It can be confusing to understand the health of the economy from the media. As the screen shot from my news feed shows, there are seemingly completely contradictory stories on the U.S. real estate market. I've put red next to the "bad" news and a green mark next to the good news. One headline has things jumping up 55%; another says new home sales are down 11%. No wonder people are finding that making sense of it is not easy.
Here are a few things to consider:
- First, all real estate is local. One region can have a spike upward while overall the country can be down. New York is not Miami or Las Vegas. For that matter, the Bronx is not Bronxville.
- There are different sectors in the market. Resales are not new homes; they are pre existing homes. In a down market, few people build new compared to the number of folks who are picking up pre-owned foreclosure properties which were built decades ago.
- There are different metrics, such as price and volume of transactions. Prices can be down, but the volume of sales can go up.
- Prices can go up, and the volume of sales can be depressed.
Data can be manipulated. You have to pay attention to the sectors, the region, and the metric. It all goes back to the old adage that there are lies, there are damned lies, and there are statistics.