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How to Answer: "What's going to happen in the real estate market?"

By Mike Simonsen on August, 16 2021

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Mike Simonsen

A true data geek, Mike founded Altos Research in 2006 to bring data and insight on the U.S. housing market to those who need it most. The company now serves the largest Wall Street investment firms, banks, and tens of thousands of real estate professionals around the country.

So you've got the market data you need, and you're ready to answer questions from both buyers and sellers – fantastic. One of the most popular questions we get is what will happen in the market – so let's look at how we can respond.

There are several signals in the data we can look at to gauge the future: MAI, price decreases, and price of new listings. You can also look at the seasonal rhythm of the market to provide guidance.

Market Action Index screenshot-1

A few example observations you could gather from the data may include:
  • “We’re seeing a MAI of 40, and it’s climbing - this means it’s a strong seller’s market and it’s getting stronger.”
  • “A normal market might have 35% of homes taking a price reduction before they sell - we’re at 40%, which indicates that demand is a bit weak and prices should fall in the future.”
  • “We’re at about 25% price reductions, which is quite a bit lower than usual - this means demand is high, and homes are moving quickly and are probably getting multiple offers. I would anticipate that transaction prices will stay high for at least the next several months.”
  • “You can see that the price of new listings is climbing - this means listing agents see strong buyer demand. I would expect this trend to continue for at least the next few months.”
  • “We’re almost at the peak of the buying season - things will start to slow down later in the summer and into the fall.”

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