Whatcom County Commercial Real Estate
Hart Hodge director of Western Washington University’s Center of Economic and Business Research helps make sense out of conflicting reports on the health of Whatcom County Commercial real estate.
Indicators can paint a picture
DAVE GALLAGHER
One of the biggest challenges I have in writing about business in Whatcom County is making sense of the numbers.
I regularly get calls from readers about the many different studies or latest economic indicators that we run, wanting to know one thing: Is this good news or bad news for the economy? I understand the dilemma.
Each day Herald editors have meetings to decide what stories will go into the newspaper. When we get to the business section, there are usually a bunch of stories about the latest economic indicators, many times giving mixed messages. One day I remember there were two Associated Press stories, one talking about how consumer confidence was down across the country, while another article talked about how consumer spending had increased. Were the studies saying that consumers were worried about what’s happening, but it didn’t stop them from spending money? Or maybe one or both studies were somehow flawed?
We get studies locally that tend to tell different stories, too. In the past couple of months we had unemployment rise about half of 1 percent in January, then drop about the same amount in February. In real estate there was a local report earlier this month indicating there was some strength in home sales (pending sales were up nearly 7 percent in February compared to the previous year in Whatcom County) and a national report last week that indicated Bellingham home prices were 45 percent overvalued.
With all of these conflicting indicators floating around in my head, I sought the help of an economist to straighten me out. Hart Hodges was happy to help.
Hodges, director of Western Washington University’s Center of Economic and Business Research, said the best way to draw a conclusion is to collect as many indicators as possible. He looks at where a study is gathered (on a local or national level), how it was gathered (survey, data crunching, etc.) and what it seems to be saying. Hodges then adds it to a collection of other indicators and builds an economic picture.
"Conflicting reports can give you useful information," Hodges said. The drop in consumer confidence coinciding with a rise in consumer spending could mean that the people being surveyed are worried about their neighbors, but they are doing fine and spending money.
"It could even be about politics. They may be doing fine personally, but are worried about who is running the country,” Hodges said.
Real estate is another example. The rise in pending sales locally seems to fly in the face of what’s been happening in other parts of the country, but other factors come into play here.
"We have to remind ourselves that we’re a small metro area on the West Coast, which is popular with baby boomer's right now, so we’re going to see some strength in the market compared to other parts of the country,” Hodges said.
The important thing, he said, is to not rely on just one study or indicator to draw a conclusion.
"More often, when you hear an economic forecast, it involves a variety of leading and lagging indicators, and is more of a consensus of several people,” Hodges said. “That gives you the best shot on what might be happening.”
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