How many times do we have to hear that the housing market is doing one thing... and that must mean that the whole market is doing the same thing?
When the price of a barrel of oil goes up, it is a singular commodity moving. While there are different grades of oil (sweet light crude, heavy crude, rough crude, etc.) they are interconnected. If one moves, they all move because their value is interconnected.
When prices move up or down in GA, there is little correlation to prices in Maine. They aren't interconnected. There may be a few instances when they can be driven by the same forces (the Sub-Prime Meltdown.. SPM, is an example). If there is MASS unemployment nationwide, that would affect multiple markets, but even unemployment is largely regional. Even the SPM has an uneven effect. It will affect markets that have had more "heat" more than stable markets. In fact, we are seeing that it is mostly those markets that are leading the foreclosures... although Atlanta didn't have the big price run-ups, it snuck in there too.
The point is that if there is a shortage of $250k homes in Atlanta, an over supply in Charlotte can't be used to offset it. If there are too many $1m homes in Lansing, MI they can't be shipped to Ann Arbor to ease the problem. Even when the job market causes some local imbalance in the supply and demand for homes, that doesn't mean Birmingham can ship their unemployed to Marietta (GA or CA).
It would simply be responsible when mentioning that real estate is moving up or down to say that some sectors are doing the opposite. Many of the same business programs that go in depth with stock reports, and go out of the way to mention that "there is a flight from tech to blue chips" or that "transports are taking a beating while oil is going through the roof" fail to mention that some areas and some price ranges are healthier or unhealthier than others.
Remember, real estate being off 3% on a national average is VERY DIFFERENT than gasoline being off 3% on a national average. The gasoline might vary a little from market to market, but up is up, and down is down. In real estate, that same 3% average might encompass one market being up 10% and another being down 18%.
Just remember that when dealing with real estate, as the FTC required many years ago, "Your Mileage May Vary." YMMV.
Unless otherwise noted, all content of this blog is the property of Lane Bailey, ©2012 Lane Bailey.
I'd love to hear from you...
Lane,
Now come on, you know that making sense and delivering accurate information is not in the media's best interest. Negative sells and that's all they know how to do. For example a month or two ago former Fed Chairman Alan Greenspan said we have a 1/3 chance of going into a recession. All the headlines said "Former Fed Chair Says 33% chance of a Recession" not one said "Great News Former Fed Chair says there's a 66% Chance We Will Avoid a Recession."
The best thing to do is to fight fire with fire. Teach the consumer that real estate is a long term investment and that future demand looks great. From 1995 to 2005 we added 12.4 million households most would agree that period was pretty darn good for real estate it held the top 3 years in real estate history 2005, 2004, & 2003 well it is estimated that from 2006 thru 2016 we are expecting to add 14.9 million new households and from 2004 to 2054 we are expecting to need 60 million new housing units (40 million new 20 million rehabbed). So in the next 10 years we expect demand to be 20% more than the previous 10 years. Plus the population of the US has doubled every 50 years for the past 200 years we hit 300 million in 2005 from 150 million in 1955 so it is conceivable that we could be at 600 million in 2055- even if we are only at 450, 500 or 550 million doesn't that sound like a lot of demand? It's not like they are all going to magically appear in the year 2055.
How about this one, foreclosures hit a high in May 2007 (don't get me wrong this is a concern in our market I am just trying to put it into perspective) well in May we hit highs from how long ago? 5 years? 10 years? 15 or 20 years? Nope we hit 30 month highs in foreclosures, yep 30 months. That's December of 2003 right in the heat of the hottest streak for selling real estate IN HISTORY! June 2007 foreclosures actually dropped a little from May. Now I don't think they will continue to go down I do expect foreclosures do go up, but come on its not the end of the world, but then this news doesn't sell newspapers does it?
As far as the subprime meltdown goes here are some of the numbers I have heard. The subprime market takes up 20% of the mortgage market and it is estimated that 20% of the subprime market will not be able to qualify to get a loan now so that is a grand total of 4% of all buyers- hardly a real estate collapse due to lack of buyers. Plus, where do you think these folks will live? In a tent, on the streets or in a van down by the river? Nope, they will live in RENTALS- hmm do you happen to sell any real estate that could be used as RENTALS? Now there's an opportunity.
to support your point.
when real estate is off 3% that means that it' up in some areas and down in others.
to take it even further i live in southwest florida and different priced homes reflect different tendencies.
One of my homesellers said it best...if the media would shut up my house would sale. I keep telling everyone it's a great time to buy or sell a home.