Just read a funny analogy about the myth of a US housing market. It went something like this. Coming up with a national housing number is like a weatherman who combines weather conditions in Nome, Alaska and Key West, Florida to arrive at a national average temperature of 45 degrees. While technically correct, this is basically useless information.
So it is with trying to pin down nationwide trends in housing. Real estate markets are notoriously hyper-local. Averages simply have no meaning. As income property investors, we’re very aware of how you must drill down to the neighborhood level, even within good local areas, to begin to see a realistic picture of that particular housing market.
Some experts like to look at housing inventories to try to find the bottom of a decline. Believe it or not, we’re beginning to see some bottoming patterns in certain areas of the Western US. Jason mentioned this is regard to California on a recent Creating Wealth in Today’s Economy show, and we’re pretty sure he wouldn’t go out on that limb unless he was feeling it in his bones.
Tattoo this on your hand: DO NOT BUY IN CALIFORNIA. We’ll let you know if and when any local markets in Cali become good buys again. For now, let’s just watch and wait from an academic point of view as this turnaround transpires. Assuming, of course, the entire state doesn’t go bankrupt and de-rail everything.
The Platinum Team
