Weâ€™ve all heard it; â€śreal estate is localâ€ť. Iâ€™m not so sure.
I believe that all of the different â€ślocalâ€ť real estate markets are in fact intertwined with one another. While there is not much value in a national average or median real estate price, there is value in national sales volume, national inventory levels and other national housing statistics.
Think of them as a barometer – a measure by which you can assess your local market. Perhaps your market is selling more homes on average at a higher price point than the national average. Perhaps itâ€™s less. Either way, national market statistics matter. You can use this information as part of a general wellness test of your local market. Not to mention that what actually is happening in other local real estate markets can directly affect what happens in your local market.
We in fact just ran into a scenario where a client of ours could only buy a home at a certain price here because the home he owns in Michigan cannot sell for a reasonable price there. They wanted to spend about $600,000, but, bought for $250,000 until the home in Michigan can sell. This is an example of exactly how these markets are intertwined and why in fact real estate is not all local.
To truly understand your local market, you must stay abreast of and understand more than just your neighborhood, town and city market statistics lest someone else who does understand will be the â€ślocal expertâ€ť instead of you.
Speaking of local experts — be somewhat critical of the local real estate gurus in your town (many are the same ones that say all real estate is local and even more have a personal soapbox they like to call their own blog). We are not always right and we donâ€™t always agree.
Here in Atlanta, Georgia, one of the statisticians who compiles the statistics for one of our local MLS boards explained in a recent article in the Atlanta paper that â€śWe have every [home loan] closing tracked, so I know February was the bottomâ€ť. Now, I donâ€™t know about you, but, I know one thing for sure â€“ nobody should make a direct statement like that when there are so many factors that can wreak havoc on a real estate economy â€“ from a local or a national level. Not to mention I wholeheartedly disagree with the assessment that February of 2009 was the bottom. Maybe February 2010, but, not the one that just passed!
I fully understand that the local economy, demographics and schools and a variety of other factors make the area where I live and work considerably different and unique compared with other areas of Atlanta and other areas of the country.
But, what happens in those other areas influence my area. Recently, a county on the south side of Atlanta lost its school accreditation. This made it nearly impossible for residents to sell and move to areas with better schools. If they canâ€™t sell, we lose potential buyers in the areas with better schools. Some of those people would have left Atlanta and moved to your city. Other times it might be a plant closing that hurts your economy, but, brings a large number of jobs to a section of my town.
National economic factors like that affect my local real estate market.
In fact, these factors are often major influences on the local real estate economies and these events happen every day.
Furthermore, some areas are beginning to reach bottom and others are showing signs of recovery. By this I mean the supply of homes is beginning to come back into balance, not that they have reached bottom. Only that the painful dive down is subsiding at an increasing rate. As this happens and prices stabilize, confidence will once again come back to the real estate market and this is certainly a national factor that will influence local markets. This will be swiftly followed by the mainstream media who will jump on the bandwagon to extol the virtues of why NOW is a great time to buy and the miraculous and unforeseen real estate recovery.
That will lead us to my next topic -â€“ buy now because you can only see the bottom once youâ€™ve passed it.
Visit Ryan Ward’s website at www.ryanwardrealestate.com.
With the internet being what it is local and nation site really has been combined to a point. The local markets are the obvious life-blood of the national market. The National market doesn’t always effect the local as much.
June 26th, 2009 at 12:07 pm
I completely agree, time and time again we hear many folks express that they want to relocate to the Denver Metro but they can’t until their out of state home sells first.
June 27th, 2009 at 5:05 pm
Isn’t that the truth! I have people in Houston, Denver and a few other area waiting to sell before they buy here. The Austin market is definitely suffering because of other markets being stalled out.
June 30th, 2009 at 11:18 am
You are spot on. Planning a relocation can be difficult because many factors can throw off finding a comparable home: current inventory, REO/SS/Foreclosures, tax filing, etc… Finding a knowledgeable RE professional in both communities is imperative.
We would all hate retiring to Colorado and sitting on our home sale in California for upwards of one year, maybe even taking it off the market if the home falls out of escrow.
July 1st, 2009 at 9:50 am