Composite Averages

Sacramento Metro Real Estate

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Intro

Using raw and monthly MLS data from 52 zip codes, an Average is derived for New, Active, Pended, and Sold listings, the average Cumulative Days on Market, and the average Median Price. The data for the 3 Counties is not part of these Averages.

From this “raw data”, my calculations result in the momentum of each Median Price, the ’10 Yr Mmm Average’ for each data item, ‘Supply’ (New+Active), ‘Demand’ (Pend+Sold), ‘Lean Score’ (long and short-term averages indexed for each data item), ‘Consumption’ (Demand/Supply), ‘Appetite’ (Pend/New), and ‘Turnover’ (Sold/Active).

Summary

This table shows the monthly and yearly changes to the computed averages in the latest month.

History

Critical data elements for the current month and each of its occurrence for 10 years earlier. The averages are shown to help describe how the current market deviates from average for these data items.

Lean Score©

The proprietary “Lean Score©” is composed of each tracked zip code (52), attempts to portray the market health, is not tracked to show trends, and uses Short Term and Long Term averages for each data element. Like a balance sheet, it shows a point in time.

Inventory

The real estate market was created to exchange “products”: money and houses. When a house is made available to prospective buyers, there is a response to that “Product”. That response can be shown by the current and historic data and the trends and shapes of those lines. An ACTIVE listing is briefly also NEW. When a seller and buyer enter escrow, the “Product” becomes PENDING. If that buyer and seller execute the contract, the “Product” becomes SOLD. The life of all “Products” (MLS only) can be seen in these charts and blurbs.

Median Price

Composed of each tracked zip code (52), with its calculated momentum, the average median price represents the shape and behavior of our metropolitan market. Time and research proves that NO zip code or area is immune to market swings. Some areas have higher swings and higher prices. The Average smooths out the anomalies and outliers. https://www.investopedia.com/terms/m/median.asp

12 mo EMA

The exponential moving average (12 month EMA) is a moving average that places a greater weight and significance on the most recent data points. Like all moving averages, this technical indicator is used to produce buy and sell signals based on crossovers and divergences from the historical average. Traders often use several different EMA lengths, such as 10-day, 50-day, and 200-day moving averages. These calculations use the frequency of source data – monthly, therefore 12 month EMA. https://www.investopedia.com/terms/e/ema.asp

Momentum

Showing the Median Price and its Momentum (Þ) together makes it easier to explain how crossing the X axis “warns” the investor that the momentum is triggering a possible action. Because Momentum is not perfect, there is a time lag and, therefore, lost opportunity to either gain more or lose less from the actual peak/trough to the crossing of the X axis.

Momentum

Commodity brokers put a heavy reliance on momentum for the underlying price change of the commodity they’re trading. It’s a year-over-year calculation depicting the direction and force of the price change. Maximizing your profits as a home seller requires the exclusive use of TIME to trigger your selling decision. https://www.investopedia.com/trading/introduction-to-momentum-trading/

Momentum Gain

Hindsight and math are beautiful when you prove you were right AND made a profit from being right. Using math and a commodity approach to buying LOW and selling HIGH, momentum would profit as shown with the math here.

Appetite

The data for New and Pending listings render this calculation called “appetite” for new residential listings for the month. If New and Pending are equal, it represents an eager demand. If New is less than Pending, supply will vanish if it continues.

Turnover

Active and Sold listings render this calculation called “turnover” of residential listings for the month. If Active and Sold are equal, it represents an eager demand. If Active is less than Sold, supply will vanish if it continues.

Consumption

Consumption is a simple calculation of demand and supply. Listings go from Active (New), to Pending, to Sold. From Pending back to Active means escrow failure. Supply is Active listings which grows by New listings and Demand is the depletion of supply by Pending and Sold listings.

CDOM

Cumulative Days on Market (CDOM) represents the number of days a listing spends ACTIVE until SOLD. The number of days PENDING are excluded from the CDOM number.

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Overview

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