How to Read Real Estate Market Data Like a Professional
Days on market, price-to-list ratio, absorption rate — what they actually mean and how to use them to make better buying decisions.
Most homebuyers look at two numbers: the list price and the Zestimate. Professional investors look at a dozen metrics before they make a move. Here's how to read real estate market data the way the professionals do.
Days on Market (DOM)
DOM measures how long a listing sits before going under contract. It's one of the most real-time indicators of market health — it reacts to demand changes within weeks, while median prices can lag by months.
Under 14 days: Extremely competitive. Offers are typically above ask, inspection contingencies are being waived. Over 45 days: Buyer has leverage. Price reductions are common and negotiation is possible. 14-30 days: Balanced market. Standard contingencies, some negotiation room.
Price-to-List Ratio
This is the percentage of homes selling above vs. below their list price. When more than 40% of homes sell above ask, it indicates a supply-constrained market with active buyer competition. When fewer than 10% sell above ask, sellers have lost pricing power.
Months of Supply
If no new listings came to market, how many months would it take to sell everything currently listed? Under 3 months is a seller's market. Over 6 months is a buyer's market. 3-6 months is balanced. This is the single most important metric for understanding negotiation leverage.
Price Drop Frequency
The percentage of active listings with at least one price reduction. This is a leading indicator — it shows up in the data before median prices start to fall. When this crosses 20%, sellers are chasing the market. When it's under 5%, sellers have full pricing power.
Year-Over-Year Price Change
The most commonly cited metric — and the most lagged. YoY price change reflects what happened over the past 12 months, not what's happening now. Use it for context, but weight it less than DOM and price drop frequency when making current buying decisions.
PropIQ™ weights all five of these metrics and combines them into a single score, calibrated for predictive accuracy rather than simplicity. That's the difference between describing a market and actually understanding it.