Why the 27% drop in home sales shouldn't worry you (too much)
Time to take a deep breath. Here's what the news really means to you: Likely nothing.
Do you have a house you need to sell? No? Then put your crying towel away, or loan it to someone who really needs it.
There are 75.1 million owner-occupied housing units in America and only 4 million of them are on the market today, according to the National Association of Realtors. The rest of you should just go quietly away. Yes, your home is worth less on paper than it was a year ago or even five years ago. But that was paper money, just like what you play Monopoly with. You don't have to sell, you likely can't anyway, so why drive yourself nuts over it?
Now that those people have left the post, let's work on those who really do need to sell. I may have some encouraging news for you. While that 27% free-fall is no doubt accurate, it may not be where you live. Now, more than ever before, the real estate market is hyper-localized. That means the depth to which you are impacted by the housing market crash depends not just on which city you live in or even which neighborhood of that city, but actually on which streets within that neighborhood.
Ernie Carswell, a top-producing agent with Teles Properties in Beverly Hills, offers a neat micro market report each month for Los Angeles. Looking at the one he sent me yesterday, you get a totally different feel for what's going on in the housing market.
Here's but one example: Comparing July 2009 with July 2010, in the high-end community of Bel-Air, Calif., the median price of sold homes went up 1.4%. Yes, up. In July 2009, there were 213 properties on the market for an average of 96 days; the inventory moving at the snail's pace of 19.6 months. Yet in July 2010, there were 178 properties on the market for just 48 days and the inventory was expected to last 6.2 months. Higher sales prices, fewer homes to compete with, things moving faster.
Those numbers would suggest a different real estate story than what the national figures tell. Location really does matter. And before you dismiss me as out of hand and think prices are only holding in the high-end market, let me assure you they are not. Again, it's pockets. If you are in a hot pocket, you may not be as bad off as the broader numbers suggest.
I'm not saying don't panic, just don't panic yet. One thing is really does underscore is the need to hire an agent who seriously knows your street. This isn't a job for the sister-in-law who just got her license or someone who assures you that they "can sell anywhere."
Carswell says, "As the economy and the real estate markets continue to change, the nuances between different areas and different neighborhoods are becoming increasingly magnified. One neighborhood may show a sales increase, while another neighborhood just blocks away may be experiencing a dramatic drop in sales from the previous year. While the media publishes its statistics based on national, state and county trends, this distorts the public's perception of what could actually be happening in their own neighborhood."
Listen to the man. He speaks the truth. Bloggers love to post items about how far the rich and famous have fallen or tell you which celebrities had to drop their asking prices by millions. But there is only one address you should be concerned with: Yours.