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What’s All That Noise?

How do you make a housing decision – buying or selling – among the noise?

Noise. Housing Market Falters Amid Rising Prices, Lower Paying Jobs Bloomberg July ‘14

Noise. Existing home Sales up Solidly –   National Association of Realtors May ‘14

All real estate is local…and then more local.  The margin for error in today’s real estate market is small.  Said more directly, an error will cost you money.  Example:  For a 4 – 5 week period in June – July, some areas of Milwaukee County were “hot” to use an overused real estate term.

We had to counsel clients looking in those areas that their choice was to “buy into” that market and pay more than a home was worth or be patient.  I am glad to report our clients were patient and did not buy into panic and were able to buy a home for value.  The real estate industry likes panic.

Noise. Inventory Surges in May, 1st Home Buyers Remain Challenged Zillow

Noise. Home Prices Are Becoming More Stable – Trulia

Homebuyer Associates tries to take a critical look at real estate, not a cynical one.  It’s a fine line, similar to the difference between being clever or stupid.  Our critical look means if our analysis indicates the value of an asking price is not present it is our job to tell our client.  That critical look means reviewing area sales, days on market, average asking price, average and median sale price among other bits of information.

Our analysis doesn’t mean the home won’t sell at the asking price – someone moving from another state not understanding area values may be sold the home.

The consumer is bombarded by “information” from HGTV, Trulia, Zillow and a host of other websites and apps.  Under the guise of information – when in fact it is advertising – the consumer is hearing a lot of noise that may hinder, not help, their choices and decision making.

In the book The Happiness Hypothesis, the author Jonathan Haidt speaks to the rational brain and emotional brain.  In his analogy the emotional side of the brain is an Elephant and the rational side the Rider.  The afore stated sites are “Elephant trainers.”

Perched atop the Elephant, the Rider holds the reins and seems to be in charge.  The Rider’s control is suspect because the Rider is small relative to the Elephant.  When the rider and the Elephant disagree about which direction to go, the rider loses because he’s overmatched.  Emotion wins.  The real estate industry likes emotion.

What is the real estate analogy?  The consumer is the Rider and the real estate industry is the Elephant.  The consumer pulls on the reins, but operating from a position where noise is considered information, decisions are too often made based on panic and emotion.

Think of noise as clutter and understand that clutter can lead to bad decision making.  In upcoming posts I note how clutter, apps and high tech noise – under the guise of providing information – can hurt you, not help you.

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Homebuyer Associates
1835 N. Riverwalk Way
Milwaukee, WI 53212
Phone: 414-254-4129