Don’t Always Believe What You Read in the Headlines!

Much has been written in the news media lately regarding the real estate market. There was a particularly interesting article in the Detroit Free Press April 13, 2008 entitled, “18.9 Month Supply of Homes For Sale.” This headline was accompanied by a number of dramatic graphs and charts which, at first glance, appeared to paint a doom and gloom picture of the market.

What was interesting about the article was that it actually included some very upbeat comments from Don Grimes, a noted U of M economist and several other local real estate experts. Their commentary, which could only be found buried much deeper in the article, spoke about the bottom of the market being at hand and the potential for the beginning of a fairly rapid recovery within the next twelve months.

Headlines of this nature, along with published short term MLS statistics, must be taken with a grain of salt. We all know that negative headlines sell newspapers. The market will have long turned the corner before the media catches on.

Our role, as trusted advisors, is to temper the bad news with a more balanced approach based on longer term trends. Focusing on inventory swings in the tiny community of Huntington Woods, as the article did for example, is very dangerous and not reflective of the overall market.

To paraphrase Don Grimes, factors that drive home demand such as marriages, births, divorces, deaths, etc. continue to occur and create pent up demand. Once people sense that prices have hit bottom, it won’t take long for the market to turn around. He believes that we are near that point.

Those who wait for the absolute bottom before buying will most likely miss it altogether. Any good stock broker will tell you that. And so will any good Realtor.