I both love and hate the attention real estate gets in the media. I love it because it’s what I do and it’s good to see so much interest in the field I work in, and I hate it because the stories usually feature statistics that can be confusing or misleading for potential buyers and sellers.
I often caution my clients to avoid making broad assumptions about local real estate based on what they’re hearing on the national news or what they’re reading about on social media.
Real estate is complex, and while trends are often talked about on the national level, real estate is really a local game. Ask anyone about real estate – heck, even ask their dog and Fido will tell you that real estate is all about location! So why would anyone listen to market trends when they don’t factor in LOCATION.
This is what separates real estate from most investment opportunities or commodities.
Let’s compare real estate with another common investing market. Take stocks, for example. Though the value and price of a stock varies throughout the day, the stock itself is sold in a single market, and the stock price is the same in Boston as it is in Los Angeles.
The value of real estate is far more complex. Let’s say you put identical homes in Boston and Los Angeles: a beautiful 2,000-square-foot, 3-bedroom, 1 and a half bath home on a quarter-acre in a quiet neighborhood with an ocean view. The two identical homes are made of the same material with the same appliances but the sale price and home value will vary greatly between cities.
Why is this? Though you’re buying the same “physical” property, the value itself is based mostly on location, more specifically, the demand for homes in a given area. So, while the term “real estate market” is used as a singular, general term, the “real estate market” is really made up of many, many, many markets! Too many markets to really count.
We could use the above “identical home” scenario and place the two homes only several miles apart and still have vastly different home values.
To illustrate my point further, I’ve pulled the statistics for median home prices over the last four years on the national, state and county levels. According to the National Association of Realtors, the median home sale price has increased by 56% since 2018. In that same time period, according to the Maine Association of Realtors, the median home sale price in the state of Maine has only increased by 39%, while the increase in York County has been around 42%.
Still using data from Maine Association of Realtors, York County’s median home sale price topped at $398,750, slightly below the national average of $416,000 but much greater than the state’s average of $299,000.
Sorry to throw all these numbers at you! If they seem all over the place, that’s (kind of) the point! The data is being pulled from progressively smaller market-sizes, and the numbers can become confusing, or worse, very misleading.
(On a side note, the statistics above are great news for homeowners everywhere. Home values have been far outperforming expected averages, meaning that if you’ve bought a house over the last decade, you’ve gained quite a bit of equity).
Back to market trends. I caution my buyers and sellers not to rely too heavily on the “market trend” stories they see on the news or on the internet. Real estate statistics often collect data from across the country and spit out broad trends. This is a good way for economists to better understand the shape and health of the housing market, and it helps the news fill air time, but it really does little to help a potential home buyer understand what to expect entering into their local market.
All of this should lead you to wonder how you can keep up with your local real estate trends, and the answer is simple: ask your local, professional and knowledgeable real estate agent!
Of course! Why not ask the person who every day has her finger on the many pulses in the area? In order to best serve my clients, I have to know at what prices houses in Maine and New Hampshire are being listed and sold.
The information I monitor daily – homes being listed, pending transactions and recently closed transactions, along with watching listings for days on market and price reductions – allow me to accurately and confidently provide market analyses for my seller clients, and allow me to assist my buyers with valuable insight when they’re considering placing an offer on a home for sale.
It also makes me a great resource for all your local real estate questions! So if you’re interested in the market trends in your area, or in areas where you’re looking to live, please feel free to message me any time! I’d be happy to give you the latest updates on market trends for southern Maine and New Hampshire.
