BUBBLE?

Is there really a real estate bubble? Do the national averages and/or the stock market have very much to do with the health of your real estate market?

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 Los Angeles does not directly affect what's happening in Tyler or Tempe. True, certain factors such as interest rates affect all the markets, there really is no 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 and due diligence. Take a look around and see what's really happening. Talk to real estate agents, investors and lenders in your area for a better picture of what is going on. Don't look at broad nationwide, statewide (or even city-wide) statistics. Be concerned with the average prices in the particular neighborhoods in which you're interested, the average time on the market, and the changes in sales prices from last year to this year. You'll be better prepared to buy your home or make your investment.