In the news and online, we hear and see a lot of statistics and info regarding Real Estate.
How do I know if this market is something I want to get into or get out of?
When gauging the price on your home to sell or homes you want to buy... what are the statistics that you should use... Macro or Micro?
What is the definition of Macro and Micro?
Marco: Large-scale, overall
Micro: Small scale, detailed
The news, magazines, and headlines use Macro numbers to cover a whole territory.
Example: The price increase in Canada is ___%.
As a professional, that is a hyper-macro number and truly should only be used by the public as a number to PEAK INTEREST. It is too broad to base any idea of sale price on your home, as it covers hundreds of different markets, and bunches them into one.
Unfortunately, I often hear people basing their hopes and dreams of their sale price on these numbers, and that can be dangerous. The true numbers can be higher or lower. This number is good for you to dig deeper and see what's happening in your market.
The news and even a Realtor's monthly newsletter will have city statistics of sales and average sale price. This covers all the local viewers. This, I would say, is Macro, and closer to the truth but still dangerous to base the value of your home price off of. It's a quick general snapshot of how HEALTHY the city is and how the general demand is in town. But these should be partnered with your Micro numbers...
(Note: Also, time is judged in macro and micro... headlines will say ___% increase/decrease in home prices in the last year. Those are old, broad numbers. Micro numbers would be the last 0-60 days).
Neighborhood sales of similar homes are extremely valid micro numbers and need to be used to determine market value. Specifically, the most recent sales and active listings.
BIG TIP: If you see a property is on the market longer than the recent sales, you need to understand that it is overpriced. This could be that the market is changing, or the features, size and condition of the property do not match the price buyers are willing to pay. In EVERY market, there are listings that don't sell because they are overpriced.
That's why it's important to determine market value on the selling price, and not the listing price. Anyone can list a property at their price, but only the ones priced well will sell.
Overall, let the Macro numbers get your attention and dig deeper with a professional to find the Micro numbers. As a Realtor, I also know the behavior of the buyers in the market and the strategy needed to acquire and/or sell a property with the greatest value for them. These qualities cannot be quantified in data until the result is completed. But I use both, which brings success to the client.
Does all that make sense? :)