Real Estate Frustration: A Reader Response - Issue 376

If you’ve read our latest blog post, you’ll have heard our take on why you shouldn’t care about the short-term real estate market and our encouragement to home buyers to embrace the journey rather than fear the market. Well, this struck a chord with one of our agents.

Mike Chuchmach, a fellow Realtor®, has been a part of Keller Williams Home Group Realty for 10 years, throughout our many different chapters as a brokerage. Mike has always been a trusted agent & active part of our community. He’s never afraid to share his opinion, and often runs a morning club within our Brokerage where agents can gather to share both their wins & frustrations with the current market over a cup of coffee.

This week, we are featuring Mike’s reader response and his take on short-term real estate stats. Read on to learn about what Mike calls “The Five-Year Perspective”.

Real Estate Frustration: Why We Shouldn't Care About Short-term Stats

Hello, real estate junkies! As a seasoned real estate agent, I've had the privilege of guiding numerous individuals and families on their home buying and selling journeys. However, there's one aspect of the industry that has been irking me for quite some time now (and “irking” is putting it politely)! It’s the way media outlets and brokerages portray real estate statistics. Sure, it's great to have data to analyze trends, but the focus on short-term comparisons like this month's sales versus last month's or even last year's simply does not matter and YOU shouldn't care!

The Real Issue with Short-Term Comparisons

Before diving into my frustration, let's take a moment to understand why comparing short-term real estate sales statistics can be misleading. Real estate markets are complex ecosystems influenced by a myriad of factors, ranging from economic conditions and interest rates, to demographic changes, and even unforeseen events (case in point: the stats rollercoaster during the recent pandemic). These variables can cause short-term fluctuations that may not accurately reflect the long-term health of the market.

The Five-Year Perspective: A Better Measure

The media's obsession with comparing monthly or yearly sales data tends to overlook this crucial aspect of the real-life-real estate journey which is ”the average time a person owns a house before selling”. In reality, the average homeowner stays in their property for about five years before considering a move to a new home. This timeline is influenced by various life events that might trigger a move, such as growing families, job changes, or shifts in lifestyle.

Why Five Years Matters

Well, the five-year-comparison gives a more accurate representation of how the real estate market is truly performing. Short-term fluctuations tend to get smoothed out over a longer period, allowing us to see the actual trends without being blinded by the noise of short-term fluctuations. Comparing sales from the current month to those of five years ago paints a more realistic picture of the market’s true trajectory.

The Impact on Homebuyers and Sellers

The media's emphasis on short-term sales data generates a lot of “clicks, views, likes & subscriptions”, whereas a focus on healthy sales statistics compared to sales five years ago would not get the same attention. We frequently see the news flooded with reports that the "bubble is about to burst" because prices are down compared to last month's sales. This could influence Buyers into waiting to purchase in hopes of further decline, when what really matters is the price you pay compared to the value when the time comes to sell, which is likely in approx. 5 years. This media frenzy doesn’t only generate “clicks, views, likes & subscriptions”, but it affects the overall market sentiment AND the financial outcomes of buyers and sellers!

As a real estate agent, it's my duty to guide my clients with accurate and insightful information. While short-term comparisons have their place in analyzing market trends, they often fail to capture the bigger picture. By shifting the focus from monthly or yearly sales to a five-year perspective, we can provide a more balanced and accurate representation of the value of their real estate investment.

The short-term stats simply shouldn’t matter to the majority of homeowners. So, let's encourage “the media” to dig deeper and provide more comprehensive stats that reflect the true nature of the average homeowner. After all, investing in real estate is a long-term game for most people, and it's high time we start looking at the data with a long range lens. Here's to better-informed buyers, sellers, and more realistic real estate stats that actually matter!