“How Is the Real Estate Market?”
When asked how the real estate market is performing, many real estate agents will respond to that question with “it’s good, or “it’s okay”….and 99% of the time either of these responses are based on how their own business is doing.
In order to make a decision about if you want to sell your home, or if you think that you want to purchase a home, you do not want the status of someone’s personal business – you need market facts.
The status of a market (a balanced market, a buyer’s market, a seller’s market, or a strong seller’s market) is based upon specific factors, – which is what should be the basis for a real estate professional agent’s response when asked “How is the real estate market?“
The Market Action Index (MAI)
Let me explain more about what the status of a specific market really means.
The Market Action Index (MAI) is an indicator of supply and demand and overall market competitiveness; i.e. whether it’s a buyer’s or seller’s market, or if the market is heating up or cooling off. It compares the rate of sales vs. current inventory of properties for sale plus buyer demand metrics.
How to interpret the Market Action Index (MAI)
MAI in the low 20s or below is a buyer’s market, with more supply than demand and prices declining in the future.
MAI in the range of 30 indicates a balanced market, with just enough supply to meet demand.
MAI of 35 or more points to a seller’s market, with demand outpacing supply and prices starting to rise.
MAI of 45 or more is a strong seller’s market – inventory is very tight, demand is high, and prices are likely climbing.
Working With Market Segments
Watching trends by “Market Segments” is important – because the high end of the market may be behaving very differently from the low end. By looking at the data split into Market Segments, you can see how the market is behaving in different price ranges.
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