A lot of hoopla has been floating around the news media lately about the "bubble" theory of real estate, that is, the theory that the real estate market is going to burst. In the opinion of many real estate experts and economists, this theory has no merit.

The Real Estate "Market" is a Compilation of Local Economies

When people speak of the real estate economy, they are using nationally-based statistics. For example, Fortune Magazine reported recently that since the early 1960s, average residential real estate values have never had a down year. This statement is true, but while these numbers are measurable, they do not reflect the intricacies of local real estate markets.

The stock market is based on the national, even the world economy. The real estate market is based on local, and, in many cases, micro-local economies. What's happening in the Bay Area does not directly affect what's happening in Toledo. True, certain factors such as interest rates affect all the markets, there really is no broad barometer to measure the entire housing industry in the U.S. Average prices, average new homes sold and average homes built nationally has little relevance to your locality. And, within a particular city that is doing well, there may be certain neighborhoods doing poorly for a variety of reasons, such as over-building of new homes.

So while statistics, calculations and economic factors are relevant, so is common sense - take a look around and see what's really happening in your market. Consult a real estate professional, like me, or investors and lenders in your area for a better picture of what is going on.

Avoid looking at broad nationwide, statewide or even city-wide statistics. Be concerned with the average prices in the particular neighborhoods in which you buy houses, the average time on the market, and the changes in sales prices from last year to this year.

For more information on your particular neighborhood or other local markets, call me. I can give you the facts!

Call me, Catherine Myers at 925-683-2125 or visit me on the web at www.DiabloValley.net .  Thanks for visiting my Contra Costa Real Estate Blog.

(c) copyright 2006

Catherine Myers