What Do You Need to Know About Comps in the Current Real Estate Market?

Almost everyone in the industry, government, and media seems to agree that the market is “shifting” right now. What that means vary from one person to the next. Considering prices were skyrocketing and at all-time highs in the past few years, you’d think that meant prices are now coming down. What else could shifting mean?

Well, it doesn’t necessarily mean that prices are going down in your area or price range. It also doesn’t seem to be translating into a buyers’ market everywhere either.

Data and news reports shpw there are fewer houses selling, and it’s taking longer for them to sell in some areas than it has been in the past few years. But in many areas prices don’t seem to be falling. In some areas prices are stable or even increasing.

The shift is affecting the market differently from one area to another, and one price range to another, so you can’t go by nationally based data and reports. You need to rely on good local comps to determine the value of a house you’re selling or buying.

Here are a few problems with comps in the current market that you need to be aware of:

• There often aren’t enough of them. Inventory has been low, and continues to be low, so it can be tough to find 3 houses in each category of a proper analysis. Beyond that, it’s tough to find enough that are similar enough to a subject property.
• Might need to look back further than 3 months. It’s never ideal to look back beyond three months, but due to the low number of listings and sales, it’s often necessary to do so. Unfortunately, a house that closed within the past three months is often just a sign of what the market was like as much as 5 or 6 months ago, because houses take a month or two to close after being listed even if they go under contract right away. So that data is more proof of what the market was like before or early on in the shift.
• Won’t see “proof” of values shifting for months. To truly know if prices are going down, it may take a few months of purchases to tell the true tale.

In a shifting market like we’re currently experiencing, it can be difficult to find enough comps, or get a true feel for where the market is going, because it takes time for houses to actually close. So the data can lag a bit.

I'd be happy to share my experience and observations of what is currently happening in your area and price range.  It's still a good time to buy and sell!