We've all heard of the overconfident swimmer who was convinced he couldn't drown in a lake that averaged four feet in depth. Averages don't tell us anything about variability and, when it comes to keeping one's head above water in swimming or in real estate, variability matters quite a bit. This lesson hit home during a weekend car ride. Son Macrae , shown above in rocker incarnation, has his learner's permit, so he took Dad for a drive around hometown Naperville. We headed southwest and soon reached formerly rural areas that are now the sites of multiple housing tracts. As we drove, the signs for open houses in housing developments first became more numerous, then they became larger. Still further to the southwest, every major intersection was overrun with the signs. As we forged ahead, the signs began offering massive discounts on the new properties--many of which were obviously not selling. Indeed, many of the developments were half-completed, seemingly frozen in place. By the time we ended our trek, we came across a large sign for a development that offered a free Toyota Prius, $75,000 in options/upgrades, and five years of free utilities to anyone who would buy one of the homes. It was clear from our drive that there is no single housing crisis. Much of Naperville real estate is in slow-down mode: prices are holding reasonably well, but taking longer, on average, to sell. In the formerly hot areas of development, however, the overe ...
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We've all heard of the overconfident swimmer who was convinced he couldn't drown in a lake that averaged four feet in depth. Averages don't tell us anything about variability and, when it comes to keeping one's head above water in swimming or in real estate, variability matters quite a bit. This lesson hit home during a weekend car ride. Son Macrae , shown above in rocker incarnation, has his learner's permit, so he took Dad for a drive around hometown Naperville. We headed southwest and soon reached formerly rural areas that are now the sites of multiple housing tracts. As we drove, the signs for open houses in housing developments first became more numerous, then they became larger. Still further to the southwest, every major intersection was overrun with the signs. As we forged ahead, the signs began offering massive discounts on the new properties--many of which were obviously not selling. Indeed, many of the developments were half-completed, seemingly frozen in place. By the time we ended our trek, we came across a large sign for a development that offered a free Toyota Prius, $75,000 in options/upgrades, and five years of free utilities to anyone who would buy one of the homes. It was clear from our drive that there is no single housing crisis. Much of Naperville real estate is in slow-down mode: prices are holding reasonably well, but taking longer, on average, to sell. In the formerly hot areas of development, however, the overe ...