National Statistics
Often, I see statistics about real estate that are averaged among all major US markets, or, worse, all homes bought or sold within a given period of time. These statistics, in my opinion, are meaningless. For example, “average home price” in the US has little bearing on what a home in northern Virginia or San Francisco might cost. Similarly, it probably doesn’t provide any information on what you might expect to pay for something in rural Arkansas. The “average” may not only be inapplicale to your market; it may not accurately reflect conditions in ANY specific market. This fact holds true for prices as well as for supply and demand. The level of competition for properties is completely dependent on the specific locale.
How/why you need to look locally
Recently, I’ve seen articles saying that homes are now selling “on average” (a term I’ve come to strongly dislike) for less than list price. While I’m certain that’s true in some places, it is not in my market. Another key difference, area to area, is the structure of winning bids (waiving the mortgage and inspection contingency?), as well as the offer process (is there an offer deadline? are escalation clauses usually accepted?). What is typical in one town may be very different than in an area 30 miles away.
National trends don’t always trickle down everywhere
I believe that the reason national statistics are considered to have value is that, theoretically, these averages are intended to predict the direction of current trends that will eventually reach all markets. First, even if this theory were accurate, it could take a long time for a trend derived from averaging statistics to reach any given market. Second, I’d argue that every market might not “eventually” reflect whatever national statistic is being considered. Real estate is hyper-local. I think that of making blanket statements based on averaged statistics serves no purpose other than to confuse consumers and often leave them with unrealistic expectations.
Know what data you’re seeing
The moral of the story? When you read headlines or look at charts and graphs depticting trends in real estate, be aware of what data is being used. Pro tip: even if it is specific to your locale, statistics can be “cherry-picked” to show different viewpoints. For example, “average price” in your zip code might sound straightforward, but is that for all homes? Only single-family homes? Only homes of a certain size or age? So pay attention when seeing trends or statistics as they are only accurate with respect to the data that is used.
If you are relocating to the Philadelphia/Main Line area, please go to my blog page and search for posts using the relocation tag. Contact me to discuss your Philadelphia area relocation! jen@jenniferlebow.com/610 308-5973
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