Ask Denise: How to Measure Market Demand

Written by Posted On Tuesday, 30 June 2020 05:00

Q: Denise, I have been watching your weekly Denise Live and your Market Survival Guides. I want to take some of your ideas and put together a report for my past clients. But I noticed that when you talk about inventory, you indicate that to measure demand, we should look at homes under contract (pendings) and not solds. Why?

A: What a great question! Solds represents properties that were spoken for anywhere from yesterday to several months ago. To understand how many buyers are in the market at any given point in time, it is critical to look at new pendings as those are the buyers who are actively in the market and have raised their hands, indicating their intent was to buy most recently.

Let’s look at an example. Let’s say there are apples in a store and on average, historically, one apple was purchased per day. If there are ten apples at the store, then one apple consumed per day doesn’t put a strain on the supply of apples. But what happens if all of a sudden a lot of people come in and want apples? In fact, if there are nine people who buy an apple, only one apple is left. If another nine people come in the next day demanding apples as well as the day after that, should the produce manager base his or her apple order off what had historically been a low demand of apples at one per day or should the manager base the order off the current demand?

This is why looking at new pendings is so important when evaluating supply and demand and price.


Source: The Real Estate Zebra Blog

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Denise Lones

Denise Lones CSP, M.I.R.M., CDEI - The founding partner of The Lones Group, Denise Lones, brings over two decades of experience in the real estate industry. With expertise in strategic marketing, business analysis, branding, new home project planning, product development, and agent/broker training. Denise is nationally recognized as the source for all things “real estate”. With a passion for improvement, Denise has helped thousands of real estate agents, brokers, and managers build their business to unprecedented levels of success, while helping them maintain balance and quality of life.

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