The Real Meaning Of Our Real Estate Numbers

Real estate numbers and data get bounced around the media like ping-pong balls in a lottery drawing. Far too often, statistics get quoted and then are left hanging out there like laundry on the line, waiting for an explanation that never comes. In this newsletter, I thought I would give you some pertinent numbers about our real estate market, and also explain the real meaning of these numbers…sort of a behind-the-scenes look at how this could affect you as either a seller or a buyer.

As a seller, one of the most significant numbers to know is the availability of inventory. The media would have you think the more homes for sale, the harder it is to sell…and they are right, but only to a degree. When they quote the number of homes available now as compared to some point in the past (for example, as of July 1, 2007, there were 2963 homes for sale in the Riverside/Moreno Valley area vs. 803 on July 1, 2005), they leave it at that and let you assume the worst…and most people do just that. However, in
reality, it is not the number of homes for sale that is the issue, but the QUALITY of those homes…and right now, there are a lot of “non-quality” homes for sale.

In our real estate world, housing quality is defined not only by the amenities a home offers and the condition of those amenities, but also by the price…specifically, does the price make sense relative to the amenities. It is easy to think that with 2963 homes for sale there is a lot to pick from, but many Realtors will privately say that much of what is for sale right now has issues with either pricing or maintenance. If I had to give you a very unscientific guess, I would say that easily 60% of the homes for sale today have limited appeal to a buyer based upon their current price or condition. In the marketplace of 2-3 years ago, almost anything would sell…but in the marketplace today, not so. A home has to be well priced and well maintained to attract a buyer. Hence, when the media scares you with the 2963 homes for sale, the real number of homes that truly look attractive to a buyer is far less imposing than 2963.

For a buyer, the important number the media shouts about is the number of closings…and again, they compare today with the past (for example, 145 homes sold in July of 2007, vs. 351 in July of 2006). Here, they would have you believe that since the number of homes sold is off by almost 60%, then this must be a bad time to buy…and just the opposite is true.

In actuality, the best time to buy a home is when nobody else is. Think about it. If you buy when everyone else is trying to buy, then the price gets driven-up and you end up paying more. That is exactly what happened in the real estate market during
2000-2006. Everyone was buying because the media was telling everyone to buy, and the prices shot up like a bottle rocket on the 4th of July. Ask yourself the
following question…Would you rather have bought your home in 2000, or in 2004? While either time would have been nice, of course you would have rather
already owned the home in 2000. Do you think this next cycle will be any different? Beware of the herd mentality when it comes to purchasing real estate. Buying now really is a great idea.

In the end, owning a home is truly the American Dream. It’s a home, not just a house. Your home combines the potential for equity when held long enough, and still keeps you dry in the rain. You can’t beat that. What you can beat though, is the alarm level the media inadvertently creates when they tell only part of the story, and that’s where I come in. Please…please…please, call me with any questions, concerns, or fears you may have about our real estate market. I will give you the entire story about anything you ask as it relates to our local area. I really do enjoy helping you any way I can.

Take care, and as always, I am only a phone call away to assist you with your real estate needs.