Why Real Estate Data Is Granular And Not Mosaic, Or One More Reason To Stop Reading Real Estate Headlines

These photos represent six neighborhoods in America and their respective real estate markets.

They are six very different neighborhoods with six very different feels, each with its own character and flavor.  Some have dogs, some are blue, some are smiling -- some are young, some are old, some are blurry.

Now, look at the photo below.

This photo represents the national real estate market.  If you look carefully, you'll find the six "neighborhoods" mixed in.  One is in the cheek, one's on the forehead, one's off to the side, for example.

The "Big Picture" shown above is made up from thousands of "Small Pictures" representing our country's streets and neighborhoods.  These small pictures each have their own unique characteristics, but combine to form a completely different look.

The mosaic above represents yet one more reason why we must look deeper than headlines to get our real estate news.  The Big Picture tells us nothing. 

Recent real estate reports tell us that this is the worst market in years.  Yesterday, for example, Existing Home Sales data as reported by the National Association of Realtors® showed a nationwide slowing of sales (again). 

That's a national story. 

But on a local level, I can rattle off a handful of neighborhoods in both Chicagoland and Cincinnati that are exploding.  Lakeview and Oakley come to mind.  And there are many more, too.  Neighborhood by neighborhood in the United States, there are plenty of areas of real estate strength.  It's just very difficult to gather this kind of street-by-street data.

By contrast, it is simple to get national real estate data on our metaphorical goateed friend above. 

When an agency like NAR or HUD issues a press release about real estate, it does so with a spreadsheet and a bevy of easy-to-regurgitate statistics.  All reporters have to do, therefore, is cite the statistics, talk to a few industry people, and spit out the national story.  That's one reason why we see so much coverage.

But real estate is not a national story, folks.  It's highly, highly local.

To beat the point home, when you buy your next home, it won't be a home that exists in all 50 states.  It will be a home that exists in one state, in one town, in one neighborhood, on one street and that has its own character and economics.  Much like the small pictures above.

And that's what real estate is --  it's a series of very, very small pictures.

So, the next time that headlines talk about our nation's housing market -- strong or weak -- skip to the next article.  You can't lump every home in America together into one giant chunk of data.  Quality real estate data requires granularity -- just like the six neighborhoods shown above.

(Image courtesy: TwitterMosaic)