Home Pricing Data Has Its Flaws
With the Dow reaching 9,000 today, it seems a good time look at a recent report on how media reports about have affected potential home buyers. The bottom line?
Home pricing data is flawed
Top officials with the National Association of Realtors (NAR) and Standard and Poor’s, which issues the S&P/Case-Shiller Home Price Index, have agreed that their monthly reports are giving imprecise readings of price changes at all levels – national, state and regional – because of rare market conditions that are skewing survey results.
An example – in April, the NAR reported that median home prices in the US had fallen 7.7% from March 2008. The decline however resulted largely from a market anomaly – a steep decline in costlier home sales because of tighter lending standards and high jumbo-mortgage ratges PLUS a foreclosure driven spike in less expensive homes.
As NAR Chief Economist Lawrence Yun noted, “In normal times a median price would reflect typical homeowner equity changes, but these are not normal times. The jumbo (mortgage) market is frozen and the buying activity is more concentrated in lower-value homes.”
Also, the S&P/Case-Shiller index is skewed for two reasons of its own – it tracks just 20 major markets, many among the hardest hit and its “repeat sales” survey pulls in individual homes both bought and sold in just the last few years. Many of those very houses are now being dumped by distressed homeowners and investors who bought at peak market prices and face higher mortgage-rate adjustments.
You can read the entire article here, or look at this video but the final comment by Yun pretty well sums up what I have been saying to all of my clients, ” . . . saying the average nationwide temperature is 57 degrees doesn’t tell you anything and the same is true of real estate prices.”
If you really want to know what your home is worth, talk to a professional, full time Realtor for local market conditions. My number is 703.927.4554 – call me.