Fish in Water


It’s tough to drill down on any topic in 450 words. Let alone write something intelligible enough to help the average person understand something as complicated as the real estate market. Sometimes I feel like a fish struggling to explain the concept of water.

Even if most people prefer answers served up in big bold news font, there’s no one message about “the market” that’s capable of being translated correctly into everyone’s personal language. The essence of the market is defined by how every home compares to every other home. And no one on the planet has enough neurons to wrap their heads completely around that concept.

Everyone lives in a different place (home), and is at a different place (stage) in their lives. All I can do is draw a rudimentary map that allows folks to triangulate some notion of where they might be in relation to everyone else. Since the world keeps changing, the map is always in a steady state of flux.

The key to real estate is not so much understanding where the market is. It’s more about understanding where you are in relation to it. Here are a few hints that might prove helpful when reading things about real estate in the future:

Don’t get freaked out when the median price fluctuates 3-6% in a month. That kind of shift up or down is normal. Every month.

There’s no such thing as a national or statewide real estate “market”. There’s not even much of a regional one either, except to identify broad trends and cycles over time.

Even within the County there are significant differences between the real estate market in the cities of Santa Cruz and Watsonville, or San Lorenzo Valley, or even Aptos.

There are many submarkets within the County that aren’t geographical in nature. A different market for homes at $600K than for those listed at $1.6M. A different market for single level homes vs multi-storied homes. Rural settings vs those close-in neighborhoods. Condos vs. single family residences. Etc., etc.

Almost all statistical data in newspapers is trailing information. The sold statistics you’ll read for November are a snapshot of what willing Buyers and Sellers agreed to do back in August or September when they opened up 30-60 day escrows.

Buyers interpret the same exact information differently than Sellers do. Always have, always will. When it comes to people who are trying to both buy and sell in the same local market, juggling those two opposing viewpoints during the same transition can be a monumental task.

We’ll stop there and continue next week…

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