What are all the Statistical Terms?
There are a number of terms that are commonly referred to in Statistics. Here are some of the more basic ones.
Median and Average are two terms that are used the most frequently when referring to stats.
The difference is that the median number is the middle, where half the results are higher, and half are lower.
An average is where you have a set of numbers and take the total of those numbers divided by the number of items in that set.
In this first example: you have 5 homes with 3, 3, 4, 5, 5 bedrooms, the median and average are both 4.
In the second example, if you swap out one home for one with an extreme number of bedrooms the results start to vary. ie: 3, 3, 4, 5, 20 the median is still 4 but the average is now 7.
If you take these factors into real estate, it means that if you have a single house in your set of comparables, that is very different from what most of your homes are; the difference between median and average can be significant.
The conclusion is that when you have a set of properties it is always a good idea to check both the average and the median results and if they are similar it means that you have an excellent set of comparables.
Some additional terms that are used frequently are:
Month over Month (MoM) is what will compare this month to last month. So in a peak market time, this number will be a simple sign of the changing seasons (ie: May to June), however, if you are comparing from a slow month to a fast month, ie: December to January the results will be misleading.
Year over Year (YoY) will compare month or a block of months from this year to the same time frame of last year or back several years, ie: January 2020 with January 2019 and January 2018 to see how the same block compares over time.
Month to date (MTD) calculates the transactions that have occurred from the 1st of the month until the date you are searching by. It is a tough one as it is very dependant on the date when people enter in sales and makes these stats difficult to rely on.
Year to date (YTD) is a great indicator of the current year’s market from January 1 until the date you click on the result. A barometer showing how the current year is faring.
Days on Market (DOM) is simply an indicator that shows how long the current listing has been on the market with the current listing.
Cumulative Days on Market (CDOM) indicates the total time a listing has been for sale and will continue counting from a previous listing if the property was relisted within 45 days of the previous listing expiry.
Inventory is a basic number that will report the number of listings that are on the market at a specific point within specified search parameters.
Months of Inventory is a statistical result that will show a number that is based on the current rate of sales, and how long it would take for the market to “sell out” if no additional listings would be added. The higher the number for “Months of inventory” indicates a buyer’s market and a lower number indicates a seller’s market.
Sales/Listings Ratios is an indicator that can be used to determine a Buyers/Sellers or Balanced market. If the number of listings being sold and added every month is equal that will be a Balanced Market, however, if there are more listings being sold than being added that indicates a seller's market and of course, the contrary is also true that if more listings are being added than sold it means a buyer’s market.
Sale to List price ratio is an indicator of how close to list price the homes are selling. The closer to 100% this ratio is would indicate that the homes are selling at the list price. This would be very evident and very area-specific and show some very clear indicators of how the market is doing in one region compared to another.