So, you live in a great little neighbourhood, a pocket of land that is surrounded by other neighbourhoods built before and after. You want to know how your home value us doing , but those homes are very different.
How do you truly understand market performance of that neighbourhood to truly relate it to comparable properties, when your closest benchmarks are a very different build and age?
Well, first of all, those other areas will tend to “bracket” your neighbourhood. The newer homes that are much more up to date, will set an upper limit to your area… If someone can get a newer larger, more up to date home, the least expensive of those (in good condition) will attract buyers to that area, limiting how far your home can be upgraded to compete.
At the other end of the scale, are those older homes that have less features e.g. no garage or separate garage, older builds with lower ceilings, older trim, older kitchens, baths, visible utilities instead of buried hydro electric, phone and cable lines. No matter how those homes are upgraded, (unless it’s a teardown and completely new home built) that will tend to set the lower limit for home pricing in your neighbourhood.
So we’ve built a bracket of pricing… But what about similar homes, same era, same styling… Without a lot of sales data it’s a bit tougher to find where your home sits compared to other recently sold homes. Unless…
You compare it to an area that has a significantly larger number of homes built of the same style and vintage in an area that’s not too far away.
Here’s an example of this… In this chart, all the individual sales of homes in a small neighbourhood are plotted since 1987, with red markers. The list price is plotted with blue markers. Added to each a trend line that is looking at these values can determining where pricing generally is following.
Next, the sales for a much greater area in the same municipality (Oakville in this instance) is plotted. These homes are similar styles, built around the same years (Mid 80’s) and shown in green with it’s trend line.
From this plot I can see where homes listed in the small area, compare to the market in a large area and truly understand how to validate any pricing chosen against real time market data. We can also see the market trend using this, and other tools, such as daily sales (below) to know what’s happening.
Seems like a lot of work to truly understand a home’s value? It is! To accurately estimate not only what your home is worth, but where the market is heading, takes a professional that understands how to filter, analyze and read the data to give you a realistic suggestion as to what your home should list at, to get an expected sales value in a reasonable amount of time.
It’s just one of the many things a professional will do, to ensure they know not just where to value a home you’re looking to buy, but one you’re looking to sell.
Want to know more? Let’s talk…