National real estate forecasts are nearly as accurate as national weather forecasts

National real estate forecast make no more sense than national weather forecasts

 

Unfortunately, consumers are being blasted on a daily basis with negative media pieces regarding residential real estate. We all know that the market is favoring buyers. That’s a given. However, it must be remembered that the goal of any media is to sell advertising space, not to accurately report. And it’s easiest to sell advertising space with inflammatory gloom and doom pieces.

 

Many real estate brokers are complaining about the unrealistic buyer who wants to present an offer at a price monumentally off asking price. The real estate agents representing these buyers implication is that while there are some properties which should have offers at this unusually level, the buyers are generating an opinion of value based (in part) on media pieces not indigenous to the local market. 

 

Let’s talk about foreclosures. I have seen articles and heard news stories saying that foreclosures have increased over 75% this year. Wow. That’s huge. Foreclosures and delinquencies have increased. However, the method by which the data is presented to consumers makes buyers think that a disproportionately high number of sellers are in default.

 

The reality is that, in Illinois for example, the foreclosure rate has recently been reported at 1.25%. Take a look at RealtyTrac.com. The rate is as large as it’s been in some time, but it’s a far cry from the conclusion drawn from the sound bite which screeches “over 75% increase”.

 

Another fun media spin is the focus on the decline in sales volume (number of houses sold). Said another way, dependent on how it’s written and/or said, a consumer incorrectly perceivesmisperceives the sales volume number to mean decline in value. They are clearly not the same thing.

 

As a prudent consumer of residential real estate, you should seek out valuable knowledge-not just raw information. Raw information is available everywhere, particularly on the Internet. That’s not wisdom. You need someone to interpret this raw data and convert it into something that enhances your ability to make an informed realty decision.

 

One solution could be to hire a local real estate appraiser. The Appraisal Institute has rigorous standards (educational, experience, etc.) which candidates must pass before acquiring an Appraisal Institute designation. Additional most states offer different levels of licenses so that you can determine an appraiser’s competence on your specific type of property. For example, Illinois has certified residential appraisers who have demonstrated expertise on complex residential valuations.

 

Here’s a recent write up in Newsweek talking about the strength of the upper bracket market: 

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