Trends – Trends – Trends – Customers and Clients both are always interested in “Which way the market is going?” I wanted today to write a short article on this and give you my perspective.
Many people tend to get caught up in real estate trends reported in magazines, newspapers and on television. This is a mistake in my opinion. Following trends is just that…
…FOLLOWING the market. To be a successful buyer of real estate you need to be in FRONT of the trend, not following the trend. This means you need to look at data at least 7 to 10 years old.
Why You Should Ignore Trends In Real Estate
In this modern Internet age, you can learn just about anything on Real Estate value trends.
While access to this information is usually a positive thing, but it can get a bit crazy if you get overloaded with it. Look long enough and you can find two pieces of information offering exactly the opposite views on a subject. Obviously, that doesn’t really help you make a choice.
In real estate, the information offered in the media is usually uniform across the National Media channels. For the last six or seven years, everyone with any brains at all has reported the real estate market has been slow. Since the crash of 2007, prices have fallen and tens of thousands of people have lost their homes to foreclosure.
Today, many of these same reporters or advisers are suggesting the market is turning around and in great shape. Some are even predicting another boom in the market.
As a potential buyer or seller, how should you evaluate the information being produce in the media?
The simple answer is you should ignore it. The problem with these reports is not the accuracy. Instead, the problem is they are reporting national trends in real estate.
National trends are great and all, but they have little or no application to your specific area.
Consider the following if you do not believe me.
The real estate market for the last few years has been reported as hot, hot, hot. In Colorado, however, the market has been flat throughout this time. If you were considering buying or selling in Colorado, the information being provided for national trends simply did not apply to you.
If you think Colorado is the exception, it is not. The state with one of the best comebacks in appreciation rates over the last four or five years, for instance, has been Texas.
Put in practical terms, this means homes in McAllen, Corpus Christi, San Antonio, Dallas, & Houston have not followed national trends. The only real estate trends that matter are those in your local markets. Never rely on national data.
Even today, as of this date, there are huge amounts of depressed real estate in some northern states and eastern states. Meanwhile, in Florida and in Texas, prices have bottomed out and are now starting to rise.
Every location has it’s own MARKET. You can not fool the market. The market is what one person will give to buy another person’s property. This free market exchange of monies and value is always in flux. What you need to focus on is how is the market in your local town or community doing.
If you are considering buying, you have to be very careful when considering real estate trends. If it looks like a seller’s market in your area, you may make the mistake of not buying. Even in a seller’s market, buying a home is better than renting. Every day you are in the home is a day you are growing your personal wealth through equity accumulation. Don’t stay out of the market simply because you feel it isn’t the right time.
It is easy to get caught up in real estate trends since they are plastered in front of your face on a daily basis. In truth, they really should play as one role in your decision making process.
The national trend should be one benchmark to consider. Now where you live, or would like to live if moving, is the next benchmark. How is the STATE doing in comparison to the national benchmark?
Then within the state – How is the city local market doing in comparison to the state numbers?
Once you have these numbers, then you will see the direction of where you local market is in comparison to the state and then to the national trend.
Using a local REALTOR® to pull numbers from the MLS is one of the best ways to look at the local trend. I always look at a rolling number in TWO areas.
1 – How many homes are selling per month versus homes for sale.
2- Of those homes that sell every month, what is the average selling price?
These numbers will tell you if it is a Seller’s or Buyer’s market, and the direction of prices.
Thanks for reading my blog post.
If you need any help in buying or selling property – Please give me a call or email me.