Why do I spend so much time and space in this blog discussing statistics about the Flagstaff real estate market? At this point in my life, it just came naturally to look at the facts and give you my thoughts only based on those facts. Now, I’ve just finished a great book that explains why looking at the numbers before shooting from the hip makes sense.

Mark Penn, in his excellent book, Microtrends, makes the point that “there is often a huge disconnect” between what people believe is going on with the U.S. economy and the actual state of economic affairs. The same is true with Flagstaff real estate. While you see more real estate signs in front of Flagstaff homes, do you really know what that means? You read and hear about the “housing bubble” from the national media, but do you know what’s happening in Flagstaff? Each month, I try to answer the question, “what is happening in the Flagstaff real estate market” by looking at the numbers.

Here is what Mark Penn has to say about the importance of doing the numbers: “…an average person cannot tell the difference between 4 percent unemployment and 8 percent unemployment.” If you have 100 friends, and four more are employed or unemployed, you can’t determine from that whether the economy is going up or down. However, if twenty of your 100 friends were unemployed, you could make a good judgment. Penn says, “In other words, you can easily see firsthand the complete disasters and depressions. But you can’t see the changes in the normal ranges of statistics. You can’t really see the difference between an economic boom and a recession, which would be the difference between 4 percent and 8 percent unemployment.”

Because people can’t perceive these small differences, Penn concludes: “people rely on a combination of news shows, Web sites, magazines, radio, chatter with friends, and their own gut. And given how unscientific almost all of those sources are, most people end up being wrong much of the time about what is actually going on. They are influenced by what looks right, and by what they want to see. They rarely take the time to look at the cold hard facts of what is happening.”

Penn gives some striking examples from his field of politics.  Bill Clinton won in 1992 with his slogan “It’s the economy stupid!” After the election, numbers came out showing that in the run up to the November election, the economy had actually been in a period of record growth – the “feeling” just hadn’t yet caught up with reality.

Think about the current “feeling” about Flagstaff real estate – prices are falling, homes aren’t selling, the “bubble is bursting.” Then look at the actual numbers: The median price in January 2008 was about the same as the January before. Nearly sixty homes sold in that snowy month. Get ready, get set, and buy now, or you may look back with regret on the Spring of 2008 and see that the “feeling” out there did not match the numbers.