Marketology 101 – A Bastard Science

Thanks to those bubble alarmists market analysts at The Warren Group, I have to listen to everyone tell me the housing market is down. Great. Like there aren’t enough Jeremiads floating around already.

And those who aren’t proselytizing the END TIMES seem to gather around, like the seagulls from Finding Nemo, waiting for the “the market” to hit rock bottom, so they can pounce and start flipping houses again.

Folks, “marketology”, like astrology, alchemy, or bracketology isn’t a real science. There’s no Platonic Ti-83 out there, graphing an endless polynomial equation that perfectly represents “the market”. The market is localized – towns, neighborhoods, and even blocks can be too broad a lens through which to analyze – and one man’s stagnancy can be another’s boom.

Do you know why Warren Buffett is richer than you? Because he doesn’t define things in terms of good or bad markets. He doesn’t “flip” companies, either; he finds undervalued assets and invests in them for the long term.

My advice to you, oh brave marketologist, would be to apply the same philosophy to your real estate dealings.

And now, some open houses:

70 Marlborough St #9 – $585,000
1 bed, 1 bath, 655 sq. ft.
I wouldn’t call this asset undervalued. Sold twice since 2005, price reduced twice since it was first listed, and still nearly 100k over its assessed value, which is in turn well above its Zillow and eppraisal estimates. But depending on what value you place on having a compact, stylish, roof-decked penthouse apartment, it could still be worth it to you. Take a look this Sunday to find out.

49 Grove St #4 – $799,000
2 beds, 1 bath, 1,327 sq. ft.
Now this certainly seems more amenable to the value investing philosophy. A spacious two-bed in the heart of Beacon Hill, refurbished and renovated, at an entirely reasonable $602 per square foot. Of course, depending on how heavily you value ease of parking, that might not be such a great deal in your eyes. Best get a first hand view of the parking situation at the open house.

27 Temple St #3 – $439,000
2 beds, 1.5 baths, 756 sq. ft.
Now the age old question – what adds more value to a home: a refined, luxury interior, or a perfect, walkable location? Your assessments are your own, of course, but it’s tough to dispute that the current price of this home seems fantastic, certainly compared to others of similar value. A bit close to Suffolk, perhaps, and the same difficulties with parking, and installing appliances, but still – $581/sq. ft. is tough to argue with.

Image: An alchemist. From original work by William Fettes Douglas. Public domain, via Wikimedia Commons.