How do you measure decline?

[Marco]

I'm looking for a more or less standard method of measuring the rate of decline for accurate market/time adjustments. I find that one method that seems to work for a particular property or market does not work well with another. Does anyone have any advice?

 

[Mike Garrett RAA]

get a longer ruler

 

[KYLECODY]

Ill take a subjects sub area (subdivision, MLS area, zip code, etc) whatever I need to get a large enough sample. Ill then knock off any excessive high or low sales that defy the market and run mean values for the rest of the data. Ill do that for a 3 month period from one year ago(i.e. 4/20/2007 through 7/20/2007), 6 months ago(10/20/2007 through 1/20/2007) and current mean values. Then its easy to extract percentages of increase/decrease.

 

[Tom Woolford]

Like Kyle, I'll define a specific area, and look at six month increments over typically 24 months. Jan through June, March through September, June through December etc. You can get a pretty good idea whats going on. Then graph average and median sales price by the month and it just about jumps out at you. Just looking at year to year data like they talk about in the papers etc. is very misleading

 

[LordofTexas]

Good tips above. But, what they didn't mention is that you should of course save and reference the data you use in an addendum showing all of this. I'm always on top of doing the adjustments correctly, but sometimes you forget to add that support within the report to back it up.

Lordy

 

[jay trotta]

In order to support a Decline, I would think you need to see ifn the growth was logical.

By that, I mean if the average of growth over a 20 year period is 2-4% considering both the upside & downside of market conditions driven by outside forces; then measuring the real growth would allow you to determine ifn there was a "Real Decline", not one that is stimulated or forced or fabricated by outside sources. Thus, the envy of real market conditions.


Resource; snowglobe library of half truth factors

PS: don't forget to calculate in the cost of money and it's true worth/value; afta all I can member when gas was $.25/gal - bread was $.19 cent and penny candy was a penny.

 

[Hamlet]

afta all I can member when gas was $.25/gal - bread was $.19 cent and penny candy was a penny.

Just how OLD are you, Jay?

 

[Mr Rex]

In order to support a Decline, I would think you need to see ifn the growth was logical.

By that, I mean if the average of growth over a 20 year period is 2-4% considering both the upside & downside of market conditions driven by outside forces; then measuring the real growth would allow you to determine ifn there was a "Real Decline", not one that is stimulated or forced or fabricated by outside sources. Thus, the envy of real market conditions.


Resource; snowglobe library of half truth factors

PS: don't forget to calculate in the cost of money and it's true worth/value; afta all I can member when gas was $.25/gal - bread was $.19 cent and penny candy was a penny.

Maybe its not really a decline, but a severe market correction based on artificially low interest rates and lax oversight of the borrowers real ability to repay the mortgage.

Hey, I think I just described the current mortgage crisis, bubble, implosion whatever ya wanna call it in less than 25 words.

 

[Pilgrum]

I too measure two time periods. However I also limit my search to properties that fall into the subject's market. I do this by limiting square footage to 15% above and below the subject's. Otherwise you may fall into a totally different market and your data becomes skewed.
I also reduce my percentage to a daily amount and apply it according to sale date and if a listing is required to a price date.
Since I have never had a lender question the method I guess they like it.

 

[Hamlet]

Maybe its not really a decline, but a severe market correction based on artificially low interest rates and lax oversight of the borrowers real ability to repay the mortgage.

Hey, I think I just described the current mortgage crisis, bubble, implosion whatever ya wanna call it in less than 25 words.

Very succinct indeed! Even a short bus rider should understand that.