Most real estate agents at one time or another wonder what planet their local news media is reporting from when it comes to home values in their area. Often time prices are rising when the media is seemingly reporting waning sales; and other times the media appears to be Johnny-come-lately in their reporting of trends such as the latest run up in mortgage defaults.
Unfortunately, as mainstream media becomes more sensational and less informational we’ll all be exposed to more stories on which celebrity is due for another DUI arrest on their way home from a drug rehab program and less stories that matter-ones which actually affect our lives.
Case in point–On the peninsula where we live in the Bay Area, our little town of Belmont has continued to show strong gains in real estate for the past ten years. Yet every January, the media reports that sales were down for that month. That seemingly incongruent piece of information would puzzle the likes of the fine citizens of Belmont and would invariably result in us receiving calls from past clients wanting to know what’s up with the market; every year we’d explain that often times the information they are hearing is the result of national or even statewide reports, and may not necessarily be applicable to the mid-peninsula.
It goes like this: the media gets a wire that the National Association of Realtors reported sales of resale homes were down in January over the prior month. That gets translated into a teaser tag line that says, "Is the real estate market crashing-stay tuned". So you patiently stay up for another twenty minutes when right after they erroneously predict the next days weather and apologize for the previous night’s errors, there’s this 20 sound bite that NAR reported resale home activity slowed in January. Slowed compared to what? Of course no one remembers the details and the next day the water coolers are bubbling over with conversation about a downturn in the value of homes. Even if they did mention that sales were down over the previous month (which they always are) nobody hears that part or knows that that’s par for the course and they mistakenly draw the assumption that slower sales means a downturn in values. And of course the media takes no initiative to interview any agents who are involved in multiple offers and losing home after home due to the low inventory. You don’t have to be the recipient of a Nobel Prize in economics to understand if you have fewer widgets to sell sales will be down and prices may go up if demand is strong.
I almost forgot, every year-months after we’ve sold a half dozens homes for considerably more than asking-the media reports a median home price gain. But were those numbers national or statewide? Who cares, it’s good for the ratings.