Texas Property Insider- Austin Real Estate and Texas Coastal Real Estate Blog

Welcome to Texas Property Insider. The purpose of this blog is to provide accurate and helpful information about market trends and issues important to property owners in Central Texas and on the Texas Coast. You hear a lot of talk out there. You see the statistics, read the stories in the newspaper and you see practitioners regurgitate those same stories and statistics. There is more information available then ever before. But why is it, even after all of the stories and pundits have had their say, you still feel you can’t grasp what’s really happening in the real estate market?


There is a lot more to it than simple statistics and market info. These numbers are helpful and vitally important, but if taken at face value they can be misleading, even deceiving. As Mark Twain once said, “There are lies, damned lies and then there are statistics.” I created this blog to pull back the curtain on Texas real estate, interpret the market information and present it to you in a format that is both pithy and easy to digest.

Tuesday, April 12, 2011

Stop Paying attention to month over month comparisons...



Hi Guys,

I hope all is well with you. Today we are going to bust open a commonly misunderstood statistical favorite. That would be the monthly performance comparisons based on the year, month over month comparisons. (ie. Sales June 2010 are up 32% compared to June 2009.)

I'll spoil the ending for you...they are meaningless.

You will often see these numbers reported in the newspaper or in real estate updates written by title companies or agents. These figures are interesting and they do fill up space, but at the end of the day the actual value of these figures is quite low. Real estate is all about trends and the pushing or pulling of interest rates, consumer confidence, the economy on the whole, local economic indicators, neighborhood, price range etc. So, because of these factors what happened last June really has no bearing at all on what happens this June and thus the numbers are cotton-candy (feel good, but no nutrition) rather than a secret weapon for the consumer.

How many people like looking at real estate in the rain? No one. Nobody likes looking for homes in the rain. Something as innocent as two weeks of rain during a busy buying season can throw numbers off. It is very important to look past the stats and try to discover the real meaning.

"Sales are up" or "sales are down" make for great headlines, but they are only meaningful if compared to applicable market data. Thus, if sales this month are up over last month this could be an indicator that the market is changing. (POP QUIZ: What are the three indicators that a market is changing? Answer...days on market, months inventory and list to sale price ratio) But, sales differences from a year ago fail to show any trends of a heating or cooling market. The figures do not show what has happened between now and then.

So...when your looking at real estate statistics be sure to look past the month over month comparisons and focus your attention on what the market did last month and the month before. Also, remember in the Austin market, that real estate has been so local that one street can be hot and another just around the corner is not. With this type of environment trends even in a particular zip-code can be deceiving.

Talk to you all soon!

Marcus
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