By the Numbers – The Bottom
This post first appeared in the July edition of Cirios Trends: Getting to the Bottom of the Housing Market
It’s everywhere these days: In the news, on the streets. The “bottom” is coming. We have toiled long and hard through the dark days of this “Great Recession” and are now coming to the bottom of the housing slump. Well, we’ve got bad news.
Not only are we not yet to the bottom, there is no such thing as the bottom. But, as it turns out, the “bottom” doesn’t actually matter, at least not to today’s savvy home buyer.
In mathematical terms, a bottom would represent the lowest value that some function worked out to as it moved its way along one axis or another. In our world, really the only axis that means anything is the axis of time. Everything moves inexorably towards the future, sometimes plodding, sometimes sprinting, but always forward. So why can’t we find a bottom to the function of the housing market?
Isn’t there a given point in time where the market reaches the lowest level it can reach and only heads up from there? Nope.
The problem — as we try to hammer home over and over again here at Cirios Real Estate — is that there is no single “function” that can describe a real estate market. As the old axiom goes, all real estate is local. And indeed it is.
Therefore, the function that describes what home values are going to do over a given time period in one area can be completely different than the function describing home values just a few miles away. The real kicker is that even these simple, very localized functions are so unimaginably complex that their ability to tell us the future through a simple calculation is nil.
So what’s the solution? Why does Cirios keep coming out with all these data and articles about learning housing by the numbers if the numbers can’t give you the answer you’re looking for? The response to that is simple: While we can’t predict the future by using some magical formula — no matter how hard we try — today’s information age allows us to get an accurate picture of what is happening RIGHT NOW, not to mention make a sensible stab at what will happen in the very near term.
While there’s no mathematical function for a home’s future value (despite attempts by myriad websites, the latest of which is called smartzip.com, which tries to assign a 10-year future value to each house in California), there is a light at the end of this algebraic tunnel. The calculations for each of us PERSONALLY are straightforward.
The most important equation is the one that looks at your individual finances and decides whether its right for YOU to buy a home. And fortunately, Cirios can help with it all. We can help you decide whether buying a home is right for you, what kind of home you should buy and when the right time will be.
And while there are no magic formulas that predict the home market’s future, Cirios has the tools and skills that can clear the confusion around today’s confusing market conditions.
Tags: Cirios Trends, Housing, real estate, smartzip, The Bottom