Mar 9, 2012

Four Tips to decipher Real Estate Headlines

Real Estate Market Soars! Real Estate Market Dives! Both these headlines appearing within days of each other sure can lead to confusion.
These two articles recently appeared 1 week apart in the Wall Street Journal. No wonder people feel so uncertain and are confused if the market is up or down.

However, one headline tell us that prices are down and the other that the number of sales are up. Those are two different statistical looks at the market. Remember that real estate isn't a weekly roller coaster ride like the stock market. Real estate is local and long term.

Here is an example of where looking at sales can be deceiving: Let's say a couple of $2 million homes sold on Monday in Preston Hollow. Then on Tuesday, a couple of $500,000 homes sold in Preston Hollow. Would you assume that prices in Preston Hollow fell by more than 50%? Of course not. But statistically, the average sales price DID fall. That's why we look at the market over a long period.

Here are 4 tips to accurately determine what is happening in our local market:
  1. Look at the long term numbers. Like the example above, short term fluctuations are not an accurate gauge. Look 6 -12 months back to see the true picture. Even when the real estate 'bubble burst' in most of the country, it took months to see the change in the market.
  2. Consider the type of property. Many statistics look at just single family homes. However, many include condos and multi-family properties. The markets for these properties are different and so are the statistics. And commercial transactions are an entirely different animal.
  3. Keep it local. Are the numbers you are viewing national, state, metroplex, Dallas or neighborhood? While the market in other parts of the country affects us, it is only a ripple effect, not a tsunami.
  4. Figure out whether the articles are talking about prices, the number of sales, the amount of inventory, the average days on market to sell, or something else.
So what is the real estate market doing in Dallas right now?
  • Sales are up. That is the number of homes selling is up. A positive sign for the market as a whole.
  • Pending sales are up. Expect to see that reflected in next month's headlines.
  • Inventory (available homes for sale) is down. That will cause prices to start rising.
  • Prices have been inching up - not soaring and not down - inching up from the previous year. If you've been waiting for the 'bottom of the market'. It has passed.  [where: 75230]

1 comment:

HcoRealEstate said...
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