How To Make Sense of Market Data – Part 1

Over the last handful of years few things have grabbed more headlines than the housing market. The sector has been so troubled that it’s only competition in the news has been Iraq, Afghanistan, and the financial crisis at large. As we have navigated through this period in history we have been peppered constantly with data by national and local media. However, to really understand real estate market data it takes more than just looking at the numbers, especially the broader ones.

I find it is much more informative, and more fun, if we take a step back and begin asking “what” and “why”. We’ll get to the “why” in the next post, but before why, we have to ask “what”? What data points actually mater to us? The great thing is, that question almost always has the same answer: the data that is as local as possible.

Why “What” Matters Before Why:
The Northern Virginia real estate market is very diverse in terms of values and performance, and that diversity can run along some pretty tight borders. Look at Arlington County, or Fairfax County as a whole and we will see one set of data. However, look at 22207 versus 22203 and we will likely see significant varience between the two. So the “what” that is going to matter to most home owners or potential buyers is not the big picture, but data for specific zip codes, or even a specific neighborhood if you have ready access to that data.

If we fail to answer the question of what data is actually relevant, then the “why” questions behind that data are not going to help us at all, or will help very little at best. Ultimately the data that will tell us the most about YOUR home or the home you want to purchase is what we are most interested in. From there we can begin to analyze that data through some good “why” questions and begin to draw some conclusions, and maybe even conjure a few predictions.

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