Using Statistics to Gauge Consumer Confidence
Look at these 7 data points:
Average days on the market
New on the market
Total available homes for that marketplace
Expireds, Withdrawn, Canceled
Bonus – Back on the market How can we use this data? To gauge consumer confidence!
Definition: Consumer confidence indicator provides an indication of future developments of households’ consumption and savings, based upon answers regarding their expected financial situation, their sentiment about the general economic situation, unemployment and capability of savings.
An indicator above 100: Signals a boost in the consumers’ confidence towards the future economic situation, as a consequence of which they are less prone to save, and more inclined to spend money on major purchases in the next 12 months (aka purchase a house).
An indicator below 100: Indicates a pessimistic attitude towards future developments in the economy, possibly resulting in a tendency to save more and consume less.
Listing put back on the market indicate confidence in the market.
Last week – 7. This week – 18. Increase of 157%
List price to sales price ration.
Sept: 99.2% Oct: 98.7% Nov: 98.2% Dec: 97.8% Jan: 97.3%
Sellers are willing to take 2% less of their asking price this month than they were just a quarter ago. Their confidence has waned...leading to an opportunity. We are looking for a home between $375,000 to $400,000. That potentially allows us to expect an $8,000 savings based on consumer confidence.
Bottom Line: Take time to understand consumer’s confidence and use it to your advantage.