Counties – Emerson Real Estate

Sacramento Metro Real Estate Market

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Intro

Using raw and monthly MLS data from 3 Counties (Sacramento, El Dorado, Placer) for New, Active, Pended, and Sold listings, the average Cumulative Days on Market, and the average Median Price. The data for the Composite Average is for the 52 zip codes, not these 3 Counties.

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).

Geography

The 3 Sac Metro Counties are tangent to each other and represent different demand and supply levels.

Summaries

Supply and Demand render Median Price which has a momentum.

History of This Month

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. (The current year is not included in averages.)

Median Price

The ‘Median’ Price means half of Sold prices were lower and half were higher. The other popular measurement is the ‘Average’ Price. Using the ‘Median’ eliminates the effect of outliers on a meaningful measurement. The Momentum and the 12-month moving average (12MM), both based on the Median Price, help predict future changes and indicates possible investment actions. Momentum detects changes in the rate of change from month to month and therefore moves before the Price change is evident. The monthly Price change pulls and pushes on the Moving Average of the Price. For highly variable prices (e.g., Loomis 95650), Momentum and the MA of the Price is more difficult to translate.

12MMA

The 12 Month Moving Average is a ‘trailing indicator’ of the Price 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 its relation to the Price changes it is measuring. Traders often use several different EMA lengths, such as 10-day, 50-day, and 200-day moving averages. Investment analysis usually uses data with a 1-day occurrence. Real estate data, although happening daily, is reported monthly. Therefore, these calculations use the frequency of source data – monthly, therefore 12 month MA. 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. https://www.investopedia.com/trading/introduction-to-momentum-trading/

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. If the seller actively removes their listing, it is CANCELED. If the listing period comes to an end, it is EXPIRED.

The life of all “Products” (MLS only) can be seen in these charts and blurbs.

The data for New and Pending listings render this calculation called “appetite” for new residential listings for the month.

The data for Active and Sold listings render this calculation called “turnover” of residential listings for the month.

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. Combining the Median Price momenta from each County and the Average Median Price momentum (zip codes comprise Averages), aggregate market changes are more apparent.

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. Maximizing your profits as a home seller requires the exclusive use of TIME to trigger your selling decision. Momentum Gain is the paper (or realized) gain if momentum triggered all sell and buy actions. This gain would require perfect response to triggers and no “push” to sell other than the momentum triggers.

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.

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.

Defined

Charted are 11 data elements: New listings, Active listings, Pended listings, Sold listings, Canceled Listings, Months of Inventory (MoI), Cumulative Days on Market (CDOM), Median price, Median price momentum (Þ), Appetite, and Turnover.

The ‘short term’ average (10 year) and the ‘long term’ average (~25 year) are tracked for each data element.

The variance between the current value of each data element and its ‘short’ and ‘long’ averages are calculated.

A positive “Lean” value (leans toward Seller) and negative value (leans toward Buyer) for a data item will be interpreted in different ways for each data element.

Inventory of houses most certainly grows and does not recede over time. I’ve known a house to decay and become uninhabitable but never dead.

When the Lean score for
- New listings leans toward
  - Sellers (positive), it means the number of current New listings is low and not adding competition to a Seller’s population of buyers thereby giving Sellers more leverage.
  - Buyers (negative), it means the number of current New listings is high and growing the selection and competition in the market for homes, giving buyers more leverage.
- Active listings leans toward
  - Sellers (positive), it means the number of Active listings is low and not providing competition to a Seller’s population of buyers.
  - Buyers (negative), it means the number of Active listings is high and provides the selection and competitive market that gives buyers leverage.
- Pended listings leans toward
  - Sellers (positive), it means the number of Pended listings is high and removing competition from a Seller’s population of buyers giving sellers more leverage.
  - Buyers (negative), it means the number of Pended listings is low and giving sellers possible motivation to reduce prices, thereby giving buyers more leverage.
- Sold listings leans toward
  - Sellers (positive), it means the number of Sold listings is high, reducing competition and making it much more probable that Sellers product will soon sell, giving Seller more leverage.
  - Buyers (negative), it means the number of Sold listings is low, maintaining pressure on sellers to reduce prices.
- Months of Inventory (MoI) leans toward
  - Sellers (positive), it means low, good for Sellers
  - Buyers (negative), it means high, good for Buyers
- Cumulative Days on Market (CDOM) leans toward
  - Sellers (positive), it means low, good for Sellers
  - Buyers (negative), it means high, good for Buyers
- Median price leans toward
  - Sellers (positive), it means high, good for Sellers
  - Buyers (negative), it means low, good for Buyers
- Median price momentum (Þ) leans toward
  - Sellers (positive), it means high, good for Sellers
  - Buyers (negative), it means low, good for Buyers

Distressed

When home owners become under-paid, unemployed, and over-burdened, houses can be foreclosed or be sold “short”. This chart shows the volume of “distressed” sales in our 3 counties. A foreclosure frequently becomes an REO (Real Estate Owned) and to avoid foreclosure, sellers can sometimes be allowed by their lender to sell “short” of the loan balance.

Peaks

In the month, these zip codes had changes resulting in a new high or a possible swing to a lower direction.

These are the zip codes that hit new Median Price highs in the month.

These are the zip codes where the Moving Average (EMA) exceeds the Median Price. This is a sign of decreasing prices.

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Averages

Momentum

Counties

Zip Codes