Thursday, December 16, 2010

What is the real real estate story?

Headline screams bad news:  Region home sales drop sharply

Yet this is the cut and paste quote from that article right now as I type:
"Average home prices rose 3.7 percent, from $138,907 last year to $151,556 last month, according to RealSTATs."
I'm missing something in the math on that?  Later another quote is that regional prices for new home construction experienced "a 13.3 percent increase in the median price of a new home to $275,000."

Given that national real estate markets are extremely anemic most everywhere... I would say this is one of the bigger economic stories for the region.  Not sure most readers will realize that, but those numbers are quite a story.

and I saw this yesterday, but for some reason thought it was really from something that came out previously.. I guess it is new.  See:  Region Economy Gets High Rating

and just to follow those stories... quite a coincidence, but:   Google delays site selection for project.  Who knows what that means for the handicapping.

4 Comments:

Anonymous BrianTH said...

The tax credit that was expiring (although it was later extended) and drove artificially high sales numbers in November 2009 was biased toward the lower end of the market. It applied only to first-time home buyers, and was limited to taxpayers with incomes of $75,000 (single) or $150,000 (married) (it phased out above these numbers).

Hence a drop in volumes but increase in median and average prices isn't really that surprising.

Thursday, December 16, 2010 10:24:00 AM  
Anonymous The Wiz said...

Could be that lower priced home sales have fallen due to high unemployment of working class. Also, could be that a drop in foreclosure sales compared to last year raised the averages as sales at near asking price will be higher than those sold at foreclosure.

And it could be the higher end homes are doing well. Maybe all those nuclear engineers that Westinghouse has been hiring. Plus some gas people moving in and people with big royalty checks. And med and high tech people.

And with lower total numbers sold, it would allow a smaller segment to cause a large variation in average selling price.

Thursday, December 16, 2010 10:25:00 AM  
Anonymous MH said...

Maybe more lower priced homes have dropped to worthless and aren't sold anymore.

Too bad we're too small to get the repeat-sales measure of house prices like the big cities.

Thursday, December 16, 2010 12:07:00 PM  
Anonymous BrianTH said...

The OFHEO's House Price Index is a repeat-sales index. The HPI has recently been significantly different from Case-Shiller in some of their overlapping markets, but to summarize a complex topic, I think the HPI is likely a decent measure for Pittsburgh. That is because the main apparent causes of the difference don't necessarily make Case-Shiller a significantly better methodology for Pittsburgh.

To be specific, last I knew the three main drivers appeared to be that the OFHEO uses refinance appraisals, Case-Shiller downweights long-term pairs less, and Case-Shiller uses data about low-end, non-conforming sales. I think it is reasonable to hope that in a market with a lot less home-equity cash-out activity, a lot less price trend volatility, and a lot less involvement in subprime mortgage lending, these factors would not result in as much difference as has been observed in some other cities.

Friday, December 17, 2010 7:51:00 AM  

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