Real Estate Statistics – Go Figure!
“Figures don't lie, but liars figure.” Mark Twain The saying portrays an ironic or perhaps cynical viewpoint of the way statistics are used to shape our decisions. While it is true that numbers can be manipulated to misrepresent a given condition, often, it is an innocent misinterpretation that leads us to draw inaccurate conclusions.
The Housing Market
Every month, various agencies in the United States release a series of economic indicators, including data on the housing market. The most commonly broadcast statistics include housing starts and building permits (NAHB), new single-family home sales (U.S. Census) and existing-home sales (NAR.) Because of different methodologies employed, reports may appear to present contradictory trends, for any given month.
The U.S. Census Bureau’s new single-family home sales is based on signed contracts and/or deposits received. Existing-home sales, including single-family homes, co-ops and condominiums, is released by NAR (National Association of REALTORS®), which bases it’s sales data on closed transactions. Since it typically takes a month or two (or more) to go from contract to closing, the market may shift direction during that period.and the two monthly reports may seem to show opposite trends.
All Real Estate is Local
While understanding the discrepencies may be interesting, the truth is that none of the reported figures may be of any value to the individual consumer. Although the full reports do refine the data further (e.g. NAR breaks out statistics for single-family homes, and by region), the headlines presented by the media reflect national information. For the home buyer or seller the only pertinent information is local information.
There is an abundance of information available to help determine trends and values, when making decisions about purchasing or selling a house in your local market. Among these statistics are unit sales, average asking and selling prices, median asking and selling prices, average days on market, listing price to selling price ratio and months of inventory. However, just as with the national statistics, accepting the numbers as presented without drilling down further may lead you to draw erroneous conclusions.
next..Part 2 Drilling down the numbers
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Copyright © 2013 Marilyn Katz, All Rights Reserved