Today we will discuss the tremendous range in meanings that can be taken from what are commonly referred to as “Real Estate Stats”. To do this, let’s look at a submarket in Austin – zip code 78703. This zip code sits right in the heart of what is called “Central Austin”. The point of this article is to encourage you to arm yourself with a few grains of salt when listening to or reading information provided by a news source, a politician or even a neighbor!
Some “raw” stats for our experiment (78703 – detached single family homes):
May of 2008, had 25 homes sell. The average square footage was 1839, average sale price $527,112 for an average sale price per foot of $293.93.
May of 2007, had 27 homes sell. The average square footage was 2413, average sale price $677,476 for an average sale price per foot of $279.96.
Here’s your task: You are the editor of local newspaper, and you must write a headline that sells papers. What will you write? How about:
“78703 values PLUMMET! Average sale prices down 22%!”
Maybe you are a politician? Try:
“McMansion ordinance SUCCEEDS! Sold Home sizes down 23.8%!”
OR, you could read the data differently and have a different meaning all together:
“No Mortgage meltdown in 78703! Average price per square foot up 5% over last year!”
“Consumers are now choosing smaller houses in Central Texas”
What is the “truth”? Answer, it is subject to your interpretation. Yes, the “truth” depends on what is important to you and from which angle you choose to approach the situation. Are any of the above headlines true? Yes – They could all be argued to be true. Remember however, they are also all LOADED with un-spoken opinions meant to make you feel a certain way.
The market trend in any submarket is a combination of a huge amount of market forces. The purpose of this article is not for me to speculate about what is really going on in 78703 (I will happily do that in person with you…), but to encourage you to notice headlines in a new way; one that begins to wonder about the intentions of the author/editor/producer or broadcaster.
Enjoy the news…
…WITH a grain of salt!