If you listen to the news media, there’s no real way to know what’s going on in the real estate market.
For example, today’s news includes both of these headlines:
- “New Home Sales Climb As Discounts Attract Buyers”
- “Housing Prices Fall At Record Pace”
These headlines aren’t contradictory, but certainly convey opposite tones. You’ll find it interesting to take just a minute to see what these stories actually mean.
First, the reference to “Housing Prices Fall At Record Pace” has to do with the recent release of the Case-Shiller index for the month of June which indicates a year-over-year decline in real estate value of 15.9%.
To be clear, that’s bad. But it’s also quite old data. The first six months of this year were the height of the rapid decline of the real estate market, and much has changed since then. Even within the Case-Shiller report, there’s news that the market appears to be moderating on a month-to-month basis, with several major cities (Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Minneapolis, New York) actually showing month-to-month improvement.
On the other hand, competing news is out today that says that sales of new homes were up 2.4% in July (according to the commerce department), and that is significantly higher than expected.
With economic data, one always has the choice of seeing the glass as “half full” or “half empty”. I think the best wisdom is to be found by analyzing trends.
The trends I observe presently are:
- Taken nationally, real estate continues to decline in value
- The rate of decline in real estate has slowed SIGNIFICANTLY in recent months
- The vast majority of the present pricing declines are attributable to fewer than 10 markets
- There appears to be more cities breaking through into month-over-month gains with each passing month
For several months, I’ve been “banging the drum” for getting active as a buyer in the real estate market. And frankly, there has been no news or information that has changed my mind about that. In fact, all of the trends point to two things:
- A rapid decrease in the rate of decline in the few markets that are in horrible shape
- A flattening of declines – and even mild improvements – in most of the United States
All of the real estate news that’s released each week can present a confusing picture. But if you factor in each piece of news and pay attention to trends rather than individual news items, you’ll be in a far more informed position than your colleagues. And it’s that information that can give you the confidence to take action at strategically important times…
…just like right now.
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