May 24, 2010

Beware of Conflicting Changes in the Real Estate Market

J0399557

How to Make Informed Decisions in an Uncertain Market

If you've followed news sources during the last few months we're probably confused amount where the real estate market is right now.  Often even the same publication will have conflicting stories with one source saying the market is showing signs of upward movement while another story says things could still fall further.  If you are buying, selling, or looking at refinancing real estate you are in a difficult place right now but you can still make an informed decision.

This article touches on the key features of monitoring the local residential real estate market.  Whether you are buying, selling, or considering whether to refinance, you really need to know these elements if you are to get a realistic picture of your local real estate market.

Nature of the Beast
Real estate is like no other commodity.  By its very nature it is not transportable to a better location or to within greater proximity to desired amenities.  Almost every parcel of real estate and the structure built on it is unique.  That’s what makes tracking the market for real estate (grouping it into a basket of goods like other commodities) so difficult and estimating the value of just one property so hard.  Yet real estate follows the laws of economics that apply to other commodities: supply and demand, scarcity, competition, substitution, etc.  Don't expect real estate to be as predictable as other commodities and that well informed experts will disagree, even in good markets.

When
One of the most important elements to keep in mind is the timeframe that your news source is reporting.  If a source is reporting on the number of residential mortgage foreclosures during the last 3 months through March 2010, that tells you something but is it still relevant?  Real estate assessment news has been active lately as new assessments came out, but you need to question the "effective date" for such assessments and what period of time the assessors studied to determine their changes for reassessment.  In some cases local assessors studied the residential real estate market through June 30, 2009, to estimate assessments that were effective January 1, 2010.  These estimates are probably no longer relevant for listing your home for sale or estimating the value for refinancing your home.  As we have seen during the last two years or more, real estate values can change very quickly.

Where
We've all heard the real estate axiom that there are three important considerations when buying real estate: location, location, and location.  Well, it's the same thing when it comes to monitoring changes in the real estate market that affect the decisions you make: it's all about location.  While national and state trends may tell you the mood of the country or state, what you really want to know is what's happening in your own community.  Your local real estate broker and realtor association is your best source for changes in the residential real estate market.  But keep in mind that these reports are showing historical facts and may not show what is happening today.

Current Indicators 
The real estate experts may comment differently (and comments are welcome) but here's what I see as the current indicators or information that will affect you the most:

Sellers - what competing properties have sold for during the last 90 days and what other sellers are willing to sell them for in today's market.

Buyers - what competing properties have sold for during the last 90 days and what other buyers are willing to pay to secure a property in today's market.

Refinancers - what competing properties have sold for during the last 90 days and what comparable properties are currently listed for sale at in the local residential market.

May 24, 2010 1:13:29 PM | Especially for Real Estate Agents, Media Toolkit, Property Ownership, R. E. Industry Professionals

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Richard L. Sanderson

I help others understand city and county property taxes on real estate

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