Are prices going up or down or what?

By Joel Persinger
YourRealEstateDude.com

In spite of what most real estate gurus might say, it is quite common for real estate prognosticators to oversimplify complicated things, over-complicate simple things and sensationalize just about everything. Every day seems to bring another article or TV news story proclaiming that home prices are dropping, going up or staying about the same. Hence, the almost total confusion expressed on the faces of many clients who ask me the age old question, “So, are home prices going up or down or what?”

While such a question may seem simple on the surface, the answer is actually somewhat complicated, once you dig a little deeper into the various layers of the market. Real estate “educators” like to say that the real estate market is stratified. This is “big speak” that simply means that the market is made up of many parts or segments that don’t all act or look alike. The condo market is very different from the single family home market. Similarly, the market in my East County neighborhood is very different from the market in La Jolla or Del Mar. There are even segments within segments. New condos are an entirely different market than condo conversions or even resale condos.

The other day, my marketing manager brought a newspaper article for me to review. The article claimed a value for a median priced home in San Diego as being quite different from what he is experiencing in his day to day work in my office. He was quite surprised and was opening the article to tell me about it, when he suddenly realized that it was focused on the market for new homes rather than resale homes. Just as with the other examples I mentioned, the new home and resale home markets are completely different and the news media moguls, whose job it is to sell news, seize upon whichever numbers are more sensational at the moment and, “Bam!” a news story is born.

With all these parts and pieces responding differently in the current marketplace and the media reporting numbers that, by in large, are useful to nobody, how does the average person ever get a handle on which way the prices are going? The answer lies in recognizing the media hype for what it is, and in being more specific with the questions you ask your real estate broker. It has been my experience that most people who ask me about market prices are wondering what has happened to the price of their property. Others are attempting to gauge whether prices have become favorable enough for them to buy property somewhere down the line. In each case, knowing the specifics allows me to provide an answer that has some value.

So, if you ask your neighborhood real estate professional, “Are the prices going up or down?” the answer is likely to be, “Both”. However, if you ask, “What’s happening to the value of my house?” or “Have the prices of duplexes in El Cajon come down?” the answer you get will be a lot more valuable.