It seems every time we turn on the TV or read the news we are being bombarded with real estate news, information and statistics. Many times the headlines are misleading and give us a false sense of what is really happening in the real estate market. It is important to first understand exactly what the article means before drawing any conclusions. The following is an example headline I’d like to look at closely:
“Real Estate Sales Down 20%�
What does this mean? What sales are down 20%? New home construction or existing homes?
Sales are down from what? If sales are down from an all-time high they still may be strong historically speaking.
What time period are they down 20%? Last month? Last quarter? Last year? If sales are down for the year but have ticked up the last month or the last quarter, things may be turning positive.
Where are “Real Estate Sales Down 20%�? In your local market? Nationally?
Does this mean the sky is falling and the real estate market is in complete disarray? Does this have anything to do with the value of real estate or what properties are selling for? Many markets experienced a dramatic real estate boom the past 5 – 8 years. Homes were being snatched up with multiple offers far above asking price, builders couldn’t build homes fast enough to keep up with buyer demand. In many markets homes weren’t selling because there were no homes for sale. So real estate sales could’ve been down 20% not because it was a bad market but because there was no available inventory to buy. A quick look at the price appreciation would have shown this. If you have “Real Estate Sales Down 20%� over the last year but prices are up 40% that tells a completely different story. To me that would be very good news and tell me there is great demand for homes and prices are on the rise.
Most of the time a thorough reading of the article will answer all of these questions, but if we don’t read the entire article, we will just assume bad things are happening and that is not always the case. We need to make sure we understand these headlines and these articles so we don’t get a false sense of what is really happening in the market.
Posted by Carter Brown
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