National statistics are a good source of information for buyers and sellers in today’s housing market. Interpreted correctly, it can give buyers and sellers a good sense of trends in the national market. However, unlike the stock market, which is easy to report nationally, the housing market is subject to ebb and flow of its local market and can operate in opposition to the reported activity for the national market.
Going Big--knowing the national trends will always be important because sellers and buyers in the market follow those trends. Those trends are often their frame of reference.
Going Home--focusing in on what is happening in your local market, including the stories of the properties that are on the market, to help sellers and buyers frame their picture of the market they need to sell or buy in.
Going Big
Stock market reports vs national real estate reports: An investor sitting in New York can view Apple stock on any given day and that information will not be different for the investor sitting in Florida, or the investor sitting in Oregon, California, Illinois, etc. However, national real estate market reports or even regional real estate reports are simply national/regional trends. Real estate markets vary from state to state and from city to city. As a result, national trends don't always match up with what is truly going on in the local market.
National statistics are notoriously late to the game. Whenever we are in a shifting market buyers and sellers need the most current active information to make better decisions. Unfortunately, reported housing statistics are often based on closed sales from not last month but the previous month—sometimes referred to as “lagging” indicators. The leading indicator data we need is how fast is the current market: how many homes are competing with the home that is listed, have there been any price adjustments, are properties staying on the market, how does this compare to previous markets? That information is relevant to how a seller positions or property or what leverage a buyer has in negotiations.
National statistics often “forget” that there still is a seasonal component to real estate. Consider the difference in a normal seasonal market for data published in February for the previous December. While closing numbers will be good, new listings and sales are typically slower as consumers spend more time focusing on the holidays. I would expect new listings and pending contracts to be lower during December and I would expect a natural decline in future closings as a result. Pendings written in December will close in January or February and be reported nationally late February or late March. This probably will be reported by the media as a dip. Is it really a dip? If you aren’t paying attention to what is important in the market you could easily head into the new season with a different expectation in your mind.
Going Home
In a shifting market, which is what we are in, it is important to know how much inventory is active, how many days on market for the active and pending properties, what was the list price to sales price ratio for the recent closings. A realtor worth their salt will keep you up to speed with those statistics so as you plan to sell your home or purchase a property you’ll have a better idea of what the impact will be to your wallet or portfolio.
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