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Housing Values: Start Of A Decline

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Farm Gal

Elite Member
Joined
Jan 14, 2002
Professional Status
Licensed Appraiser
State
Nebraska
can someone please explain how one can take percentage changes over time and use an additive function of the percentage of cahnge regardless of whether the second column is negative or positive and find a value which is supposed to indicate ANYTHING?!?!?

please.

i looked it it for about 3 minutes and coannot see that the third column has any validity as an indicator of anythign at all. <_<

besides like most generalizations I can find heaven a plenty of reason why the report on MY market is meaningless
 

Patrick Egger

Sophomore Member
Joined
May 29, 2003
Professional Status
Certified General Appraiser
State
Nevada
read my signature ... Mark Twain said it best ...

Sales stats alone, can be very misleading and although I believe there's truth to what's being said, any drop in sales and prices will be more related to purchasing power ... the fact is people buy what they can afford and the low interest rates are making larger/higher priced units affordable to a larger segment of the population.

In the Las Vegas area, land shortages and rapidly rising land prices are forcing builders to offer only larger product in order to justify land acquisition costs, limiting the new home market to 1st, 2nd and 3rd tier move-ups, with entry level relegated to the resale market.

The second area to consider is new & resale home absorption. Our numbers are still very strong, despite ever increasing prices. Another factor, price spikes ... builders and sellers maximizing prices, then the market tapering.

Next you need to know what the price represents ( in terms of a house). 10 years ago, the Las Vegas average new home was $120,000 and 1250 sf, building lots of entry-level product. Today, the new home market is geared towards 2nd tier move-ups, with the average new home exceeding $200,000 and 2,100 sf ... so your not comparing apples to apples and I suspect similar findings in other markets.

If the stats showed a then and now price on a typical 1200 sf home in the same location .. that may be different. I suggest you take a look at the posted stats for you city and see if you can support those figures by comparing like home sales from the same period.

There are many other indicators missing from the stats, such as the number of new residents to each city, standing inventory, time on market, etc. , all of which are needed to understand what's really happening.

In a lot of markets, the historic low rates simply turned renters into buyers, take a look at apartment occupancy rates in your area and concessions. I haven't seen any drops, but I do expect to see price increases to start tapering off ... even with low rates, I think a lot of the excess demand has been met.

just my two cents ...
 

Non Sequitur

Elite Member
Supporting Member
Joined
Feb 14, 2002
Professional Status
Certified Residential Appraiser
State
Louisiana
Lee Ann that's the new math.

25.7 + -5.02 will never = 30.7. The real number is 20.68. But these numbers should never be added anyway.

The larger problem with this mess of an article is that the first row of numbers already include the second row before the poor math. When NAR compiled the statistics the first row is for 4/1/2002 to 3/31/2003. Then the author presents the second row for 10/1/2002 to 3/31/2003. Duh! The second row is embedded in the first set of numbers. What he should have done is break the first row down in to 2 sets, one for the first 6 months and then the last 6 months.

For example, Philadelphia's home prices grew 25% over the last 12 months, but actually shrank 5% over the last six months, for a difference in reporting of 30%!

Um, no. The growth is still 25% because the last 6 months are included in the last 12.

Hey, it's a good article if you're looking for doom and gloom.
 
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