the side to view one of his graphs.
Anything you’d like to add? What do you think?