Understanding Real Estate Headlines in the Current Market

Posted on Posted in HELP!, Market Activity, Social Media, Uncategorized

Today’s Headlines can be confusing…    Sales Volumes soar,  Home Sales Fall, it sounds confusing, doesn’t it!

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So what does this mean?  Are they reporting conflicting news?  Or are they not spelling out the whole picture to get you bouncing back and forth reading news articles just to get your attention?

 

Well, they are the same thing actually, but reported from two different angles…  Using the Basics of Supply & Demand that some of us took in High School Marketing (remember that stuff?), when there is less of a desired product that’s in Demand, market prices are driven up by the buyers willing to pay more.   If the Supply can be increased to meet this demand, prices stabilize and drop until it’s in balance at a new price level.  It’s not so easy to create new “product” or homes as you need land and time, so responding to that demand is difficult.

So how is that affecting Real Estate in our market?    We’re low on inventory for sale… This means not everyone can find the property they want, so those that are willing and able to pay more, usually do, because they know pricing is continuing to climb for the foreseeable future (even if it slows down, it’s still climbing).   So what I buy today, is still less than what it will cost in 3-6 months.  (The stats I publish in other posts illustrate this!)

This drives people that are able to pay more, to do it, knowing later it will be even harder to get that level of Real Estate for the same $$$.

 

How does this affect News Headlines?

It all depends on what you’re reporting!

Are you reporting number of properties sold?  We are in a low inventory state, so with less homes to sell, the NUMBER OF SALES fall further.  So the headline reporting a fall in Home Sales is “correct”.

Are you reporting the dollar value of homes sold, either the Total, or the Average per Unit?  Market pressure is making people pay more than ever, so SALES VOLUME in DOLLARS continues to increase at high rates, even in a month where the number of sales has dropped compared to previous years, months, or whatever time frame the author of the article wants to compare to.  So this too, is “correct”.

A Headline that reads:

HOME SALES ARE FALLING AND RISING AT THE SAME TIME

Is actually, “correct” as well!  So what’s it all mean really???

It means you have dig further to really understand the statistics behind an article.    Reduced unit sales at higher costs can create this falling sales, but rising sales dollars, simultaneously.  Our market is very out of balance, creating this situation.

You can sort this out and understand it by doing a lot of reading, looking up stats from various places such as Real Estate Boards, the Canadian Real Estate Association (CREA), and other resources.  If you like spending time on this, you can become well informed.  For the moment.  But things change quickly and local neighbourhoods also shift and don’t always follow the trend.  For example, look at the bar graph on the right side of this recent report…

Not every area saw a gain in September 2016 from September 2015.

2016-2015-september-chart

How do you manage this, and truly understand what the market is doing generally, what’s expected in the future, what unique characteristics your neighbourhood has, and even what unique characteristics your home has, to bring to it’s present value today and the expected near future?

Well, it takes education, and a lot of reading, understanding, first hand experience in local neighbourhoods, etc., to really be able to do this well.  You’d think it was a full time job to keep on top of all this.   Well, it is…  That’s what an excellent REALTOR®* can do for you.    It’s good to understand the fundamentals of what’s going on, and have a Trusted Advisor to do the Homework and keep You on top of it all with Education and Market Updates specific to Your Property.

If you are interested in knowing more, feel free to contact me…  We can have a chat on the phone or talk over a coffee, as I find the more people know, the better equipped they are to make sound decisions.   Smart Clients make my job that much more pleasurable!  I believe in doing the work, to make it seem easy for you.

James

 

* A Sales Representative or Brokier who is a member of CREA as part of their profession, has to abide by the CREA Code of Ethics as well as use the Registered Trademark form of REALTOR® in their communication.