Broad housing market reports are a dime a dozen these days, and if you ask me, that’s a good approximation of their worth. Markets are sliced and diced and compared across the board, drawing multiple — and often conflicting — conclusions with shaky, obsolete data. The market’s up, or maybe it’s down. It’s good, it’s bad, and it’s confusing.
For most people, even with access to all this information the results are more inconsistent than ever, often dated and out of context. But they don’t have to be.
Timely and accurate information, provided on a local level with a real-world perspective, is the real estate market’s most important commodity — and the ability of the public, government, financial institutions, investors and real estate professionals to make informed decisions on local housing markets is the cornerstone of an eventual housing recovery.
Isn’t it time we stop trying to drive by, looking in the rear-view mirror, and insist on seeing just the facts, clearly, as they unfold?
Considering the critical role that real estate statistics play in just about every housing-related decision, it is time for our industry to rally around better data. We owe it to ourselves, our clients and our profession to insist on timeliness and clarity while delving into the motivations and methodologies of every metric we disseminate.
The most recent Case-Shiller Home Price Index of May 31 is a perfect example: It noted, of all the U.S. markets it tracks, the Washington, D.C., metro area as the only market to experience an increase in housing prices for the first quarter of 2011.
While this index may be useful for Wall Street, it hardly constitutes breaking news. Improving market conditions were reported three weeks earlier in an index produced by an MRIS subsidiary.
Metric discrepancies are about more than selling products or securing a reputation in the marketplace — they go to the heart of how we think about information. The one real estate mantra that has remained unequivocally true through some of the most tumultuous years in the history of our profession is that all real estate is local.
By focusing on broad market-to-market comparisons instead of individual markets, we undercut our value as real estate professionals. Instead of chasing fleeting affirmations that change day in and day out, we should ensure that real estate professionals know how to read and apply local data.
Let’s focus more on whether single-family homes or condos are more prevalent in a single area, the variance of seasonal market shifts, or the changes in sales activity that often precede major trends.
Let’s talk about the facts as they stand today and refrain from basing decisions on reports that are already five to seven months behind the market when they hit newsstands.
We’re never going to move forward as a profession by basing decisions on old data, and we’ll never overcome paralysis if we compare our local markets to every other market in the country without considering the context of local driving forces.
Most people won’t buy stocks today based solely on six-month-old research, nor will they decide what to wear today based on the average temperature in New York. Why don’t the same principles apply to real estate?
David Charron is president and CEO of MRIS, the largest multiple listing service in the nation. MRIS facilitates more than $100 million a day in real estate transactions in the mid-Atlantic region.