The Limitations of Comps in the Jerusalem Market
The real estate industry often emphasizes the importance of checking comparable sales, or "comps," when evaluating properties.
The idea is to examine similar properties that have sold within the past year in order to make informed judgments. However, it's crucial to understand that relying solely on comps can be misleading. While I don't suggest disregarding them altogether, I urge caution when drawing conclusions based solely on this data.
In today's market, apartments that meet all the desired criteria are in high demand, and it remains a tough market for buyers to find such properties.
Not the most accurate picture
Therefore, relying on comps that are several months old might not provide the most accurate picture.
Instead, recent sales, particularly those that occurred within the last week, could offer more relevant insights.
However, it's worth noting that such fresh data is often not publicly available, making it challenging to access in practice.
Allow me to illustrate this with an example. I have recently been selling a project that contained four identical units. After each unit was sold, the price of the remaining ones would increase by nearly 5% automatically.
This price adjustment occurred due to a decrease in available inventory combined with a steady number of interested buyers. As a result, each subsequent transaction yielded a 2-3% price increase.
Prices are constantly fluctuating
This scenario highlights the dynamic nature of the real estate market, where prices are constantly fluctuating.
Consequently, relying solely on comps can prove to be less helpful than anticipated.
It's important to recognize that fixating on a single comp could potentially deter you from purchasing a dream apartment.
In the grand scheme of things, that marginal variance may be inconsequential over a ten-year period.
Therefore, I advise you not to let a single comp cause unnecessary apprehension when you've spent years searching for your ideal home.
Focus on your own needs & long-term value
In conclusion, while it is prudent to consider comps, it is crucial to look at recent and relevant sales data, preferably within the past two months.
However, when you come across the one apartment you've been searching for, don't allow the comps on their own to discourage you from making a decision.
Remember to consider the broader market dynamics and focus on the long-term value and suitability of the property for your needs.
(This article is not data-based but rather based on Ben Levene's personal market experience and opinions. No decisions should be made without thorough due diligence and professional financial advice.)