How’s the real estate market? Depends on who you ask or what you read. You don’t have to look far to find bad news. I pass by most of the articles written by mainstream media. They are all about sensationalism and beating a dead horse! One such report this week indicates homes across the nation have lost an average of about 14% of their value. Truth: some areas have lost more, some areas have seen property values increase.
Another article printed yesterday by Money Magazine is just the kind of advice buyers and sellers don’t need. Don’t get me wrong; much of what Ms. Gengler had to say was not bad advice in theory, but it certainly wasn’t new.
Except…..Her opinion about how much buyers should offer on a home was way off base. There may be some markets where her advice would work. For the real world of real estate in Indianapolis, buyers who decide to offer 10% below what comparable homes are selling for will find themselves renting long term. It’s really an injustice for buyers who may want to take advantage of the great mortgage rates, to be told they should “move on” if the seller doesn’t accept their “low” offer. That’s not to say a buyer has to offer full price. A blanket figure, though, is not realistic. This type of reporting is exactly what keeps buyers sitting on the fence wondering if they can time the market and why people like this guy call me.
I am not a big fan of using averages to determine value. Most reports about real estate markets are based on averages from data derived from Boards of Realtors around the country. While a great resource for gathering information to determine value, the stats are based on broad averages. What applies in one city or neighborhood is not applicable to the entire nation. Since mainstream media stands on the “numbers of averages” to sensationlize their dire predictions about the real estate market nationwide, I, too, will use averages.
Below are a few charts based on averages for two cities within the Indianapolis Metroploitan area. One for Avon, a smaller suburb to the west of Indianapolis and Carmel, a mid size suburb to the north of Indianapolis.
The graphs reflect the low price, high price, average price, DOM (Days on Market) List to sell ratio, and number of properties sold. The properties were sold between January 1st – May 28th of each year from 2002–2008.
As you can see, the averages from 2002–2008 for these cities do not reflect a 10% difference in price. There are certainly a few years where the average price went down, though not by much. There are neighborhoods which have seen an increase.
The days on market are consistant, as is the list to sell ratio. The bigger difference is the number of homes sold over the last two years has decreased.
There is some margin for human error, since sometimes numbers do get input incorrectly or the data did not compute properly. Such is the case on the list/sell ratio for 2003 and 2008 in Carmel.
When looking for real knowledge about real estate in the area you are buying or selling, don’t read the news or take advice from someone who is using broad averages. Find a good Realtor who will break down the results for you, based on the “particular” area you are buying or selling your home.
Another Truth: All real estate is local!
Related Posts:
Indianapolis Real Estate Market Updates
Preparation Is Key When Buying a Home
News Flash – Buyers Control the Market
{ 1 comment… read it below or add one }
Paula, Very true, Real Estate has always been local and will remain to be local. Even in the same city real estate differs from neighborhood to neighborhood.