Another Reason and False Assumption That Caused the Housing Crisis

False Assumption – There is No Need to Have Current Local Information, Demographics, Economics, or Hyper-Local Forecasts, Since Macro Metro Yearly Data Is Adequate.It is inappropriate to assume that the annual macro-level data on home prices is sufficient to make a sound decision about buying a home or investment property. The macro-level data for metropolitan areas, usually presented in terms of average or median prices, is not reflective of specific trends that may affect the local-level housing market. These specific developments or factors, however, could have a significant impact on home prices in a particular local community. For instance, average prices of housing in New York City metropolitan area as a whole are much different than the average prices of homes in the Queens country. Moreover, there are over 14,000 sub-markets or Census Block Groups in the New York Metro area, and there is practically NO correlation of the median of any large group, to the local block level, for ANY local block variable. As differences in home values further channel down to block levels, current local information becomes more and more relevant in making a buying decision and assessing risk. Therefore, substantial research into current local trends is needed in order to make the most appropriate and well-educated decision about buying a home or investing into a property that has a good potential to grow in value.Metropolitan area statistics on home prices are too general to suggest the true value of any property in a local community. Moreover, annual data is too old to be useful in making a decision about home purchase in today’s market. On the other hand, most available home price statistics fail to account for location-specific economic and demographic factors that drive demand and thus have the determining impact on both current and future home prices. Many annual price indicators also allow for a substantial margin of error, ranging up to 10 per cent, which may makes any such global information irrelevant for the current local market.