I was reading the Washington Post on Sat November 24 and I came across their "Real Estate Trends" report for Fairfax County. They compared the first 6 months of 2006 to the first 6 months of 2007. They excluded condos and they used data gathered through the courthouse, and not via the MLS.
Out of the 47 zip codes, they said the #1 fastest growing zip code was 20170, Herndon at 14.4%.
How can this be? I recently wrote about Herndon and the Foreclosure mess going on over there with as many as 48% of homes on the MLS from $300k to $400k being in some stage of foreclosure (See SOL foreclosure post).
So I set out to prove the data wrong. I especially was suspect of the line saying "It excludes some types of marketplace transactions, particularly those that are not at market price."
Aha! Gotcha! My translation: Take out the foreclosure and short sale problem in Herndon and home prices went up!
Oh this is gonna be good!
So, I know you aren't supposed to set out with an bias, but this was Herndon!
I pulled data from the MLS for the same time period. Just like the Post, I used the Median home price.
Washington Post's data:
Jan-June 2006 20170
356 Homes $411,000
Jan-June 2007 20170
123 Homes $470,000
$59,000 increase or 14.4%
Frankly Data (from MRIS)
Jan-June 2006 20170
291 Homes $475,000
Jan-June 2007 20170
199 Homes $485,000
$10,000 increase or 2.1%
I didn't see 14.4%, but it still went up!
So I ran the numbers from July 1 2007 to present.
Frankly Data (from MRIS)
July-Nov 25 2007 20170
134 Homes $421,000
(vs $485k in 1st part of year)
$66,000 DECREASE or 13.1%
(this was based on 6 months later, so one could argue that annualized that is 26.2%)
Up 14%? Down 13%? Down 26.2%?
Bottom line is, I don't believe DATA. Anybody's DATA
How can you compare 300 homes in a zip code to a completely different 150 homes a year later? These are NOT the same homes. Add in a new community of 30 homes (which are always much higher than resale homes) and it makes everything look like it was skyrocketing.
I think New Homes actually might be the reason why NAR has never shown a decrease in home sale prices (with the exception of this past year). Why? Newer homes sell for higher, if you add them to the "average" or "median," it will pull everything higher.
On the flip side you have bubble prognosticators. To the right is a chart from the S&P Case-Shiller index. They are claiming that prices will drop 50%. Is your $500,000 condo going to be worth $250,000?
Oh by the way, Robert Shiller is getting rich on this doomsday prognosis.
But then NAR's comeback to this is weak:
Lawrence Yun, NAR's chief economist says, "In some ways we’re tracking different things. We use MLS data, so our figures are as timely as possible and are more representative of markets. Shiller uses county records and mortgage data from the secondary market. These sources lag further than ours and they capture a disproportionate percentage of higher-priced homes."
Let me break that down really quick before ending here. His main excuse is that the data is delayed and is more weighted toward higher priced homes? Um, that was a horrible comeback.
- Ok, it is 3,6, 9 months behind, so just wait, or move the data over.
- Are you saying you agree with them in regards to higher priced home? So with the average home in the US being somewhere around $250,000, anything over $500,000 will drop like they say?
He better come up with a better comeback to that
Bottom line is, data is too easy to manipulate.
Ok, so what should buyers do?
1) Don't try to time the market Attn. Market Timers! The EXACT Best Day to Buy!
2) If you are ready to buy, use the Round Robin Method "Round Robin" Buying System. Unearthing The Desperate Seller.
And the only data to look at is data pulled by your agent showing you extremely local data (as in down to the neighborhood) while making adjustments PER house. Does it have a garage? Compensate for that. Larger Sq Footage? Then and only then can you see any real trends.
Written by Frank Borges LL0SA
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Frank-I just posted something yesterday about two articles in Money Magazine that show one community with two entirely diffferent sets of data. I'm past believing anything I see in print and hope we can convince consumers to give up reading the paper and listening to the news. Instead listen to the agent who knows their area of interest and let us work the numbers for them.