Are All Housing Markets Local?

In this world of 24/7 news, global markets, and countless reports on the housing market, it is easy to be misled by information that may not be applicable to your local market area. Several outlets track national markets while others such as C.A.R. report both state and county-level market information. While national, state, and county reports describe general trends in the housing market, households and REALTORS® alike know that housing markets vary a great deal locally.

Is the California Market Ahead of the US Market?
Reports on the US housing market do not necessarily reflect what is happening in California. Existing home sales in California rose 57 percent year-over-year in August 2008, compared to an 11 percent decline for the nation. Statewide sales have increased 85 percent since reaching bottom last October, yet national sales have remained virtually unchanged over the same period. Movements in home prices over the past year have played a large role in driving California sales. The statewide median price declined by 40 percent in August compared to a year ago, while the US median price fell 10 percent over the same period. Yet, the supply of homes for sale in California is considerably lower than the corresponding national figure: 7 months versus 10 months. In short, real estate markets tend to be much more local than nationwide statistics or even statewide statistics can illustrate.

Housing Markets Vary Greatly at the Local Level
In fact, local market patterns frequently differ from state and national trends. Differences in housing markets become more apparent when you compare neighborhoods, communities, and counties. For example, in some markets home prices may have fallen by large margins, even as much as 50 percent from their peak. But other markets have experienced small declines, and a few markets have registered slight increases on occasion in recent months. The same is true of the share of distressed sales in different markets. In some areas, distressed sales (Short Sales, Foreclosures, and REOs or bank-owned properties) account for as much as three-quarters of market activity, while distressed sales in other areas may account for fewer than ten percent of the market.

Many areas reporting a large share of distressed sales of late have had a run up in building and home sales in recent years. It is important to note that for the most part, differences in the mix of homes for sale in the market are driven by local conditions. Even within a city, individual neighborhoods or subdivisions may be behaving quite differently. Because of the barrage of information out there with respect to real estate, it is best to turn to the expert in your local real estate market when considering purchasing or selling a home. In the end, while national and state trends are important, they do not necessarily reflect what is happening in the neighborhood or community where you want to buy or sell a home. Be sure to contact me to get the latest information in YOUR market when thinking about buying or selling a home!