If you’re paying attention to the real estate news, you’ve probably heard multiple reports about the numbers in April 2013 that indicate an improving real estate market: new listings are up 17.4 percent over April 2012, although active listings are still at a five-year low. Sales are up 13.7 percent, the median sold price is up 4.7 percent over last year to $470,000–the highest in five years, and the average sold price is up 4.6 percent to $551,214. Average days on the market (DOM) are down 37.3 percent to 42 days on the market and the average ratio of sold price to original list price (OLP) is at a five-year April high of 99.5 percent
But what do these measurements indicate and what do their values mean?
Active Listings indicate the number of available properties at any given moment. This number has an inverse relationship to median sold prices and average sold home prices. Putting this relationship into a familiar concept-the law of supply and demand-you can state the relationship like this: When the supply of homes is high and demand is low, median prices and average prices are relatively low. These are the conditions of a buyer’s market. When the supply of homes is low and demand is high, median prices and average prices are relatively high. These are the conditions of a seller’s market. Right now, we are in a seller’s market in DC.
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