Question: Whenever I ask local real estate brokers about the neighborhood market they always tell me it’s great! Sales are booming and prices are rising, they say.
While I appreciate the sunny evaluations and healthy enthusiasm, is there a more fact-based way to find out how local real estate markets are really doing?
Answer: In many cases, there is public information available which can give you a very precise idea of local market trends.
The places to check are local government offices, your local real estate brokerage association, current and recent home sales, open houses, local media, and crime.
Every city and county government has financial reports which look at such things as tax collections and expenditures. Grab the latest one and search for “property taxes” and “property values.”
For example, my local county reports for the most recent year that while the property tax rate remained unchanged, “property values increased an average of 6 percent over the prior year.”
If you see huge value increases, you need to ask if they can be sustained. If you see enormous declines, you need to consider just how much further prices can fall. In general, you would like to see consistent value increases above the rate of inflation.
Real estate brokers
There are hundreds of local Realtor groups and MLS systems across the country. If you search their websites, you can often find monthly and annual statistical reports.
My local Realtor group – the Pensacola Association of Realtors (PAR) – posts monthly sales reports and they are an excellent source of data and information. For instance, for October PAR reported:
- “Median sales price for October was $184,000, $20,000 above last October.”
- Unit sales were up 4 percent over last year.
- Pending sales were down when compared with last year, meaning demand was up.
When looking at industry sites it’s important to understand that while they are a good source of sale information they may not reflect all local activity. For instance, homes sold for-sale-by-owner (FISBO) may not be included in industry totals.
Current listings & recent sales
We live in the internet era, and a huge amount of real estate information is online. Spotting hyper-local trends – what’s happening in your neighborhood as opposed to real estate movements across town – is now fairly easy. Just go online and search around. You will be able to quickly find:
- Homes now for sale.
- Homes recently sold. The more recent the better.
- The listing history for individual properties showing current and past listing prices.
- The number of bedrooms and baths.
- The square footage.
- The sale or offering price as well as the cost per square foot.
- Renovations, new appliances, etc.
- Extras such as a pool, enclosed lanai, sun room, etc.
It makes sense to visit open houses in your neighborhood.
Open houses are open to everyone so go. You can see what’s currently available and get a good idea of values that extends beyond mere numbers.
You can also see how properties show and their general condition, and you can also meet local real estate brokers who are a very good source of local market information.
You want to explore local media, especially newspapers. What you’re looking for are signs of future real estate demand or decline, often small or buried items.
When you see that a local employer is growing from 400 jobs to 2,000 positions, that’s good news for local real estate. If a major organization is building a business campus that will employ 10,000 people in five years, that’s extremely good news.
If a nearby bridge is no longer able to handle local traffic and is being replaced, that’s two pieces of good news; first, the money spent to build the new bridge is good for the community and; second, the increased traffic says more people need to live somewhere.
A mall that’s being expanded – at a time when many malls across the country are closing – says there is enough local economic activity to support more shopping and that means more jobs and tax revenue.
Alternatively, if a factory is closing, a big employer is moving, the population is shrinking, parks are not maintained, home prices are stalled, or schools are poorly rated then there’s reason for concern.
Crime is a concern but publicly-reported crime information can be deceptive if not outright wrong.
According to the FBI, “many entities – news media, tourism agencies, and other groups with an interest in crime in our Nation – use figures from the Uniform Crime Reporting (UCR) Program to compile rankings of cities and counties. These rankings, however, are merely a quick choice made by the data user; they provide no insight into the many variables that mold the crime in a particular town, city, county, state, region, or other jurisdiction.
Consequently, these rankings lead to simplistic and/or incomplete analyses that often create misleading perceptions adversely affecting cities and counties, along with their residents.”
So – as always – there’s a lot of information out there but it takes time and critical thinking to see what makes sense. You may find that your broker’s enthusiasm is justified – or maybe not. In either case, it’s good to have hard facts on your side.