Lancaster County PA Realty Check: Misleading Real Estate Statistics

Misleading Real Estate Statistics

Every month new statistics are published regarding the state of the housing industry.  Recently these statistics seem quite depressing!  While not discounting the fact that the real estate market has been soft in most areas of the country, several factors combine to make these statistics somewhat sensational and rather misleading.

In the first place, all real estate is local.  Just like the old joke about location, location, location.  National statistics don't tell the story of what conditions are like in your area.

Furthermore, even if you separate the local statistics into average sold price or median sales price, it still doesn't tell the whole story.  Average sales price is arrived at by taking the total sold prices and dividing that figure by the number of homes sold.  But  even this figure doesn't tell you what you need to know. 

What are your particular neighborhood figures?

Are higher priced homes selling well?

Are medium priced homes taking longer to sell?

Is there a slow-down among lower-priced city homes? 

In other words, you see that figures need to be broken down into neighborhoods, types, and price ranges in order to be meaningful.  How long the homes took to sell is also a factor that usually isn't mentioned in the media.

What about median home prices?  The median sales price simply means that half the number of homes sold at above the median price, and half the homes sold below it.  But is that as meaningful as it would seem?  Not so much as one would think.  The problem with both the average price and the median price is this:  we're comparing apples and oranges.

If it were the same houses that we were comparing from month to month, the comparison would be meaningful.  But we're not comparing the same houses.  We're comparing a whole different set of houses that went to settlement each month.  Were they nicer than the houses that sold the previous month?  Were they on equally nice lots?  Were the sold homes predominantly  in different price ranges?  The overall trends can be meaningful in a general sense, but month-to-month comparisons aren't particularly useful.

The thing to keep in mind out of all this is that in order for real estate statistics to be meaningful, they must be as specific as possible to a particular neighborhood and price range.  An experienced Realtor can help you analyze the data.  

If you have any questions on real estate home sales in Lancaster County, PA, please feel free to call me at (717) 951-5552.

 

Brian Schulman offers expert real estate representation for buyers and sellers of homes in Lancaster County, PA.  To learn more, visit http://www.FindLancasterHomes.com/

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Comment balloon 17 commentsBrian Schulman • April 04 2008 04:12PM

Comments

Great post.  I couldn't agree more.  Top line results have their place but they don't tell the whole story.
Posted by Don Stern, Greater Baton Rouge Real Estate (Realty Executives South Louisiana) about 10 years ago
Exactly, Don - you have to go deeper to understand what's really happening.
Posted by Brian Schulman, Lancaster County PA RealEstate Expert 717-951-5552 (Coldwell Banker Residential Brokerage, Lancaster PA) about 10 years ago
Brian..that would be a great localism post! Consumers have a real problem with this issue and your explanation was clear and concise.."consumer friendly"
Posted by Joan Mirantz, Realtor, GRI, CBR, SRES - Concord New Hampshire (Homequest Real Estate) about 10 years ago
Joan, I thought that by making it available to consumers, it already was going to localism.  I aimed it at Lancaster County, PA, although the information is valid anywhere.  Am I mistaken that localism will see it?
Posted by Brian Schulman, Lancaster County PA RealEstate Expert 717-951-5552 (Coldwell Banker Residential Brokerage, Lancaster PA) about 10 years ago
Yup...When I first looked all I saw was Realtors group! It's where it's supposed to be!
Posted by Joan Mirantz, Realtor, GRI, CBR, SRES - Concord New Hampshire (Homequest Real Estate) about 10 years ago
Yea but the public wants broad stats not to their house went down 20% more then the one on the other side of the tracks.
Posted by Gene Allen, Realty Consultant for Cary Real Estate (Fathom Realty) about 10 years ago
I agree Brian...Most stats are made up at the spur of the moment if you ask me.
Posted by Vern Eaton, Realtor 651-674-7449 about 10 years ago

Great post Brian. You've opened my eyes to a few things. Thanks!

Posted by Eugene Jones (Weichert Realtors) about 10 years ago
I'm glad you found the post useful, Eugene.  Thanks for stopping by!
Posted by Brian Schulman, Lancaster County PA RealEstate Expert 717-951-5552 (Coldwell Banker Residential Brokerage, Lancaster PA) about 10 years ago
Yes, statistics are all over the place with real estate. The national numbers floating around are great for nothing. I pull stats every month for Waco, but even those aren't a clear picture as you pointed out. It has to be specific to where you are looking and what you are looking at. A local real estate agent knows and can get the most accurate stats pertaining to a person's individual situation and needs.
Posted by Wendy Montoya, REALTOR® Broker Associate, 254-315-4906 (Towne Adams REALTORS) about 10 years ago
Well stated, Wendy.  All real estate is local, as you pointed out, and the more specific, the better.
Posted by Brian Schulman, Lancaster County PA RealEstate Expert 717-951-5552 (Coldwell Banker Residential Brokerage, Lancaster PA) about 10 years ago
Gene, the public may like the overall statistic better - but if they're the ones living on "the wrong side of the tracks" as you say, don't you think the specific stat for their neighborhood is the one they need to know?
Posted by Brian Schulman, Lancaster County PA RealEstate Expert 717-951-5552 (Coldwell Banker Residential Brokerage, Lancaster PA) about 10 years ago
Vern, you make a valid point:  figures don't lie, but liars can figure.  Statistics look different depending on how you categorize them.  Statistics can be gathered in such a way that they make a particular statement.  That's also just what's happening when the parameters are purposely national, instead of local, therefore implying that the whole country is down.
Posted by Brian Schulman, Lancaster County PA RealEstate Expert 717-951-5552 (Coldwell Banker Residential Brokerage, Lancaster PA) about 10 years ago
Brian, I am glad you are talking about all the variables that can help you lie about statistics. My pet peeve in this area is Sale Price to List Price ratio. If the list price goes down and is reset along the way it makes the percentage look much more favorable. One number like %growth or decline for an entire metro area is also ridiculous!
Posted by Gary Woltal, Assoc. Broker Realtor SFR Dallas Ft. Worth (Keller Williams Realty) about 10 years ago

Gary, I agree - the % of sold price is even more skewed if the property has been relisted by another agent at a reduced price, after previous reductions by the previous agent.

Posted by Brian Schulman, Lancaster County PA RealEstate Expert 717-951-5552 (Coldwell Banker Residential Brokerage, Lancaster PA) about 10 years ago
Brian - There are so many statistics, facts and figures about the housing market floating around, but unless you know exactly what everything means they are useless.  I agree that real estate is local and median house prices are misleading.
Posted by Debbie Summers (Charles Rutenberg Realty ) about 10 years ago
Right, Debbie - and part of the value that we provide to consumers is the analysis of these statistics, so they actually understand what the figures are or are not telling them!
Posted by Brian Schulman, Lancaster County PA RealEstate Expert 717-951-5552 (Coldwell Banker Residential Brokerage, Lancaster PA) about 10 years ago

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