There is No National Real Estate Market

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I remember when the big Y2K bug was the big story. Seemed like it was on the news every day during the last six months of 1999, warning me about my computer crashing and the airports and businesses would be shut down. The nation was in a panic and the media loved it. I remember New Year’s Eve 1999 (well, I remember most of the night anyway). It was a blast- people thought the following day would be chaos so they wanted to have fun and celebrate like crazy while the electricity was still working. And then midnight came… and the lights stayed on. And life went on as usual. And the media went on to the next big story.

This is how the national media works- find something (anything)to latch onto, create sensation around it, present it in a “Must-See” format, sell ads. Everything seems credible when it’s broadcast across the country- but it’s not.

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The national media is not an educational forum– it is a collection of for-profit organizations charged with making money. And they make money getting people to watch so they can sell ads. How do they do that? They create sensational stories. Watch the news for a month and you will have seen at least a dozen ways to “prevent disaster” in your home and at work and on the road and etc etc…. The American news feeds paranoia because fear sells. That’s why we went to war in Iraq, that’s why horror movies can be so lame and still make millions, and that’s why there are foolish real estate “bubble” theorists.

The national real estate market is a farce. It is the home of Loch Ness and that big Snowman. You cannot paint an accurate portrayal of the real estate market with broad strokes because real estate is about communities and the human condition within them. Even within cities there are different economic and societal conditions that affect how desirable different neighborhoods are. Even from one street to the next, values fluctuate with the condition of the homes, the aesthetics of the area and the homes. Driving through a neighborhood and seeing children out front playing can give a sense that the area is safe, families walking down a sidewalk holding hands can reflect a feeling of community togetherness, and noticing people gardening and painting the trim can cause us to feel a pride of ownership present in that area. And these are things that cannot be expressed in the one-size-fits-all assembly line that is national media.

Right now, today, in every market across America there are people making money buying and selling real estate.

If a city has strong job growth and low unemployment then it will fare better than another city three states away that has high unemployment and the big steel mill that’s shutting down. Describing a national real estate market is akin to describing a global real estate market.

Salt Lake City right now has the best real estate market in it’s history. Last year prices rose around 15-20%, so it’s a good time to sell. And yet there is a good selection of homes on the market and prices are expected to rise about 10% this year so it’s a great time to buy. Good time to sell and good time to buy- that’s as good as it gets.

There are areas of Texas and New Jersey that are seeing hot real estate markets and great price increases, with many homes selling. There are areas all over the country that are seeing good activity in the real estate market, but you don’t see that in your national news. When the real estate market was supposedly “hot” the last few years- the national news fed the beast and real estate-related TV shows were springing up almost weekly because that’s what was selling at the moment. During that time Salt Lake City’s real estate market was slow and home’s weren’t appreciating or selling well.

This is also why Zillow can never be a true evaluator of a home’s worth. It’s just a set of numbers- just like the national real estate market is a bunch of averages- both make for good entertainment, but neither are credible enough that I pay attention to what they say. 

 

 

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8 thoughts on “There is No National Real Estate Market

  1. Greg:
    Loved this post. I cannot stand 98% of the media. Some day soon, our country will wake up and not trust any of them. As a young adult, I learned that whenever I read or heard a story about something I personally witnessed or knew alot about, I was amazed at how inaccurately or empty the story was reported. When I read something about real estate, I laugh, because the story is usually 6-9 mos late, and has already shifted. When I watch a game with someone like Tim McCarver or Joe Buck reporting, I turn the volume down, or as I did this past weekend, watch it in Spanish (I don’t even speak Spanish). It was much more entertaining this Saturday to listen to the announcers in Spanish than to hear childish and inaccurate comments from McCarver, and Buck’s self-righteous non stop blather.

    The media more often than not, hurts our market by giving bad info, and passing it along as fact. Bad news sells better than happy news.

  2. This society is a “I want it now” society and the press enables this trend. Like you said, the presss will throw together and combine many different sources of information to come up with a story that will make a splash. Little fact checking leads to misinformation.

    With this mind, maybe we need blueroof.com to start a trend in the SLC real estate market. Can you provide the facts and figures for your local market? I’d like to see the numbers for YOY home sales and prices published on your site. Only with hard facts and figures can we get to the bottom of this “misinformation”.

  3. I agree with 99% of your post. Well, 98%, but 1% is attributed to the reason for celebration on the eve of 2000. I think there was more celebration because of Prince’s song – not the feeling of chaos that was to follow. The other 1% is from your Zillow comment. I DO agree that Zillow has no way of determining a value based on emotional characteristics of an area, but I think it’s an amazing tool for people unfamiliar with an area. I have no idea about San Francisco, but after going to Zillow, I can tell a huge difference between there, and say Alameda or Oakland. The inclusion of MS Livemaps (or whatever they’re called) birds-eye view, you can get a general sense for an area, and for someone on the other side of the country, that’s a big deal.
    As a local tool, I see your point. The values are off a bit (up to $100k in a few neighborhoods in Orlando), and it’s hard to judge actual neighborhoods, or blocks, or street by street. Zillow definitely has its place.
    I’m with you 100% on the media BS. I have not watched the news in over a year. Although, the BBC seems to do a better job report US stories than anything we have.

  4. HOT real estate – you left out Seattle. We keep trying to get this message across to our local communities. The California Association of Realtors recently announced – California Foreclosures at 10 Year High. I guarantee you, I can find California communities where foreclosures are at a ten year low or a twenty year high.

    Local, Local, Local

    Best decision I ever made was to sell my TV – oops – that was the second best – blogging has taken over the #1 spot!

  5. Had to come back – here is a headline on a a Real Estate Journal post today:

    Pending Home Sales Index Hits Lowest Level Since March 2003

    Here is a line from a post at Square Feet in San Jose, CA today

    In the West, to our credit, we were at least inching in the correct direction, with the index up 1.6 percent from February to March.

  6. John,

    Didn’t know Seattle was still hot- I knew your market was hot last year, but haven’t anything lately- Texas and Jersey I have- glad to hear Seattle is still going strong.

    Shaun,

    Look for my post later tonight about how accurate Zillow is in Utah- they aren’t. Some states and areas the site may be more accurate, but Utah is a non-disclosure state so the site is so far off with it’s estimates that it really has no real value in determining price or even as a starting point. It’s a fun site for entertainment, but not much more- at least in Utah.

  7. Here here! Trying to lump every city into an average doesn’t show accurate portrayals of markets because every city is completely different than the rest.

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