Why The Media is Usually 4 Months Behind

(Westcoe Realtors, Riverside, California)…Whether it be the high-pitched, seriously toned voice of the verbal media (radio, television, etc.), or the massively large headlines of the printed media (newspapers, magazines, etc.), I always find it interesting when another decline in housing stats is paraded past our senses.  Most of the information is touted as the “latest housing statistics” according to some credible source, when in reality, almost all of these sources use data that is at least 4 months old…and that makes the resulting article or commentary not a particularly accurate depiction of the current real estate market as we see it in the “real world trenches” in which we operate every day.  Let me give you an example.

 In today’s local paper, on the top front page of the Business Section, is an article in very big bold print that says “NEW HOME SALES FALL 8.5 PERCENT”.  It is an Associated Press article out of Washington, and it sites a number of sources to let us know that for the month of March, 2008, new housing sales “plunged” to their lowest levels since 1991.  There is additional doom and gloom, and a few analysts who also offer their opinion on why we should all panic, etc.  You get the idea.  However, let’s analyze this a bit…and please understand that I am not picking on our local paper.  One can see the same type of headlines in any paper or magazine in the country.

 First, and very importantly, any story that originates out of Washington, or is reputed to be about any national trend, generally has about as much relevance to you in your local community as a as a space walk does on what you eat for lunch…there is simply no connection.  Granted, quoting national statistics might make for entertaining cocktail banter, but as far as giving you much of a picture of what is happening with real estate in your own backyard, no way. 

 All of real estate is local, not national.  Heck, we have incredible fluctuations just within our local Riverside city market.  You draw a 2 mile radius circle on a Riverside map, and I guarantee you will cross at least 3-4 sub markets with varying real estate pricing and activity.  What is happening in Orangecrest may be completely different from what is affecting sales in the Wood Streets…or Lake Hills…and generalizing doesn’t cut it. The same is true where ever you live.

SO…when you see any article, or hear any news clip…if it references anything outside your immediate area, take the message with a large grain of salt.  This is especially true when we live in California, since we are not necessarily like the rest of the nation on so many things.  Even within our own state, we have enormous divides.  Northern and Southern California bask in their differences.  Just in our own area, what is happening in Orange County and the beach cities in real estate is a far cry from the current markets of Los Angeles or Riverside.   So be aware of where the “story” you are hearing or reading is originating from, and gauge your level of concern accordingly.

 Next is a discussion of the data all these sources quote, AND THIS IS HUGE IF YOU WANT TO OPERATE IN A REAL TIME DATA ENVIRONMENT…which is critial in the real estate world. 

Almost all stories will quote statistics based upon CLOSED sales, not on CURRENT SALES IN ESCROW…and this makes the data, and resulting story, at least 90 days old, maybe more.  The key here is understanding that a closed sale in March will have generally entered escrow in January or February…and then when all those March closings occur,  it takes a few weeks to aggregate the data…especially if it is a national source.  So what you are left with is an article appearing today, April 25, that is really an indication of what was happening almost 4 months ago! 

Don’t blame the media…they do not have access to the real time data we real estate professionals work with every day…but don’t take their word as current gospel either. 

As another example, Westcoe Realtors posted on this blog space, on April 2, 2008, a blog entitled “Absorption Rate Drops Again”.  This article is a discussion of some very important real estate information, AND IT IS BASED UPON DATA THAT IS ONLY 2 DAYS OLD…data that will effect what the press will report approximately 2-3 months from now…and in this market, that 2-3 month time lag could spell disaster for someone who is buying or selling.

My point here is not to bash the media (although they do make it easy sometimes), but to enlighten the public as to the meaning of the articles that are being written.  We all know that negative news sells (just like people slow to see a car wreck on the freeway), but what sells is not necessarily accurate on a real time basis.  The bottom line here is that if you want accurate, up-to-the-minute information about real estate, or pricing, or market activity, get with a real estate professional (I can make a very biased suggestion for more than a few here at Westcoe).  They are the ones who work in this arena on a daily basis, and they are the ones you should consult. 

Think of it this way.  If you were buying or selling some stock, would you like the pricing information now…or are you willing to wait and make your decision tomorrow on what you read in the paper? Fortunes are made or lost in minutes in the stock market world, and waiting until the end of the day for your information would be unheard of.  In real estate, the same principal applies.  Perhaps not as immediate as what you need for a stock market decision,  but surely you want your information based on today, and not 3 months ago.

SO…enjoy your newspaper, television, radio, and Internet..but don’t rely on them for your own real estate buying or selling…call us…we are a lot more current.