Is the glass half full or half empty? Personally, my perception of the glass changes from day to day. When I'm feeling gloomy, the glass is empty! When I'm feeling upbeat, the glass is half full! But, that perception is from me as an individual, not a society of people.
Regardless of how much we want to separate ourselves from the herd, the media still impacts our daily thoughts and forms perceptions for us. A couple weeks ago RISMedia, an online nationally respected journal, published an article about how real estate agents should manage the potential home seller's expectations in the area of pricing their home.
My first impression was the article was excellent . . . which is true. On second reading, however, the doom and gloom hit me. My experience with statistics is that one can massage them to create most any message one wants to hear, but some of the quoted numbers in this article brought the Ziggy cloud over my head!
- A survey by Boston Consulting Group in June, 2007, found that 55% of homeowners still believe their home is worth more today than last year. Hmmmm. The public has been taught by real estate professionals and the media that homes appreciate. Why would the home owner think differently than they have been taught? Were these owners screened to eliminate those who have made improvements or whose neighborhoods are next to a booming area of new development? Were they only people whose homes are listed? Were they people in a depressed real estate market or in a more stable market? Too many questions about this statistic make me question the purpose of it being published. Do I think my house is worth more this year than last? No, but I know I paid more for my house than it was worth when I bought it. If it was in pristine shape in a stable real estate neighborhood, I might have a different opinion.
- First American Real Estate Solutions (Google search for that term produces First American Core Logic which sells statistical information) was cited as showing that if one house forecloses in a neighborhood, the average house in that neighborhood loses 5% of its value. If 8% of the homes foreclose, the value of homes in that neighborhood goes down 20%. This is a scary statement to me. What I hear is that if one of my neighbors is injured or loses their job and their house goes into foreclosure as a result, my other neighbors and I get to suffer the consequences? Again there are questions. Can the home owner not sell the house and that's why it goes into foreclosure? If that's the case, the real estate market may already have lost 5% in value which is not the result of the foreclosed house in the neighborhood. Secondly, these numbers probably are averages across the nation and do not apply to local neighborhoods.
- After all of these scary statements, foreclosure statistics are forecast for the coming two and a half years by a website (RealtyTrac) who sells these foreclosure leads to real estate agents and consumers. It is anticipated that more than 2 million homes will foreclose. Is it possible a foreclosure frenzy might be in this company's best interests? Frankly, if that is a national figure, I would like them to quote how that compares to the total number of homes owned. The first quarter of 2007 is quoted as having 3 out of every one thousand homeowners going into foreclosure. Is that a bad figure? There's no comparison to former years to give us a baseline. Three out of 1000 translates to .3% or three-tenths of a percent. Is that higher than other years? Again, these are national statistics. How do they apply to local neighborhoods?
Even though the reality is that our St. Paul real estate market is seeing prices go down, the application of these horrendous statistics doesn't necessarily work in our local market. As clients come to me, statistics for their specific neighborhood are generated from the MLS. Doom and gloom doesn't always apply. Some neighborhoods are holding strong. Others are not. I need to remember just like everyone else that because it's printed in a well respected publication doesn't make it truth!
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