Don’t Over Analyze the Daily Dose of Real Estate Data

Westcoe Realtors, Riverside California…As technology as shrunk our daily world to the point that multiple media outlets and web sources will deliver minute-by-minute reports on anything from Lindsey Lohan’s latest legal issues to Tiger’s divorce, the simple reality of our normal lives is that we are all surrounded by massive amounts of data.  It used to be that it took some time for this data to be sifted and analyzed, but with the plethora of talking heads and experts telling us what we should be thinking (all justifying their  exorbitant salaries they get for being “experts”), we as a society are drowning in over-analyzed data.

Such is the case with any segment of our society….including real estate.

In the past 2 weeks, there have been numerous reports of the following taken directly from the papers, TV, and websites.

1.  Housing sales are off tremendously from last year, the market is slowing, and housing is in more trouble.

2.  A list of the 10 top cities in the United States was published showing housing prices have increased recently, including Los Angeles.

3.  Builders are not building due to horrible demand for housing due to buyers increased concerns about the economy, jobs, etc.

4.  Approximately 70% of all housing closings for the Riverside area close at a price over the original list price due to the bidding action from all the buyers that want to purchase a home.

5.  Home loan interest rates are at their lowest levels since anyone has been keeping track of such things.

6.  July housing sales increased from the previous month.

You get the idea, and I could go on with numerous examples.  SO….which one of these stories that were widely reported is true…..Probably all of them!

Here’s the point.  You can’t analyze daily doses of real estate data, and make any predictions about what it means…you need a little time to see how it all plays out.  Taking the data from a specific week, or month, is like saying your 100 mile car trip will go smoothly because the first 10 miles went smoothly.  A thousand things could happen to slow or derail your car trip…or not…but you need to get a little further into the trip itself before predictions will mean anything.  The same holds true with real estate.

For our Riverside area, as our real estate market hits the bottom, THAT DOES NOT MEAN THAT WE WILL THEN PROCEED IN A LINEAR FASHION TO RISING PRICES, ETC.  We will bounce along the bottom for quite some time, with some months being better than others….and that is where we are at this very moment.  Some months, the numbers will show an increase, some months they will not.  The problem is that everyone wants a conclusion…right now…as to exactly what any set of numbers mean.  And unfortunately, there is no lack of people who will be glad to offer their interpretations as to exactly what this minimal amount of data portends for our future.  Right or wrong takes a back seat to the force and fervor of the ”experts” opinion.

So…what to do?

Easy…just chill a bit.  We’re in a cycle, and it will take time for it to progress.   We are far better off than were were 3 years ago, and will be farther along the path 3 years from now.  Westcoe will be happy to let our local residents know of significant housing trends as they present themselves, but how about we let them happen on their own, without the benefit of over-analysis.

We’re not burying our heads in the sand, but merely letting the market play out without immediate panic.  

Or, if it makes you feel better, numbers were down a little bit in August…it got hot, and a lot of people went to the beach.  Makes as much sense as most of the stuff published the past couple of weeks.

Take care, and thanks for reading.