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This is a repeat sales index so it tracks sales of the same property over time. This allows it to filter out changes in average price due to a changing mix of houses sold.
What they're reporting -
Nationally, prices dropped 12% versus a year ago, and 23% from the peak.
Prices have declined nationwide for 24 straight months. The rate of decline is picking up a bit in recent months.
The number of metro areas showing a decline is increasing as well, so this is not just a few bubble markets skewing the average.
Declines in the worst hit areas are starting to slow, but areas which haven't been hit quite as hard are showing increasing price declines. My thought is that this is starting to show effects of the overall economy on housing instead of just the effects of unaffordable houses in bubble areas. Although some of it is just bubble markets in WA and OR which happened to hold out a bit longer than the rest.
Out of the 30 largest metro areas, the only 3 to show price gains over the past year were in Texas.
7 states showed price increases in the past year (one of these is expected to be revised down as more data comes in), while 11 showed double-digit drops. NJ, MN, and NH were above 9% but not quite at 10%.
It's an interesting report overall, since it shows just how widespread this downturn is. The raw data is used by mortgage insurers and lenders to assess risk, which makes it even more relevant than it would be otherwise.
what you need to keep in mind is that it says nationally, not all areas will be like that - some will be higher and some lower - it isnt the same in every city or neighborhood
what you need to keep in mind is that it says nationally, not all areas will be like that - some will be higher and some lower - it isnt the same in every city or neighborhood
Obviously not but the message is clear that prices are still coming down and that is very good news for the economic consumer.
Out of the 30 largest metro areas, the only 3 to show price gains over the past year were in Texas.
Over the past 5 years I have worked with many inbound relocations from the greater Houston area. Everyone of them ( they do not know each other) claimed to have barely broke even on resale, claiming it's cheaper to buy new there than it was to buy resale, especially with the funcky stucco and mold remediation issues. In otherwords, their collective take was that new construction was driving the market, not resales, at least in their price range.
I do not live or work there and don't know. It's curious that so many had the same story.
Over the past 5 years I have worked with many inbound relocations from the greater Houston area. Everyone of them ( they do not know each other) claimed to have barely broke even on resale, claiming it's cheaper to buy new there than it was to buy resale, especially with the funcky stucco and mold remediation issues. In otherwords, their collective take was that new construction was driving the market, not resales, at least in their price range.
I do not live or work there and don't know. It's curious that so many had the same story.
I was alittle curious about your post, because I lived in Houston for 30 years before moving to my present location, so I feel that I have a little knowledge on the subject. In 1981 we purchased a home for $57,800 and live in it untill 1998 when I sold it for $88,900. In perusing realtor website in 2006 I saw that the same house was on the market for $120,000 -- don't know what it sold for. However, I checked realtor website a few minutes ago and found several similar homes (same subdivision of ~ 500 homes, same age and sq ft) in the $135K-$145K price range. There also did not appear to be any short sale/foreclosure or otherwise distressed listings in the area. Those figures do not indicate either a bubble or a distressed market to me.
Over the past 5 years I have worked with many inbound relocations from the greater Houston area. Everyone of them ( they do not know each other) claimed to have barely broke even on resale, claiming it's cheaper to buy new there than it was to buy resale, especially with the funcky stucco and mold remediation issues. In otherwords, their collective take was that new construction was driving the market, not resales, at least in their price range.
I do not live or work there and don't know. It's curious that so many had the same story.
Interesting you point this out, since one of the limitations of a repeat-sales index is that it by definition has to ignore new construction. There's obviously no previous price history on a brand new house, so it's ignored in these kind of price comparisons. It could be that for areas where there was a construction boom that the data in this particular report isn't totally representative of the area.
In any case, appreciation in those TX cities was at 3% or less a year, so a homeowner could easily be at break even after accounting for upkeep, insurance, RE commissions and so on.
what you need to keep in mind is that it says nationally, not all areas will be like that - some will be higher and some lower - it isnt the same in every city or neighborhood
"Every market's different - call a REALTOR(tm) today!"
Guess I can't fault them for trying, but I wish they'd at least read what I wrote and linked to before posting the marketing campaign here.
There are problems with every method of attempting to measure the trend of prices and say that those trends apply equally to all units in a particular market.
I know the criticism of the MLS average sales price is that it is do dependent on the homes that come on the market varying from month to month.
Anyone who ignores the problem of repeat sales data also has a biased view of sales. As has been said, new homes automatically are not part of that data set, until they've changed hands. The bias there is that homes that people are HAPPY WITH and do not feel a need to upgrade or pressure to sell will NEVER enter the re-sale data. The homes with the MOST influence on re-sale data will be those that change hands frequently / multiple times. In a rising market these are the properties most likely to have been "flipped" and in a declining market there is good chance that these are properties that attract down-on-ones-luck types that NEED to sell.
My point is that anyone that looks at ANY data and says "this is the ONLY way to evaluate property" is hopelessly myopic. In every market the #1 determination of selling price is CONDITION, properties that are in tip-top shape ALWAYS sell for more and in a short time frame than those needed TLC. There is no denying that economic conditions are much tougher than they were at peak, sellers are NOT putting the money into prepping homes before listing them. This BY ITSELF depresses the heck out of prices! Toss in the foreclosures and short sales and a very distorted picture emerges. I am not saying that even tip-top properties will sell now for what they would have at peak, but the disparity in prices is extreme. The properties that are lender owned can be had for a fraction of the price that one would expect for a property that is in excellent condition and owner occupied. In areas where those are the ONLY properties available it is foolish to think that sellers will slash their prices. Even if more desirable areas have better bargains due to their being more foreclosures in competing area the STABILITY of areas without significant foreclosures will prevent price erosion.
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