Interesting. I've heard others do this. How are you connecting the dots with this graph?
Literally or figuratively? :laugh:
I have a 1-page competitive market summary and a 5-page market condition analysis that I do. 5-pages may sound like a lot, but it isn't that onerous; I have a template in word, and the font size is large, so without the charts, it probably translates to 2/3rds typed narrative in the addendum of the 1004.
The market summary provides a map of the competitive market and a summary of the last 12-monts transactions in that defined market area. In my market, the vast majority of properties are transacted on MLS, so the data is from MLS. I provide high, low, average, and median data points of the sale price, GLA, lot size, age, and DOM. Sometimes I'll expand it to include bed/baths if that is relevant to the assignment.
So, the market summary gives the reader a snapshot at a glance: here is the market area and here is the market transactions summary. BTW, I use this data to complete my page 1 high-low-predominant sales and age data for the neighborhood.
The 5-page market conditions starts with a paragraph that summarizes my findings (market is stable, increasing, decreasing, etc.). On this page I include the unemployment rate graph from the FED and comment how housing values are directly related to unemployment rates; I make a comment on the current rate for the county (unemployment has generally been falling since the beginning of 2010).
The next two pages I put information from a paid data source (Altos Research). I provide a 6-year and 12-month chart of the $/SF trend for the city of zip code where my subject is located (depending on the market, I'll go with city or zip code). I'll also provide a 12-month chart of the median price trend and make whatever comments I think are appropriate (usually describing the predominant trend or YOY changes).
On the third page, I provide a chart that I construct using MLS data. It trends sale price and size of home over time. Sometimes, prices will go up but it may be related to the house-mix; likewise, a declining trend in price may be related to a smaller house being sold. The idea is to try to determine if an observed change in price is dependent on the change in house size or is independent of the size of house; if price and size are changing in tandem and correlated, I think that likely implies a stable value environment. If price is declining and size remains the same (or worse, size is increasing), then I interpret that as a declining market. I then summarize all the information and make my market condition conclusion (rising, stable, declining... and I'm not afraid to use terms like "moderately", "strongly", etc.).
The last page is reserved for your and my (Resguy) favorite topic: Non-REOs, REOs, and short sales. I provide a summary table of all the transactions (same count as in the neighborhood transaction) and then break-them out according to their status (REO, etc.). I include a pie chart for the closed transactions; that is a good "visual at a glance" for the reader to see if REOs and shorts are a significant part of the market. I also include the active/pending properties broken-down the same way (no pie chart) and provide an implied inventory-on-hand indicator based on the prior sales to current inventory.
In some markets the number of REOs and shorts are not significant, so I only make a summary comment. In others, they are significant; when they are significant, I include a scatter chart to show their price-distribution vs. time. This gives the reader a picture of where (in terms of price; and I know there are some shortfalls in examining only that aspect) the three types of sales are concentrated. As one would expect, in some markets, there is a distinct differentiation between the types of sales, with the non-REO/shorts typically selling at the upper end and the others selling at the lower end. However, in other markets, there is no differentiation, and based on price only, all three segments appear to compete equally with one another.
It takes me about 20-30 minutes to compile the data, do the charts and summary tables, and write the analysis. In addition to the collecting the data for the above, I know have the data in excel, and can do other types of trend anlysis (like providing support for a GLA adjustment, or evaluating location differences, etc.). And, obviously the trend analysis provides me with some solid support for making (or not making) market condition adjustments.
But, here is why I really do this: So I can understand (to my satisfaction) the dynamics of the market and I can (with confidence) make a adjustments in the grid and conclude results that may appear to be in conflict with the 1004mc. 30-minutes is time well spent (IMO).
