About the HOME MARKET INDEX

Description:
The HMI is a proprietary index calculated to indicate the BUYER SENTIMENT to purchase. A higher number indicates a "seller's" market. A lower number indicates a "buyer's" market. A number close to zero (in most areas) indicates a fairly balanced market. This index is weighted heavily towards the "sale price over initial asking price" ratio. It shows the willingness of the buyers to pay more (or less) than the initial asking price.

In areas where the sellers tend to set an "conservative" initial asking price, the market balance index number tends to be higher than zero. Ex: Berkeley.

In areas where the sellers tend to set a "liberal" initial asking price, the market balance index number tends to be lower than zero. Ex: Santa Cruz County. This may happen when property market values are harder to determine, perhaps in areas where properties are non-homogeneous. (Urban area properties are fairly homogeneous - as with many tract homes).

What does it mean to the Buyers:

During periods when the HMI is high, you may see prices on the climb, and see more buyers at open houses. You may see multiple offer competitions on homes which are reasonably priced and show well. You may not have much room for negotiations. You may have to be courageous to offer more than the asking price. You must be ready to make an offer quickly. You will need to work with your agent to structure the offer which would be most appealing to the seller.

During periods when the HMI is low, you will see more homes on the market and you will have the luxury of choice and time. You may even have room to negotiate on price and/or terms, including repairs, contigencies, and even financing.

What does it mean to the Sellers:

During periods when the HMI is high, you may see more buyers at open houses. If your home is reasonably priced and shows well, you can expect to see an offer more quickly than usual. You may see multiple offers from competing buyers. You will be more likely to be able to stand firm on your asking price and give in less to demands of repairs and financing requests.

During periods when the HMI is low, you may expect to see your home stay on the market longer, simply because there aren't many buyers in the market to purchase your home. Be prepared for buyers who expect you to be flexible with price and/or terms, including repairs, contigencies, and even financing. This is not the time to over-price your home. Take all offers seriously, your first offer could very well be the best you'll see.