Inman

When to ignore real estate market reports

It doesn’t happen very often, but I am offering something today that will help all of us improve our attitude about the economy. It’s not as bad as we have been led to believe. I have the numbers to back it up.

You will see why I am so excited about what I have discovered. After all these years, my degree in economics is finally paying off.

I am about ready to quit reading monthly housing reports. Instead, I plan to focus on listing and selling homes. I am asking my readers to join me in this movement.

It’s a big step, because it means I will have to quit complaining and worrying and go to work, which no one should be expected to do cold turkey.

That’s why we should start reading market news only in part. The key is to focus on today’s numbers, not the trends. We are salespeople. We don’t make things.

I understand why companies that make appliances, Sheetrock and carpet would care. After all, they have to plan and make projections. We don’t. We sell homes.

Our long-range plan is a pile of short-range ones, ranging from the next phone call to the next email or text. We are real estate agents. We don’t plan. We are first responders.

The secret is to focus solely on this year’s numbers. Do not read or heed the comparisons to last year or projections for next year. They do not matter to you.

Try it. It will change your entire outlook.

The Census Bureau reported last month that the seasonally adjusted annual sales pace for new-home construction stood at 319,000 homes in May. But what does that mean? Is it great news or bad news?

"I can’t tell without comparing them to last year’s numbers," say the purists, most of whom are just waiting to spew some high-sounding, emotionally debilitating analysis around an office filled with commission salespeople.

We live in the moment. Next year’s projections don’t make our house payment or fund this summer’s vacation. Our attitude — not the market’s altitude — is what makes the difference to us. That’s why we need to purposely protect what we see and what we think.

Last year’s number can cause your attitude to harden, and next year’s numbers can be discouraging. Fortunately, neither comparison matters.

Let’s take it further:

New-home real estate agents make about one sale for every 10 prospects who register in their sales offices without a broker (I am being conservative).

If 319,000 new homes are going to be sold in 2011, that equation means that about 3.19 million people will shop new homes this year! I don’t know what your sales-to-prospect ratio is, but annualized sales for resale homes are projected to be in the neighborhood of 4.81 million homes sold this year.

The secret is to not compare this year’s numbers with last year’s or next year’s projections. They do not matter. We are commission-based sales agents.

Numbers tell us all kinds of things about out business.

There are about 1 million Realtors, so that means there will 4.8 resale homes sold per agent, based on projections — and the National Association of Realtors expects the median price of a resale home to be about $168,800 this year.

Since you are not average, because you don’t worry about what you cannot control, you stay focused on what makes you money: listing and selling real estate.

Here is an example taken from a blog post that lists 12 months’ worth of sales for three ZIP codes in the Pittsburgh, Pa., area:

Existing-homes sold: 1,080, for an average price of $132,000. New homes sold: 94, for an average price of $303,000. I have no idea how these numbers compare to 2010, and what could I do about it if I did? Let’s assume that sales are down 10 percent, or whatever percent you want to use. So?

You may find yourself in a conversation where the economy is being discussed, and a cloud of hopelessness hangs over the conversation.

I always wait for the opportunity to ask this question: "So, what do you think we can do about it?" And there the conversation turns to sports or politics. It’s true. We cannot do one thing about last year, next year or even the inventory.

But there is one thing we can do. We can quit making excuses and believing that "nobody is buying." The numbers prove us wrong.

People in your market are buying. The good news is that you can do something about it: Start prospecting harder and smarter, and watch your own local market share grow.