Decling Market Y/N

[Lobo Fan]

Here is the data I uncovered. Would this indicate a decling market or stable? There is a drop, but fairly minor. What sayeth the gurus and oracles?

From 07/03/07 to 07/03/08, there were a total of 29 closed sales within the neighborhood boundaries. The average sales price was $169,438, the median was $165,000. The averages days on market was 48, the median, 29. The average GLA was 1,542, the median, 1,500. The average dollar per square foot is $109.88, the median is $110.00. The average list price to sales price percentage was 97.93%.

From 07/03/06 to 07/03/07, there were a total of 48 closed sales within the neighborhood boundaries. The average sales price was $174,253, the median was $166,500. The average days on market was 27, the median, 12. The average GLA was 1,557, the media 1,500. The average dollar per square foot is $11.92, the median is $111.00. The avaerage list price to sales price percentage was 98.78%.

 

[PropertyEconomics]

Here is the data I uncovered. Would this indicate a decling market or stable? There is a drop, but fairly minor. What sayeth the gurus and oracles?

From 07/03/07 to 07/03/08, there were a total of 29 closed sales within the neighborhood boundaries. The average sales price was $169,438, the median was $165,000. The averages days on market was 48, the median, 29. The average GLA was 1,542, the median, 1,500. The average dollar per square foot is $109.88, the median is $110.00. The average list price to sales price percentage was 97.93%.

From 07/03/06 to 07/03/07, there were a total of 48 closed sales within the neighborhood boundaries. The average sales price was $174,253, the median was $166,500. The average days on market was 27, the median, 12. The average GLA was 1,557, the media 1,500. The average dollar per square foot is $11.92, the median is $111.00. The avaerage list price to sales price percentage was 98.78%.

And what have the first two quarters of 2008 shown using the same analysis?
And monthly from like 08/06 - 08 / 07 .... and 09/06 - 09/07 ... etc.. One period of analysis isnt enough.

 

[Lobo Fan]

I haven't broken it down that far, but I could I guess. What would be the tipping point?

 

[PropertyEconomics]

I haven't broken it down that far, but I could I guess. What would be the tipping point?

The question is why use 06 as your basis? The focus cant be so narrow. You have to analyize all of the data over the time periods to reflect what has happened. Perhaps it was a one month drop (not probable) but it has increased since then ... without doing the analysis there is no way to really tell.

 

[Lobo Fan]

Comparing the previous year to the current year seemed as valid a comparison as any. It was in the scope of work on an order I had recently, so I have been doing it on all my reports. Usually it has been definitive, but this one was borderline.

I did a month by month for 08, and it was not very helpful. There were some months with none or only one closed sale. Of the months that had multiple closings, they were similar to the YTD numbers. Mid 160K range.

I guess the real purpose of my question is to determine how much of a drop would qualify as a declining market? Is it 5%, 10%, etc. This might be a good topic for Friday?

 

[PropertyEconomics]

Comparing the previous year to the current year seemed as valid a comparison as any. It was in the scope of work on an order I had recently, so I have been doing it on all my reports. Usually it has been definitive, but this one was borderline.

I did a month by month for 08, and it was not very helpful. There were some months with none or only one closed sale. Of the months that had multiple closings, they were similar to the YTD numbers. Mid 160K range.

I guess the real purpose of my question is to determine how much of a drop would qualify as a declining market? Is it 5%, 10%, etc. This might be a good topic for Friday?

If its consistent then Id say 1% is a decline .. wouldnt you?
These are the exact things we will be discussing on Friday. But measurements over long periods of time and multiple periods are the only way, in my mind, to have adequate information to make your conclusions.
Are you using all sales from the market, just from the neighborhood, or just from the neighborhood in your value range?

 

[Lobo Fan]

The way I have been looking at these situations is to first define my neighborhood boundaries. In this case it is north of Ouray, south of San Benito, east of Unser and west of Ladera. I will use +/-25% of the GLA to set limits on neighborhoods with large ranges of sizes. Then I make my searches.

I thought that FNMA or someone wanted to see a larger decline than just 1%, but i cannot find any real guidelines anywhere. That is why I was seeking opinions.

 

[KD247]

There's no hard and fast rule. The data should be examined, but the general sentiment in the market area should also be considered.

The problem is that it's pretty easy to rationalize, or even support, just about any position you'd like to take. I've seen appraisers say things like, "The market was previously declining rapidly and is now stable, but is likely to decline further in the future." I've also seen appraisers in relatively stable areas state that values are increasing on the basis of one or two pieces of isolated data.

The data you present shows a stable market, but it's common for data like this to be affected by buying patterns. For example, a flurry of closeout sales on high-priced properties can present the appearance of increasing values while values are actually declining.

Once you check the data, double-check your opinion with agents, buyers, sellers, and other appraisers. If everyone is saying, "sell quickly before prices drop further", or "wait until next year to buy", those are strong indications of a declining market.

It seems that every appraisers has a different way of making this determination, but the client's intent in asking the question, is pretty clear. Most readers of the report want to know if values are generally trending up or down to a significant degree. They are making decisions based on your appraisal, and how you portray market direction will affect those decisions. If your educated opinion is that values are significantly headed one way or another, it's misleading to state otherwise. You always have the opportunity to comment on any uncertainties in the data or on the relatively certainty of your conclusions.

 

[Steve G]

In my area any change + or - 3% or less is considered stable. Any change greater is either declining or increasing. I don't think a 1% change proves anything other than a slight difference in sales prices, not a declining trend. You're never going to come up with two median prices that are exactly the same in any type of market. If it were 1% per month for an entire year that would mean something. I couldn't compare all of the past year to date with the previous year. This goes back two years. We've had a lot of change over the past two years here. In order to say what the present state of the market is, the most relevant market data is the most current, so I compare the past 6 months with the previous 6 months and make my determination based on what has happened over the past 12 months. Any farther back is old news. That's just how I do it and it seems to make sense to me and all of my clients. This is something that may differ from one market area to another in the country.

 

[PropertyEconomics]

In my area any change + or - 3% or less is considered stable.

By whom? ...