Two Numbers That Tell You Your Real Local Market

By Gregg Tepper

I have been married to my wonderful wife Letha for 30 years. We have 3 children: Max, Alexander and Charlotte. I have been a licensed Realtor in the New Orleans area for 21 years and am the Operator of The Tepper Group with Keller Williams Realty in Mandeville. Our team services the entire New Orleans and Baton Rouge metro areas. Our team of partners has well over 70 years of experience. In the last 2 years we helped 269 families buy, sell and lease homes, land and commercial investments.

Something is happening in real estate that’s leaving many people stuck. In much of the country, home prices are still climbing, yet buyers suddenly have room to negotiate that they haven’t had in years.

Normally, those two things don’t happen together, and it’s why we hear the same questions every week: Did I miss the boat? Should I jump in now, or wait? Everyone wants a simple yes or no, and the honest answer is that there isn’t one, because the market you keep hearing about on the news isn’t the market you’re actually buying or selling in.

Let’s clear up the confusion and give you a way to read what’s really happening where you live.

Nationally, we’re not in a buyer’s market; we’re drifting toward balance. That’s a real shift from the last few years when sellers held every card, but it isn’t the same as buyers taking over. Home prices are still up on average, approaching 2% nationally over the past year.

In some places, sellers are still landing great prices; in others, buyers genuinely have the upper hand. It all comes down to where you are, your region, your state, your city, your neighborhood. Real estate is a hyper-local event, and general market news is, by definition, general. It says almost nothing about what’s happening on your street.

So how do you cut through the noise and read your own street? Two numbers do it, and once you know them, you’ll never lean on a headline again.

The first number is the absorption rate, which tells you how long the market would take to clear. Take all the homes for sale and the pace of sales over the past six months, and you get how many months it would take to sell off the current inventory. Nationally, it’s about 4.6 months, which is balanced.

Under four months leans toward a seller’s market; roughly four to six is balanced, with neither side holding a clear edge; and more than six tips toward buyers. But there’s a wide gap between seven months of inventory and fifteen. At 15 or 20, buyers can truly pick and choose and negotiate better terms, though even then a seller isn’t obligated to sell to you. Motivation, finances, and emotion still drive every deal, which is why real estate stays hyper-local and hyper-emotional, even when we tell ourselves it’s all logic.

Around our Southeast Louisiana metro, from New Orleans and Metairie to Baton Rouge, Ponchatoula, and Mandeville, absorption rates swing widely by area and by price point. That’s the whole point: the national number is just the backdrop.

The second number is the pending ratio, which shows current demand. Absorption rate looks backward: how long inventory would take to clear based on past sales. On one hand, the pending ratio captures today’s activity. Take the homes for sale in an area and look at how many are already pending.

If 20 are listed and 10 are pending, that’s a 50% pending ratio: strong demand, and a good spot for a seller, less so for a buyer. If only two of the 20 are pending, that’s a 10% ratio, a sign of softer demand, where a buyer has more sway and a better shot at a deal. And read it tight: ZIP code, subdivision, or price range for a specific area, not the whole city.

As a team, we look for a pending ratio of at least 30%. When we see 30% or better and a home looks good, smells good, and is priced right, that home will sell. Put the two together - how long it takes to clear inventory and how much demand exists today - and you can finally read your own market instead of guessing from a headline.

If you’d like to know what these numbers say about your specific neighborhood and price range, that’s exactly the kind of read we do every day. Call or text us at 985-218-5445, email us at TGroup@kw.com, or visit findnolahomes.com. Let’s look at your street, not the national news, and figure out where you really stand.