We are constantly looking at data in regular (and unique) ways to spot trends and keep a tight read on the market. It’s just a matter of course for being in this business. Normally, this data is only internal, guiding us on where to concentrate efforts and in general staying close to tiny reverberations in the market. Imagine us passing around these spreadsheets and talking about findings in meetings. (We know how to party.)
We had the idea to externalize some of this data and share our methods and findings with the public in an effort to be more transparent with the trends we are seeing.
Highlands Snapshot Data
During the week of June 7 – 13 we collected data in Highlands above 26th, which was an effort to keep the four quadrants of Highlands (Berkeley, Highland, Sunnyside, & West Highland) relatively the same size. We looked at current listings, historical home sales, agency market share, and dumpsters. That’s right, dumpsters.
All content is linked from this page, but we will give the headlines here, and you are welcome to click deeper if you like to dork out on this stuff as much as we do.
Just to disappoint right from the start, we don’t know yet. We collected this data in Highlands, and we are watching the 60 homes that are currently being remodeled and seeing how many of them come on the market and how long it takes them to reach market from the time a dumpster appears. But to satisfy some cravings…
We found that of the 60 homes being remodeled and with dumpsters in front of them, 68.3% have not had a change of title in more than two (2) years. And 51.7% of them have not had a new owner in seven (7) years or more. What is significant about those two numbers is that there is a fairly severe capital gains tax if you sell a home with less than two years of occupation, so our thinking is that a remodel happening within two years is the remodel the homeowner was intending from the beginning and unlikely to be a flip. The seven year significance is just some dirty math that, on average, people move every seven years. So if a home is being remodeled and it hasn’t had a change of title in more than seven years, our hypothesis is that this home is destined for the market.
We are watching and eager to see what happens, but if we are close on this one, we might have found an additional leading indicator of home sales, which is a critical piece of data in this tight market.
The collection of our dumpster data led us to notice a curious thing: there were a lot of listing agencies we had never heard of. Like, a lot a lot. We made note of them during our exhausting drives up and down every street in Highlands. When we got back to the office, we looked it up.
In Highlands, one June 11, there were 91 residential home listings, and those listing were being represented by 66 different agencies. We pulled data from Highland home sales in June of 2010 and 2017 and found that the number of listing agencies had risen by 69% in that time span from 61 to 103, respectively. Further, the agency with the largest market share in 2010–RE/MAX Professionals–had 22%, which had fallen by 85% seven years later, having listed 52 homes in Highlands in June 2010, and just six (6) in June 2017. (Only had three (3) listed thus far into June 2018.)
Traditional agencies have become a victim of their own greed, watching real estate values skyrocket, the housing market restrict, and still requiring a high commission rate based on the value of a home and not the quality of their work. With their establishment of market rate for real estate agents, the amount of potential money at stake is too attractive, and many new players have entered the market and gobbled up traditional agency market share to the point where the largest player last June, Your Castle Realty, had a 5.7% market share with 11 homes listed.
It’s Wild Out There
If Highlands is just a subset of the larger market, things are very tight out there. Not many homes listed, less visible remodeling happening than we would expect in June, and about the average number of new builds (48) that we would expect. This should lead to these next cohorts of homes to get increased value with likely competing offers. We shall see.