We can’t say it enough. It is so important to truly understand the state of your market. Understanding the market data will help you educate your clients and prospective clients and it will help you build confidence in your work. Plus, it’ll make you good at your job.

There’s a lot here, but everything is important for being good at your job. Scroll below to find:

1. The bare minimum you need to know to understand and explain the market.
2. Knowing the difference between average and median
3. Figuring out year-over-year change
4. How to use all of this amazing information
5. How to use the MLS daily

The Bare Minimum of What You Need to Know (and what you need to be able to verbalize to people)

• Average Days on Market
• Average Home Prices
• Median Days on Market
• Medan Home Prices
• Year Over Year Change in the Market (formula below)

When you niche down, you should not only know the stats of the market as a whole, but know what’s happening in that niche. In your MLS, you’re able to do a deep dive search into all sorts of things, so you can get as specific as possible.

*Pro Tip: if you don’t fully understand all of the power of your MLS data search, reach out to your brokerage for help – remember you’re paying them so they need to be able to help you get exactly what you need to succeed.

What to Know about Average and Median

Averages, especially in an entire market like a city or a county, may not always be the best way to analyze what’s actually happening day-to-day on the ground. Averages will have very expensive homes and very inexpensive homes in the mix. The homes in extreme price ranges will often have longer days on market. These extremes in both price and days on market will skew the data. Averages are good at looking at overall trends in a market, but if you’re trying to tell the story of what is happening on the ground, you’ll want to look at the median pricing and median days on market.

Median is the halfway point. This means that when you find the median price, half of the homes sold fell below that number and the other half of the homes sold for more than that number.

Median can also dramatically change your day on market number and this is where you can really help prepare yourself and clients for what’s going on. Let’s take a look at examples from our market here in Nebraska.

Pulling our MLS data, I found the following information about the year so far:

• Average Home Price: $267K
• Average Days on Market: 19
• Median Home Price: $237K
• Median Days on Market: 3

Notice how big of a change median days on market makes. From this data, I can tell my audience that half of the homes in our market are going under contract in three days or less. Half of the homes sold are going under contract in under 3 days.

If I just looked at the average days on market, then I would be telling people that we had about 19 days for homes to go under contract. That would make me act more slowly and make my clients miss out on homes. Knowing that we’re actually closer to three days or less means I know we have to get going quickly to snag homes.

In this case, understanding the median changed the entire narrative and our actions. You can see that the average and median home prices weren’t insanely off, but it’s still important to know the difference between the two and when to use them.

How would we talk about the difference here? If you have clients who are going to buy a home for $225K, they may see that average prices are over $260K and get discouraged. But, we know the median so we can tell these worried buyers that they don’t need to worry. Half of the homes sold this year fell under $237K.

That means there are plenty of homes in their price range – they haven’t been kicked out of the market because of their budget. Now you have very relieved buyers and you were able to give them that piece of mind because of your deep understanding of the data! Great job!

Year-Over-Year Change Formula

Knowing how your market is change year over year can help your clients make decisions about when they want to sell, when they want to buy, and where they should buy.
You can use this simple formula to find appreciation (or depreciation) rates. This can get interesting when you’re looking at rates in individual neighborhoods. It can really help you understand where the up-and-coming or hot neighborhoods are.

1. Find the average price of the area from the most recent year.
2. Find the average price of the are from the previous year.
3. Find the difference between the two.
4. Divide the difference by the previous year amount.
5. Multiply that number by 100 to find the percent.

Now let’s see it play out with real numbers.

Average Home Price in 2021 – $267K

Average Home Price in 2020 – $234K
267 – 234 = 3333/234 = .14 (rounded).14 x 100 = 14%

Final Answer: In a year, this market’s average appreciate rate was 14% (these are real numbers for our market in the first two quarters so WOW. Much of the country is seeing these kinds of rates now).

*Pro Tip: If a client asks you that inappropriate question of “is this a good part of town”, you can direct them to these numbers and say, “well, the appreciate rate is 5% here (or whatever it is) and the average in the city is 14%”. They should be able to make decisions on their own with data like that. You saved the day with data again! Great job!

How to Use All of this Knowledge

You will quickly become the authority on the market when you understand the data, and you need to show that off to your advantage. Here’s how:

• Post a graphic of market conditions monthly on social media. When you do this, make sure not to just throw up the numbers, you need to use the caption to create a narrative – a story – of the market. If you’re using median, explain to your audience how half of the homes are falling to one side or the other. You live real estate everyday, but remember not everyone else does so you need to talk in a not-so real estate wonky way.
• Include this data on your monthly newsletters/farms or e-newsletters. Because you are posting it monthly and sending it monthly, give different information in the different communications. If you include median home prices on social, then include the average on your newsletter. Or, keep the median on both mediums, but maybe give a little extra in the newsletter like the number of homes sold that month. (Or, maybe your newsletter/farm letter is for a specific neighborhood, and in that case, the information will be different anyways).
• Have amazing answers ready when people ask “How’s the market?”. They’re going to ask you so be prepared. An easy way to sound like the expert you are is to say something like: “It’s amazing! Homes are going under contract in a few days and homeowners are really seeing great appreciation rates. Exciting time!”.

You will not only be able to impress your audience with this info, you’ll also start feeling confident in your knowledge – nothing feels worse than being an agent who doesn’t fully understand how the market is going. Use this to your professional and personal advantage!

Grab our EDITABLE monthly market update social post Canva template here!

Before We Go – Remember To Check These Things Daily on The MLS

• New Listings
• Sold Listings
• Expired Listings
• Price Changes

This will help you understand what’s out there, what’s happening, and what you could sell (hello, expireds!).

Have questions? Send them to us! Email us at hello@unicornagents.com or DM us on Instagram @unicornagents!