How to Read and Interpret Real Estate Market Data

Successful real estate investors make decisions based on data, not gut feelings. Understanding how to read market data gives you an edge over investors who rely on anecdotes and local rumors.

Median sale price is the most commonly cited metric, but it can be misleading. A rising median doesn't necessarily mean homes are appreciating — it can also mean the mix of sales has shifted toward higher-priced properties. Look at median price per square foot for a more accurate picture of price trends.

Days on market (DOM) measures how long it takes a property to sell from listing to contract. Rising DOM indicates cooling demand, while declining DOM signals strengthening demand. Track DOM by price range — the $200K–$300K segment may be hot while the $500K+ segment cools.

Months of supply (inventory) is the most reliable indicator of market direction. Under 3 months is strongly seller-favored (prices rising), 3–6 months is balanced, and over 6 months favors buyers (prices flat or declining). Calculate this for your specific price range and neighborhood.

List-to-sale price ratio reveals negotiation power. A ratio of 98–100% means sellers are getting asking price. Below 95% indicates buyer leverage. Above 100% means bidding wars. This metric directly impacts your flip pricing strategy.

New listings versus closed sales shows momentum. When new listings exceed closings, inventory is building (bearish). When closings exceed new listings, inventory is shrinking (bullish).

Mortgage rates affect buyer purchasing power and demand. A 1% rate increase reduces buying power by approximately 10%, which can lower your ARV. Monitor rate trends and factor them into your ARV estimates for projects with longer timelines.