Keeping Current Matters is the blog site of Steve Harney and his terrific real estate data ccollection and analysis team. Last week they published a series of reports and links from major industry analysts. The universal agreement is that home prices will continue to drop over the next six to eight months.
Steve published this chart last week that he says "may be the best real estate chart ever".
Steve's comment on the chart: "We can see that the experts are calling for prices to decline for the next year and then take another year to regain that loss and have values equal today's prices. They then see prices steadily appreciating over the following several years." Simply stated, prices will not recover to their current level until the end of 2012.
One of the sites that I also subscribe to is Altos Research, who had this to say in a report published on August 11:
"The market, right now, is a veritable case study of the law of supply and demand. Right now, there's a whole lot of supply, but very, very little demand. The buyers that drove a flurry of activity during the spring have left a deafening silence in their wake ... Increases in inventory nationwide show that demand simply isn't there. As the market continues to correct itself, and as we head into the seasonally weak fall and winter months, expect more increases in inventory, and likely deepening declines in asking prices."
I the next day or so I will publish the market updates for the areas I cover, including St. Charles, Geneva, Batavia, Wayne, Elburn and South Elgin.
Here's one example of the rising inventory and falling prices in Batavia (zip 60510). The orange line shows the rising inventory, while the black line shows the falling prices.
This post was written by Leslie Ebersole of Baird & Warner Real Estate.
Use or reproduction of the material published on this site is expressly prohibited
without the express written permission of the author.
My Email leslie.ebersole@bairdwarner.com
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This is something I have been predicting for my area as well although I'm not sure about how "low" it will drop as far as the Frisco market.
Very, very interesting, Leslie. I think it’s easy to see the temporary impact the tax credit had on the median price.
In the Phoenix area the MLS has some great stats and they are predicting our market price do decline about 4% through September and then to rebound as the year end approaches. I don't know if it will rebound the way they porject.
that's the good news happy approach
it's probably more like six years until prices are back to today's price....
here comes the twelve percent mortgage rate and triple dip recession
hold on
Hi Leslie -- I always try and caution buyers and sellers that all real estate is local and it only takes one buyer and seller to make something that happen and that you cannot look at each home through one lens of either a buyer or seller or balanced market. One home can sell quickly for top dollars while others languish on the market due to improper pricing, lack of updates, location, etc., even in the same geographic area. It is helpful to put things in a broader perspective if debating when to sell, motivations to sell, etc.
I've been debating whether to subscribe to Altos, I know there stuff is very good and insightful, sounds like you are happy with their data/reporting?
Chris: I am in the early days of my love affair with Altos Research. I licensed 7 zip codes in their basic plan and may add more. Altos provides a big chunk of what I've been doing manually and does it better. For the last couple of months I have been including (in my weekly listing reports) their weekly pre-done market reports or executive summaries for each of my zip codes. Tonight will be the first time I post my city by city reports with their dynamic graphs. They continuously access updated data....they are so cool. There is a report wizard that let's you build dozens of individual reports with all sort of criteria. It's actually mind boggling. If part of your "brand" and service line is to be very focused on data, I can't recommend them highly enough.
I agree that data is only part of the picture and not a substitute for detailed evaluation and recommendations to your listings. A shabby over-priced house will never sell regardless of "the market".
Loreena: None of us know, but we certainly can try to provide good information to our clients, even when the news is negative.
Vince: I'm happier when I'm unhappy...not really, but yes, it will be YEARS until we reestablish the 2005-type values.
Bill Travis: today's housing data would certainly support the predictions of your mls.
Bill Burchard: And now in retrospect we tried to block out that giant sucking sound of buyers being pulled forward in the year.
You're such a chart geek. I love it though. Actually, it freaks me out because there are so many realtors out there hurting. But you're right. Needless to say, it comes just down to supply and demand. Anyway, with no buyers....values are dropping. The only thing separating your place from the others is the price.
We have seen an increase in inventory in some areas, though it is still very low in others.
As Chris said (#5), all real estate is local. My market just NW of Boston is experiencing the exact opposite - supply is going down and prices are stabilizing/rising. Our inventory has gone from a six to nine month supply down to 2! So at least here in NE Massachusetts, we're seeing a great turnaround!
All real estate is local. I no longer attempt to predict things. I can pretty much explain why things are they way they are NOW....but too many predictions have been off-base for me to listen to them. Even Steve Harney.
Leslie,
With your permission, I would like to link your post to one I am doing. The dates match mine.
Great post! While the market is different for each location, this information is presented very well.
Great presentation of the market in your area. The turnaround may be further off than even the experts are predicting though.
Insightful post. Because of the unemployment situation, I've been looking at 2014 as the year for a healthy RE market. Sometimes I wonder if the tax credit has done more harm than good...
Jason
Refreshing to see some informed realism here on ActiveRain! Altos is an excellent operation...I also enjoy the arena of Seeking Alpha for housing market commentary. When smart people argue, the audience wins!!
Thanks for the post. I work in three states and many zip codes and neighborhoods. Supply is so different in each of these areas depending on the time of the year, housing type, proximity to public transportation, prices in that area, etc. Some areas near me have very low supply with huge escalations. I have buyers waiting to jump on anything that becomesa available. Other areas have properties sitting for quite some time with list prices that are unrealistic.
I love palying with charts and numbers, but a few poorly priced houses in a neighborhood can really skew the numbers. However, the broader approach would give an incorrect analysis for these extrememly competitive neighborhoods or other neighborhoods that are not average.
Real estate is local and it will take the efforts of local agents to really explain the local markets to buyers. Hopefully, that will keep many of us busy over the coming years.
I love a good chart. I keep local data and it is such an eye opener.
I think that a 10% increase over current prices by 2015 is not in the cards for most areas of the country as everytime inventory starts to decrease we get more sellers jumping in. Of course this is my opinion and we all know about opinions :)
your friend in Charlottesville
Good info - ties in for sure in the Twin Cities market as supply has been steadily increasing for months
Spot on...wait until the shadow inventory hits (homes that were foreclosed but have NOT yet hit the market, between 3 and 5 MILLION....a 33 month supply of homes by some calculations!!!!!
I run a short sale negotiations company (we help agents deal with the "joys" of short sales), and you NEVER hear about all the homes that banks have taekn back, BUT, not yet put on the market:
http://www.housingwire.com/2010/02/16/shadow-inventory-of-homes-to-take-nearly-3-years-to-clear-sp
going tobe a LONG LONG ride!!!
Ben Benita, short sale speaker, Radio Guest
Author - "Are You More Likely To See Bigfoot Or A Short Sale Approval Letter?"
Get your copy on Amazon and GET YOUR SHORT SALES CLOSED!!!
Logic says your chart is correct and at some point all the markets should follow suit however we still have to see what the lenders will have to say about it, I mean we keep hearing of the record braking amount of repossessions the lenders are working on however they don't seem to translate or ever hit the market. The manipulation of the market on the part of the lenders is very visible and I don't think it will stop anytime soon. I must say I don't disagree with a responsible manipulation of the market but it's being done very irresponsibly and quite frankly like everything else the lenders have manipulated it will probably come back to cause havoc once again and ofcourse us the regular people will end up paying the price.
It is very hard to qualify any of these predictions without knowing the calculations that are used. Many people are viewing median selling prices as a benchmark and this is wrong. When determining the rise or fall of prices or values one must look at the sales histories of individual homes or of comparable homes within a market. In many markets today homes are selling at price levels that are below the depretiated replacement cost. This means they are selling below real value. This is a result of a deflationary cycle that the housing industry has fallen into and the result of the constant media reporting. Today the perceptions of both home sellers and buyers continues to push prices down. Until some authority publishes a counter argument explaining this phenomenon the deflationary spiral will continue.
I'd love to know why they feel 2012 is the year prices will start to come back. I think the decline will last much longer simply for the same reasons they state we are declining know.
Wow, I like the quote from Altos about the "deafening silence". I am seeing similar trends in our market. Supply is growing again and demand is shrinking. Its Econ 101. Great post
I too agree with our MLS prediction Bill! In our area we see stabalization happening now, our season out here is about to begin and we believe it will be a good selling season with the many inquires we have already received. The harbingers of "gloom and doom" are not what we need right now. Facts and figures support what you are saying!
I agree with Simon. High unemployment is the wildcard in all this. Until we figure out how to get people back to work on a large scale, the housing market is going nowhere.
I love data too and always a geek for a good graph. Although I feel it's important to be attuned to the broader speculation, I focus more on what's going on in my local market and jobs. Unless we see a longterm job creation plan I fear we're in for a long haul.
Interesting post...especially since I read an article this morning by CNN Money that stated hoem prices have inched up a national average of 1.5% in Q2 of this year. In fact, some areas of California have seen an increase in the median home price of 25%.
http://money.cnn.com/2010/08/11/real_estate/latest_home_prices/index.htm
It's really true in that all real estate is local.
There is a saying about numbers that "the person who knows the numbers wins almost every time," and it is true for the most part. I liked the post in that it is graphic and on target. True, real estate is a neighborhood market and one size does not fit all, but looking at the future makes it easier to make decisions in the present. Again, well done!
Well I can say that I know some servicers are trying to put millions of homes through HAFA..if 90 percent of those fail we will see an extra million REOs inthe next 12 months further driving prices down.
Without employment rising, house prices will continue to decline indefinitely.
With less buyers employed who qualify for purchases, house prices will drop to meet demand.
With less buyers purchasing house building will decline.
With less building, there will be fewer jobs and so forth.
What will turn things up?
Is it a good time to sell or buy?
Before you buy or sell, Get serious... Get a CRS!
Certified Residential Specialist.
All things considered, mortgage rates will be forced upwards by investors and home seller "creative financing".
Yes something is driving down house prices, unfortunately the baby boom generation has left the building.
Stay tuned!
Leslie - I think that the experts are still too optimistic about the level of price increases in the next several years. It is going to be a slow long climb back in prices.
Great post thank you!
This too shall pass!
While I agree that we are still seeing and going to see some price deflation across the market for the next 12 months at least, the 9 to 10 % prediction over 5 years sounds like more than we'll see in appreciation.
I've been watching our area regarding this very topic. It seems my area is more stable and houses are moving. Still a bit of inventory, but not so dramatic as your charts are showing.
Thanks for sharing.
Leslie - I love your graph, I guess I am just a technician at heart as well. The biggest problem I have in predictions is they are so hard to get right. Trending is about the best we can hope for and that is more a generality than a fact. As far as what the 'experts say', I believe it was the experts that told us Fanny and Freddie were solvent and to 'move along please'. I tend to ignore the official media and government experts at this point and turn to capitalistic firms like you mentioned. I know they will have true facts, even if its not good news...
While some areas of the nation are still in distress, others are not, so most of the data used to trend nationally is irrelevant unless your market is specifically listed in the report.
Neighborhoods that are stable with fewer sales activity usually sell quickly at the prevailing asking price. I've found that neighborhoods with pride of owneship in the appearance and maintenance of the properties are key to mainatining stabilty in resale prices. While many Realtors market everything, some like myself choose to market only in stable neighborhoods. So it really depends on where your market is located, doesn't it?
To Everyone. This was certainly a surprise feature! It is intended to be the lead-in for a series of posts I am making on MY LOCAL AREA. By LOCAL I mean at the zip code level and then down to the subdivision and house type. Since my blog is emailed, subscribed to by my clients, and included in my e-newsletter I wanted to start with a national numbers, and then I'll drop down to my area. I never intended to speak for every market in the country.
Prices, supply and demand are of course local. For example, in our Mill Creek subdivision, the average market time for houses under $300,000 is 19 days. In the Fox Mill subdivision just 4 miles away, the absorption rate for houses over $700,000 is about 30 months. My job is to know both these numbers.
Coweta #29 quotes the fly in the ointment for real estate agents and many consumers "Median prices are showing a slight uptick", Yes, in my area, too. THE PROBLEM WITH ONLY USING THIS NUMBER IS THAT IT DOESN'T ADDRESS INVENTORY OR EQUITY AND ABILITY TO SELL. For most sellers, the issue is that houses are selling at 20% - $30% below their high values in 2005 - 2006. A huge percentage of sellers are underwater on their mortgages. A 2% increase in median selling price over the same period last year means almost absolutely nothing compared the relative 18% to 28% loss over a value over five years ago, especially if that house is overleveraged.
Leslie, I don't have the nifty graphs (LOL), but I think the information will be correct for MOST areas. However, in the desireable parts of the Nation I don't think the same will hold true. San Francisco and San Diego are starting to see appreciation....or at least leveling off. Sure, there are still zip codes with slight declines, but if you want that second home in San Deigo the timing couldn't be better. To be sure, the inland part of California (San Bernadino, Bakersfield, Fresno, Stockton and Modesto) may never recover to the crazy daze (what were they thinking in the first place? Have you ever been to these places? Yuck, patooey, icky!).
Congrats on the Daily Drop......you are truly a star!!!
Leslie,
Great Post...........Thanks for the information on Altos. I already use statistics in my listing presentation, but this may be much better than my generated reports.
real trends magazine shows the mid-west hurting and the north east doing the best....guess it is where you live.
Leslie--this is an excellent post and extremely timely for me. I was having this very conversation with a good friend and fellow realtor just this morning, and we came to the same conclusion. If this scenario doesn't apply to a particular area, that's great news. Unfortunately, it does apply to mine, particularly in the "move up" housing category.
The challenge is in communicating this to our sellers. Those who must sell will reduce their price to be the most appealing property in their range. Those who don't need to sell are likely to be undercut pricewise by those who do. Furthermore, clinging to the hope that prices will stabilize (let alone, increase) in the coming months, is just that...a hope.
Ideally, our sellers are able to take a step back and objectively see the market in this light. Price reductions shouldn't be perceived as a criticism, but, rather, as a symptom of excessive inventory and varying degrees of motivation on the part of sellers. If folks don't need to sell, they might want to wait. However, the length of time they'll have to wait before realizing their ideal selling price may be significantly longer than they anticipate.
Not only are we experiencing a deafening silence on the part of buyers, but we're having to deal with the fact that until sellers are willing to accept the law of supply and demand as it pertains to the current market, our explanations, suggestions, and possible solutions may be falling upon deaf ears.
Thank you for your post, and the local application of national data Leslie. Given that many of the affordable areas of our market (greater Nashville TN) are under three months of available homes, it would be great to see more focus on incentivizing businesses who create jobs -- to get us over the ‘hump' and further stabilize housing prices above the median range. Our chambers and the Williamson County Department of Economic Development are doing a fantastic job of this right now. Do you see these kinds of efforts, and business relocations, having a measurable impact in the St. Charles areas?
Great Post and I agree that prices will fall, but buyers better be getting thier credit in order for next year then!
Every market is local. I do not know if they will drop in this area. I hate to put out negative reports that might become self fullfilling. We have taken are beating and have been on the way up.
Thank you for sharing your resources. It is one thing to 'feel' a market and another to prove it to a seller.
Thanks again.
I find statistics on average housing price trends confusing and a bit misleading. In my market (Western Washington) one of the largest forces driving down home prices was the change in mix of home sales. All of the first-time home buyer incentives, coupled with the collapse of the jumbo loan market, created a healthy low-priced home market ($200 - 400K) and an anemic mid-priced home market ($400 - 800K), with the $800 - $2M market dead for some time. Does this mean that the price of each home declined? There were demand-side pressures that lowered the prices of homes, but not to the extent that the "average" home value declined. Now the mix is improving, with the mid-priced market coming back - and thus the average price of a home in King County (where Seattle resides) is up 5% in the first six months of the year. Does this mean that each home is up 5%? I don't think that this is the way to look at it. Real estate is hyperlocal - national trend data or even statewide trend data can easily mis-represent what is happening in a locality. So why follow these types of figures?
I agree with the recovery begining in 2012, although I don't think it will behave in the "boom-like" manner that your graph suggests. Demographics show that the baby boomer generation will be shrinking their spending consistently beginning 2010, so 2012 we should be basically at the end of the downturn, but recovery will be slow and wavy, absorbing new young buyers coming into the market, baby boomers buying vacation and or retirement homes. Downtrends to be expected on higher end homes due to the same: baby boomers retiring, empty nesters, and a more "down to earth" buyer.
Nevertheless, your graphs look great, an expensive service but looks beautiful.
Very interesting post! The question is how do we create demand to match a supply that will seemingly continue to grow for the foreseeable future. I wrote a post last week with my idea for helping to spur demand without simply throwing taxpayer dollars at the problem, and I may try to update it and link to your post if you will give permission.
Homes are places to live first and investments second.
Short term price deflatiom may be emotionally hard to overcome, but if people intend to be in a location for 5-7 years and they are going to finance the home then they should seriously look at purchasing now. Mortgage rates this low make the affordability factor better than it likely will be when prices start to appreciate.
If your time frame is not at least that long then renting might make better sense right now.
Leslie,
It will be depend on the level of unemployment in each area, but I agree that the recovery will be over the next several years.
I always love to see numbers that they extrapolate to the nation. Even more I like to see numbers driven by local sales which tell consumers in an actual area what pricing and inventory are doing. They are nearly always different when it comes to my market.
For instance right now prices in our metro area have increased over 4% over last year. Public will watch the national news telling them how prices are falling when in our market that is not the case for the most part. So we always have a process of educating clients on the differences between national and local trends.
Here is just one of 19 local charts I post each month based on data at the MLS market area level.
It shows the total active listings and the number of closed sales for the month of July for each of the last ten years (in the FERRY STREET BRIDGE RMLS market area of Eugene, OR).
It shows that demand is variable but that inventory is the greater problem. Here, the impact on price from the tax credit was highly transitory and focused on homes at or below the local median. Any gain seen this spring will be gone by fall.
A ten percent gain in five years is highly unlikely.
2005 values will return about 20 years out.
(I may be wrong on that one, but I'll be too old to care.)
Hi Leslie, Not a very promising outlook it it ? I'm wondering if your charts accurately reflect " destination markets " ?
Great post. Thanks for the great information.
I saw part of his presentation. Not encouraging, but info we need to be able to talk to sellers. I remember hearing a presentation about 2 years ago that said that prices were going to be at 1994 prices. I thought he was crazy! Who knew.
Great Post & Thank you for sharing your resources.
Reminds me of the famous line uttered by Bette Davis "Fasten your seatbealts . . . it's going to be a bumpy night."
I agree with everyone who thinks we are in for a long ride! There are a lot more foreclosures coming.
Love Altos Charts. I also subscribe to them and send them out to my market! Good stuff Leslie.
Our stats for the Monterey Peninsula area reflect very much the same scenario for prices during the next few years. We are divided between a very high end luxury home market and a number of real bedroom communities. Properties listed under one million dollars sell more by a factor of at least 5 to 1. Thanks for the report, it's most appreciated. -Lawrence Lyonhardt
Seems they have been saying the markey would be re-bounding withing the next few months, but that's all they are is predications. In our local markets there was supposed to a shortage of properties, which drove sales up just for a short while. What happens when the rest of the housing is released into the markets? Its' only a matter of time before this happens....
That influx of inventory is intimidating... and we'll only have to wait and see if 2012 fulfils the promise of restored home values!
Good blog post! True that supply will reduce home prices overall but specific markets still have the opportunity to flourish which have been dragged down the bubbles. I wrote a blog which i expresses the sentiments of my given area for example. http://realtordreams.com/about/ocala-real-estate/
I see people are still talking about that old 'shadow inventory', which apparently hasn't materialized for some mysterious reason. But what I'm wondering, is when will prices return to their 2002 levels? (That's when they started to drop around here.)
I like the post. The visual impact of the charts is a good tool for speaking to clients who are underwater and do not fully understand the market and why they can be under water when they've been paying a mortgage for 5-10 years.
This is why we have to stay Jazzed for the process and not the promise of appreciation.
We have a mission to put these homes in the hands of people that will make the payment.
It is a contest to see who can put away the most of these assets. Opportunity is greatest in time of crises.
Back in the early 90's they had the RTC selling off assets at tremendous discounts. We are facing that kind of opportunity again....
Randy
Larry:I think sometimes people lower thier prices with me just to have to stop talking about the data. They get tired of the homework I send them.
Christine: Absolutely....our job is to know what is where!
Tim:I love Massachusetts. Can you give me a territory with two months of inventory?
Ruthmarie: I am working to get sellers and potential listers to understand that a 2% increase in median prices YOY does not mean that they can "hold tight" in their house hoping for whatt the refi appraisal three years ago said. It's a matter of perspective.
Terry: in my office we all work on this and share the data. I look forward to seeing whatever you are producing.
Catherine: Thanks, and yes all markets are local.
Bernadine: I'm sure it will vary from area to area.
Jason: There is something called the "friends and neighbors" affect. We interpret national news through the lenses of what we see around us. An incentive was important for making enough hoopla and activity to legitimize a purchase.
Mike: I'll have to look that up. Thanks.
Dana: We're transaltors, I agree!
Charles: Some areas will take longer....upper end new construction in metro fringe areas, for example.
Bill: I am interested in how areas similar to mine are faring....Twin Cities seems similar.
Ben: 7.8 million
Horacio: Thanks for your comment, I'll have to think about what you've written.
Glenn #22: I thought about your comment for some time today since it has several interesting components. Median price is simply a starting point. Median price is a better starting point than an average price. An average can be skewed by a few outliers, especially as the data pool becomes smaller. Median prices within price categories (eg quatriles) give a clearer picture, especially when inventory is accounted for. Absorption rate is probably the most important statistic we can give our sellers, and yet even that can misleading. As you say, price evaluation begins with realistic comparison to the competition. It does no good to tell someone that absorption rate is 6 months for a price point if in fact that house is not a legitimate contender at that price point. Condition and the seller's ability to in fact, sell, are also critical elements.
Thanks for contributing, I appreciate your comment.
Simon: you can join my "all sweetness and light, all the time" club.
Bob:One of my great joys in reading the AR blogs is the quotable quotes. Along with "violent agreement", "deafening silence" just has a great ring to it.
Lori: I'm sorry if the news is gloomy, but it is what it is.
Terry: No kidding! Housing demand is directly tied to jobs, new household formation and confidence. We are lacking in all three right now (sorry Lori).
Lonni: charts are a good place for me to start any conversation.
Woody: They do a great job.
Michael: You had me until the last line: you were knowledgeable, specific, credible and then...huh? You have to legitimize what folks are hearing on the national news. That news is real, it's factual, and true. Overall trends are important for determining fiscal and monetary policy. Think of it this way: national housing statistics are relevant the way overall troop movement is to a general in a great war. There are magnificent successes, horrible losses, much suffering, and decisions to be made....sometimes at the expense of one group versus another. Having a vision of the overall success or failure is essential to predicting and planning for the overall outcome.
Kevin:I could learn to love Nashville...find me a territory! My area in the far western suburbs had a huge building boom in the early to mid 2000s. Many of those homes were bought with sub-primes and exotics...the mid to upper ranges were bought with an assumption of continued bonus income and a continual flow of transferees. Sadly, the economy has changed. We're not desperate, we're just not booming and we sure enjoyed the boom.
Sounds like I need to check out your reporting company! Great information, although I would like to think that there is a positive approach in there somewhere! Thank you.
Deborah: don't mock me or I'll stalk you and leave more snippy comments on your posts.....but seriously, we do need to look at the claim for appreciation. Year over year, month over month, as a percent of assessed value, as a factor based on equity? And what about inventory? In my little burg of St. Chuck, we have seen a 30% increase in median sold prices for houses listed for more than $1,000,000. Sounds great! But what this tidbit doesn't show is that there is one sale over $1,000,000 every 1.5 months. At the current rate of sales, the inventory is over 90 months. The fact that 8 houses have sold over $1,000,000 in the past year is of little comfort to the 76 active listings. And that these houses are selling for an average of about 70% of assessed value. And it's not just the upper end....townhouses are getting creamed -- because of HOAs, financing difficulties and the fact that some older single family homes with great remodels are such a great deal. Oh, well, mine is not to question, just to do.
Kim: I can come work for you or you can come work with me. The single biggest challenge we have is communication to our customers. The data is available and laid out in fascinating detail. Our job is to communicate and translate the information in ways that can be used by our clients. Wishing and hoping for better or different or more cheerful news is a waste of time. Excellent comment, you have the basis for a perfect blog here.
Gloom and doom, but at least we are approaching bottom so that we can start the climb. Would rather be in the present than two years ago!!
Kevin #52: I'd love to hear your ideas, as long as "call me" isn't the refrain. ;-)
Mr. Primary Capital: Altos also uses an affordability index...I am wording on how to incorporate into our lexicon....if buying is a good choice, as you say.
Bruce: the good news is that your prices are up 4% over last year...but the bad news is that last year the prices were down 20% from the high at 2005. It's all a matter of perspective.
Jim #56: How do you do your local charts? I played with excel for a couple of hours yesterday to do the community level SOLD vs UNDER CONTRACT vs. LISTED.
Bill: I have no idea! No, honestly, the main chart is a national level view. The Altos chart for Batavia, IL is for a thriving burg of 35,000 nice folks, but hardly a destination. Maybe call or email the people at KCMCrew...FB has link or google....they have been really helpful and interesting. Or go to the Altosresearch.com and use their "try me" feature under the "real estate professional" tab. I'd be interested to hear about what you find.
Marsha:No analyst is infallible, but I follow those who try hard, show their data and are sincere in their desire to communicate. Ummm...sounds like my criteria would be for hiring a realtor ;-)
Philip: We're only as good as our friends, aren't we!
Carla: You may be immortalized in my listing presentation....perfect.
Joe:Yes. You are certainly correct....much more to come.
RJ Pilla: Love the line about baby boomers....thanks.
Dennis: Agreed!
Debbie: I really, really need to listen in on a couple of their webinars....there seems to be so much potential for using their stuff. I'd love to hear about how you are using their material.
Lawrence: Monterey in CA? One of the prettiest places in the world. I grew up in Marin...will always miss northern CA. Our upper end is really struggling....90+ months of inventory.
Francisco: I agree...so much work to understand what is really happening?
Torgie: Just a halt in the decline would be nice.
Joetta: wow, that's tough....are you still coping with sellers "upside down"?
Angie: Pictures help show ideas that are hard to express....better than waving my hands around a lot and talking louder.
Randal: Good ideas, thanks.
Karen: This post is the first, the backdrop for the individual city posts and then second, our brilliant commentary about what to do as a seller.....but that will take a roll out of posts.
Pat: couldn't agree more....my head got yanked out of the sand last year...still learning to adjust.
I recently did some really in-depth analysis of one neighborhood of 600 homes here in Arvada, homes bought in 2001 are not upside down, a few bought in 2002 are upside down, from then on almost all are upside down. Even the ones that aren't upside-down would be barely able to break even after paying commissions,etc. And yet, the upside down ones aren't very far under, so our market is better than some out there.
And that's why national statistics aren't helpful for the local market. I still see agents talking about the 'boom' of 2006 to 2008, as though it happened here like it did in the rest of the country. And yet, it didn't happen. How do agents that are (supposedly) active in their local community not know what really happened?
So true.....good post. My developer friends are coming out with tons of products that are new, designed for today's needs, priced right and will give more bang for the buck than a foreclosure. Buyers are going to have a lot to choose from....that's for sure....
Leslie,
I am seeing our local inventory increasing in volume but few are getting to close. Obviously, this should put downward pressure on prices but sellers aren't getting the picture just yet.
So far prices are keep going up here, regardless of any predictions, as well as number of sold houses compare to last couple years.
Home prices continue to steadily creep up here in San Diego County. There are spots of decline and spots of excessive increase, but the general line is going up.
Hi Leslie,
I'm in the Chicagoland area, like you, but for some reason, I'm not seeing the same picture that Altosresearch is showing. Looking at the Agent Connect, Market Dynamics for Batavia (same city you have featured)
And I'm not seeing that drastic graph when using Market Dynamics.
For example, I'm showing that in Sep. of 2009, the median price (including Detached, Attached and 2-4 units) was 245K and in July it was 275K. Between Sep/2009 and July 2010, the lowest median was in April, 2010 when it was 209K.
The inventory (total units for sale) was 337 in Sep. 2009 and 336 in July 2010. Again, this is looking at Detached, Attached AND 2-4 units.
Now, if I look only at DETACHED, I see that the median sales price actually went UP. Sept. 2009 it was 252K and July 2010 it was 280K.
I'm curious where the Altos search get their statistics from. And whether the median is CLOSED median or ACTIVE median?
Thanks
Vlad: I just spent 30 minutes writing you a response and I somehow lost it in this AR editor. I'm exhausted, I promise to respond in the am because your accurate and reasonable observation is at the core of what our new series of data reports will address. The conflict between increased number of units sold, the supposed increase in closed (sold) prices, and the increasing inventory is the nut of what we need to answer when asked the question "How's the market".
In the meantime, here is the definition of just one field of the information provided in the Altos Research reports. Italics in 1. are my emphasis.
MEDIAN PRICE
The real estate industry generally uses "Median Price" instead of "Average Price" because a couple of high-end or low-end properties in a single zip code or city can skew the Average Price pretty quickly. Using Median (or the midpoint) gives a more accurate depiction of local price levels.
Median Price is often a very good proxy for indicating real-time market activity because sellers in a market, with the help of their local real estate agent, will price their home according to other similar homes in that market. While this isn't a perfect science, most agents and sellers tend to price their homes in close to the price where it will eventually sell. As the median price changes, this can indicate a couple of key market movements:
1. A rise in median price means that sellers are responding to more sales in their local area which means that the local market might be "strengthening" or getting "hotter" - favoring sellers, so they will ask more for their home. A fall in the median price might indicate the opposite - few homes selling at the current price levels which causes homes on the market to drop their price (see our post on Percent Price Decreased here - viewtopic.php?f=7&t=11) and for new homes on the market to price more aggressively.
2. A rise in median price could also mean that homes at the lower part of the market are selling and leaving the market. This means that the remaining homes on the market are at a higher price point, which causes the aggregated median price to rise.
Vlad: I just spent 30 minutes writing you a response and I somehow lost it in this AR editor. I'm exhausted, I promise to respond in the am because your accurate and reasonable observation is at the core of what our new series of data reports will address. The conflict between increased number of units sold, the supposed increase in closed (sold) prices, and the increasing inventory is the nut of what we need to answer when asked the question "How's the market".
In the meantime, here is the definition of just one field of the information provided in the Altos Research reports. Italics in 1. are my emphasis.
MEDIAN PRICE
The real estate industry generally uses "Median Price" instead of "Average Price" because a couple of high-end or low-end properties in a single zip code or city can skew the Average Price pretty quickly. Using Median (or the midpoint) gives a more accurate depiction of local price levels.
Median Price is often a very good proxy for indicating real-time market activity because sellers in a market, with the help of their local real estate agent, will price their home according to other similar homes in that market. While this isn't a perfect science, most agents and sellers tend to price their homes in close to the price where it will eventually sell. As the median price changes, this can indicate a couple of key market movements:
1. A rise in median price means that sellers are responding to more sales in their local area which means that the local market might be "strengthening" or getting "hotter" - favoring sellers, so they will ask more for their home. A fall in the median price might indicate the opposite - few homes selling at the current price levels which causes homes on the market to drop their price (see our post on Percent Price Decreased here - viewtopic.php?f=7&t=11) and for new homes on the market to price more aggressively.
2. A rise in median price could also mean that homes at the lower part of the market are selling and leaving the market. This means that the remaining homes on the market are at a higher price point, which causes the aggregated median price to rise.
Richie: This is an interesting thought....in the Chicago metro area new building permits are down 90% 1Q 2009 - 1Q2010 compared to 2005. 90%! And yet future building for particular market segments will represent new choices for buyers: senior, multi-level future care, smaller luxury, ranches. I fervently hope that my next home will be one or all of those. Thanks for bringing up this point.
Eugene: we're living the same situation here!
Lilia: Every market is different. What we need to address is the conflict between increased unit sales, increased median sold prices, decreased median listing prices, slowing rate of new contracts and rapidly swelling inventory (see that slope...ouch).
Jim: Thanks for commenting. An accurate picture of any market includes the sold price trend, the list price trend, the rate of new contract signings, and the number of new listings. Absorption rate is probably the single most important number we have to communicate to our sellers. Telling someone in a price category that "sold prices are up" leads to unrealistic expectations if the absorption rate is 90 months (eg Chicago western suburbs $1,000,000+).
Thanks again, what I'm questionining though is not the interpretation of the data but the Altos data itself.
Here is a disclaimer from Altos Site:
http://www.altosresearch.com/altos/website/TermsOfService.page
DATA SOURCES AND RELIABILITY
Altos Research collects market analysis information from various sources, including publicly available over Internet. Altos Research does not guarantee or warranty the accuracy of the data or any conclusions of the Web site, products, or services. Except as expressly provided otherwise, you assume all risks concerning the suitability and accuracy of the information within the Web site, products, or services. The Web site, products, and services of Altos Research site may contain technical inaccuracies or typographical errors. Altos Research assumes no responsibility for and disclaims all liability for any such inaccuracies, errors, or omissions on the Web site. Issues about data accuracy may be brought to the attention of Altos Research by emailing support@altosresearch.com, but any issues cannot be guaranteed to be resolved.
Real estate markets can go up or down in price. Conditions may change very rapidly. Altos Research obviously cannot guarantee any future prices, or market direction. You use the information, web site, products and services at your own risk.
Altos Research may make changes to the Web site, information, product offerings, and any other information and materials on the Web site at any time and without notice.
End of quote.
The highlighting is mine. It appears (to me, anyways) that Altos data is not accurate based on the numbers that I see in the Agent Connect which is based on the MRED LLC MLS.
Excellent post and responses, it brings out the complexity and the knowledge that is truly needed if we're to present our selves as real estate professionals. This type of information, the interpetation of it and the final dissemination of it is what brings out the best of a real estate agent. With this kind of data we can giove a meaningful and relatively accurate answer to the question of "HOWS THE MARKET DOING FOR REAL ESTATE?", as compared to the answer of "oh things are tough all over" that I frequently hear from agents.
While we may discuss and challenge Altos data and the information from other sources, at least we are analysing and studing the information. Excellent post!!!!!
Graphical presentations are comparivetively easy to understand than long stories.
Global economic downfall has had a mjor impact on real estate markets. Prices are lower and still falling as explained. The other is increasing foreclosures.
Real estate prices dropping
Gary - # 92. Amen. Great post and thank you for the potential new subscription to Alta...
Billy: Altos? Alta? are you with Altos Research?
Parag: A picture is always a great starting point for a conversation.
Gary: I decided that I couldn't get into a debate about the integrity of the data. The MLS also has a plethora of disclaimers. Altos is considered a reputable organization...and they draw from sources other than our mls (mred)....just like some of the better appraisers. I'm guessing the WSJ and Bloomberg are pretty good testimonials for the quality of their work. But as you say, simply having the conversation is an upgrade from conversations about granite counter tops.
This is good stuff Leslie. Thanks for the links.
Leslie, I believe as long as the NOD's and the foreclosures keep coming, we will see declining prices, UNLESS.. (soap box time)... The appraisers start making adjustments for NON-distressed properties vs. distressed properties.
Thanks for the great charts!
It appears that after almost a year, your analysis was spot on. Well, at least so far. I think some analysts today are not so sure about that full recovery of prices by the end of 2012.