For the past year, it seems all housing news has been "bad" news. A case in point is the headline in our local St. Cloud Times recently blaring a huge ($20,000) decline in home values in the past year. Accompanying this article, oddly enough, was an Opinion Poll asking readers to respond to whether they believed their house had declined in value in the last year.
READER: BEWARE OF THESE HEADLINES!
Examine statistics.
- What, exactly, is being analyzed? A case in point with the local headlines: the statistics quoted to decry the seemingly huge decline in value were based on median sales price, a statistic confusing, if not unheard of, to the public and useful mainly to statisticians. When the public sees the "median sales price" being quoted, they read "medium" or "average" sales price--something very different. (In this case to the tune of $14,647.)
- Where was the study taken? Another case in point with the local headlines: the reader couldn't tell what area the statistics applied to, but the reader assumed St. Cloud and the most immediate surrounding area. If the statistics were instead based on the entire MLS area, (18 MLS zones vs. 8 locally) for example, the decline quoted would have dropped considerably and probably would have been more relevant. In addition, on a national level when statistics are quoted, they are often skewed by markets which work very differently from your local market, being dominated by heavy populations on both East and West coasts with specific variables which may not affect your area. (Co-op housing, for example.)
Be an informed and critical reader.
- Case in point in the local article: if the front page headlines constituted a news story, why was an opinion poll conducted on the readers' beliefs about whether there was a housing decline? If the stats were factual, why would opinions be relevant? Do we run opinion polls accompanying whether we believe (or not) that three people actually were killed in a local traffic accident?
- Examine slant or bias in the story: if housing prices went down in the past year, is the logical conclusion that this is bad for the consumer? (Does anyone, for example, benefit in the current market? Answer: of course! First-time homebuyers, for starters.)
- Housing statistics quoted may be provided by an economist vs. a real estate expert. Be advised: the financial (stock) market and real estate market are two distinctly different animals that seldom resemble each other in predictability.
Headlines can be frightening! Train yourself to read "between the lines" and seek out additional information. And as always, consult your real estate professional to help you make wise housing decisions.
