This week has been about numbers – 00 for us in Victoria and 270 for the US.

Numbers – I love numbers. And I miss Bidderman, no not Bidenman, Bidderman.

Bidderman is a simple and almost foolproof number, a statistic developed a decade ago that shows the depth of the Inner Melbourne property market.

Why is market depth important? It foretells the immediate future on price trends.

Why are pricing trends important? With pricing you are in part predicting the future and the more accurate you can be, the better the result can be for your buying or selling client.

Bidderman is the best measurement if done over a wide enough, random and unbiased sample, for indicating market depth which helps predict correctly, those short term pricing trends.

Yes clearance rates are also indicators of market depth, but they are not as accurate when they are calculated using voluntarily reporting by agents. Why? Agents are less inclined to report failed auctions as there is a perception that is not good for their business. It’s a bit like Donald on legal and non-legal votes – you know the ones that are for him are legal and those against are not. Same with some reporting – if it’s good news pass it on – if it’s not then don’t.

Back to Bidderman. On our past 100-auction test measurements, if we had less than 100 bidders, then obviously in time there would be a buildup of unsold stock. As stock levels rise, prices would ultimately drop, as supply exceeded demand. Here Bidderman would be under 1 bidder per auction or < 1.0.

If you had say 180 bidders across a reasonable enough spread of home types in those 100 random auctions, then the market was healthy and solid and probably steady and possibly looking to rise gently. Bidderman was 1.8 bidders per auction.

Why Rise? Demand and Supply yes, but it’s accentuated by the phenomenon we term “wounded underbidder” – the runner up or runners up will through human nature, due to a shelter need, go harder in the bidding next time on a home. As more and more wounded underbidders go harder together, a wave of more frenzied bidding leads to a rapidly rising market.

When Bidderman was over 2 and sometimes over 3 (regularly in 2015 and 2016) then we were in a rising to “on-fire” market.

When street auctions are numerous and public, the reverse can happen when enough buyers see less than stellar results. As a herd their gumption for “go hard” diminishes, as they think there will be another around the corner or they feel not overpaying is more important than securing a home, that in the falling market they could now afford.

Currently in between lockdowns and zooms AND with a lot of homes off market (hidden), rather than on market (on internet), it has been very hard to assess the depth of buyers in what we said a fortnight ago was a “mini-boom”.

Why? No Social Proof. No Bidderman Stats.

Most in real estate, including us, have been championing the bigger results of the last few weeks. Why? They are facts.

The market is having a lot better time of it, than pundits were predicting.

Here are some more this week:

Brighton – Wellington St – Nick Johnstone – Sold circa $6.5m

Camberwell – Kintore St – Geordie Dixon and Mike Beardsley – Sold $400,000 above reserve – circa $7m.

Canterbury – Bryson St – Nick Franzmann – sold $400,000 over reserve – circa $4m

In the last few weeks, partially due to Santa getting closer and partially due to good news spreading, we have seen more and more sellers take the plunge and go to market.

As well we have seen a substantial increase in buyer action, long diaries for agents full of one on one inspections and yes, the occasional good ol’ fashioned Volcano auction (4+ bidder auctions). I miss Volcanoes too, hopefully we will see more on the street soon.

So between now and Santa it’s going to get very, very interesting.

How will this market go with more substantive stock levels and with some “early out of lockdown” buyers satisfied?

In Movember and December, with stock depth, home choice and more public auctions, will we see matching buyer depth with more bidders than homes or will we see more homes than bidders?

The Bidderman stat – this simple number < 1 or a lot more than > 1 will foretell price trends for the remainder of 2020 and for the early markets of 2021.

Standby Bidderman.

Standby for Depth or not.

Footnote: Whilst we say clearance rates are not a panacea on the market, they can give a measurement of spread. Ideally it’s Bidderman for depth and Clearance Rates for spread, combined that give you the best indicator of markets. But I digress.

First week(s) of lockdown (early October) we randomly selected the 100 homes over a $million in our areas of Bayside and Inner East that went to market publicly.

We stored them away on a spreadsheet and this week we revisited each and every home on that spreadsheet, to see if they had sold or not.

The result was a healthy 52 of that 100 had actually got to market and sold.