Selling Guide Announcement (SEL-2024-07)

[Surf Cat]

Well..... the powers that be put it out there a while back. They're tired of all these reports being stable and they're cracking down.

If each section of This MC clearly showed a fluctuating Market, so be it. But what was provided in the thread is clearly a declining trend....

 

[Tim Hicks (Texas)]

Houston is that busy for you pundits out there. Yes, the 1004MC shows a slight decrease, but is it really? Larger homes are selling less than smaller homes right now because of interest rates. It could be a lack of like/kind exact size homes.

I have been using True Tracts for monthly market trends and I am seeing many times less than 2% change over a year. Is that declining or stable. Technically it is declining, but still pretty stable. I had one today that shows -2% for last July, but +1% for March. Stable or declining?

 

[DWiley]

Houston is that busy for you pundits out there. Yes, the 1004MC shows a slight decrease, but is it really? Larger homes are selling less than smaller homes right now because of interest rates. It could be a lack of like/kind exact size homes.

I have been using True Tracts for monthly market trends and I am seeing many times less than 2% change over a year. Is that declining or stable. Technically it is declining, but still pretty stable. I had one today that shows -2% for last July, but +1% for March. Stable or declining?

I think a concept some are still struggling with is this - the difference between the overall trend and the individual adjustments.

What have prices done in the past year? If prices have declined since this time last year, then the trend is declining. But, that does not mean that there will be negative market conditions on all the comps - maybe not on any of them.

Example: Suppose there was enough data for monthly analysis, and suppose that analysis, showed the following price trend:

July $400K
Aug $396K
Sep $392K
Oct $388K
Nov $384K
Dec $380 K
Jan $375K
Feb $375K
March $376K
April $374K
May $376K
June $376K

For all comps sold in the past 6 months it would be reasonable to say that the market in that time period is stable, and no adjustments are warranted.

At the same time, the trend on page 1 should be declining, because based on a minimum 12 month analysis the prices have declined.

 

[CGinMN]

Your report and method of analysis is entirely compliant. If they wanted to know why you chose stable instead of declining, they could have asked. Instead they copy and pasted boilerplate from the selling guide, which understandably has you questioning what exactly they are looking for.

 

[DWiley]

Your report and method of analysis is entirely compliant. If they wanted to know why you chose stable instead of declining, they could have asked. Instead they copy and pasted boilerplate from the selling guide, which understandably has you questioning what exactly they are looking for.

While I agree that the nature of the inquiry is unclear, the data presented in this thread does not support reporting a stable market (at least not if one is following the GSE protocol). There certainly may be additional info that does, and the OP did indicate that additional analysis was provided.

 

[NC Appraising]

If the lower median price in the more recent time period is due to GLA or some other factor (and it certainly could be), then the report should address that.



Some are resorting back to the 1004MC because it is simple and because there is lots of software available for its completion. It is the "easy button" approach.

If he would had said that and still marked stable, would you be okay with that?

Not sure it could be done, but wouldn't it be great if someone could come up with software that would adjust the data that was used in the 1004mc (GLA, site size, garage count, etc). Quality and condition should have already been manually removed.

 

[DWiley]

If he would had said that and still marked stable, would you be okay with that?

Not sure it could be done, but wouldn't it be great if someone could come up with software that would adjust the data that was used in the 1004mc (GLA, site size, garage count, etc). Quality and condition should have already been manually removed.

The requirement is to provide the data/analysis that supports the conclusion. Providing data data that shows a decline over the past 12 months and the marking stable without presenting additional analysis does not meet the requirement.

And, yes, there is software out there that does the analysis as you suggest.

 

[Tim Hicks (Texas)]

We have one new home builder that loved to build and sell the 4000-5000 sf spec homes. Well, when the interest rates hit 7, the demand for their 4000-5000 sf home evaporated. They still occasionally build one when contracted, but the recent sales data in basically non-existent now. There could be 20-30 of these size homes in a subdivision, but only two have sold in the past year and those are 8-12 months out. They continue to sell their 2500-3500 sf home sales, but the sales data appears to show a decline because most of the recent sales are much smaller and the truly comparable large home sales keep getting further in the rearview mirror.

 

[alebrewer]

perfect example of why HPI's don't really work that well when trying to model trends for a particular market. There are potentially several markets in any given geography at a given point in time.

 

[DWiley]

We have one new home builder that loved to build and sell the 4000-5000 sf spec homes. Well, when the interest rates hit 7, the demand for their 4000-5000 sf home evaporated. They still occasionally build one when contracted, but the recent sales data in basically non-existent now. There could be 20-30 of these size homes in a subdivision, but only two have sold in the past year and those are 8-12 months out. They continue to sell their 2500-3500 sf home sales, but the sales data appears to show a decline because most of the recent sales are much smaller and the truly comparable large home sales keep getting further in the rearview mirror.

A great example of why the data needs to be analyzed and not just dumped into a spreadsheet or other software tool.