A few years ago I wrote an article regarding how often I was asked “How’s the market?” I hadn’t realized it until last night, but I’m not getting the question so much anymore.
I realized that when a client commented, “You know, I probably know as much about the market as you do.” He immediately apologized and explained his position even though I agreed with him. His point was not who was smarter; his point was it’s darn tough to understand this market and almost impossible to make predictions.
Unfortunately, this is not a case of clients getting smarter (nor for that matter is it a case of me getting dumber!). The media is doing a great job of keeping information about “the market” in the news. We can debate the quality of the information; we can disagree with the conclusions… but the point here is that folks have a much higher awareness of the economy and market events. They truly don’t have to ask; they know. The problem for all of us is, in part, we mostly know that we don’t know!
An interesting example of this was a major story that hit my inbox just yesterday morning. Corelogic (a company that collects mortgage and property data) issued a press release stating that “Statistics published by the National Association of Realtors appear to be overstate sales of existing homes by 15-20%.”
If you thought it was bad before, this number gets your attention. In practical terms, NAR says the unsold inventory on the market last November represented a 9.5 month supply. CoreLogic says it’s a 16 months supply.
NAR’s response to CoreLogic’s claim is that it’s “premature at best.” You probably don’t want to hear the explanations. Most of us would prefer to think this is not rocket science but rather a simple counting exercise.
My point is that assuming my client and I both read this article we both know:
- Sales are down, NARs thinks by 5%–CoreLogic says 12%.
- The glut of homes on the market represents either a 9.5 month supply or a 16 month supply.
Of course what’s especially interesting is that none of these numbers are of particular interest or value to a buyer or a seller. More localized numbers might be, but even those numbers are just that: numbers.
Market’s don’t buy and sell real estate, people do. And I still “sell” properties (admittedly far less than in the past) the same way I always did: one at a time.
I’m not suggesting we should ignore the “market.” But if you — for whatever reason — are in a position to buy or sell property, you should focus on your objective. Almost all of this “market data” is history and a lot of it is at best “spongy.” If you want to buy or sell it’s important to remember that history doesn’t create the future and you are not the victim of history; you are creating it.