5 Reasons to Hire a Real Estate Professional When Buying or Selling!

Keeping Current Matters keeps serving the Kool-Aid on the Collateral Analytics study. I'm not sure the Collateral Analytics study conclusions can be broadly applied.  The study only focuses on 13 highly populated counties.  Only 150 counties (of over 3,000 counties) in the US comprise 50% of the population.  The study uses AVM methodology as a tool to derive their results.  AVM models do not work well in low population housing markets.  Extrapolating high population urban results to less populated and/or rural areas is risky.

The Collateral Analytics study also indicates it was a normal market. “The data used for this study came from a rather normal housing market, not one in rapid rise or decline, and covered all of 2016 and the first half of 2017.”

A quick review of the markets the study covered showed the following info:

·   Clark County, NV, “The median sales price of previously owned single-family homes in Southern Nevada in June was $257,373. That’s up 2.9 percent from May and 9.5 percent from June 2016, according to a new report from the Greater Las Vegas Association of Realtors.”  Las Vegas Review-Journal 07/06/17

·   Cook County, IL, “Feb 2017 median home price was $210k, a 12% increase over Feb 2016” Illinois Realtors Blog 03/22/17

·   King County, WA,  “median home prices grew 15.7% compared to a year ago”  Seattle Times 05/04/17

·   Prince George’s County, MD, “Prices rose fastest in Prince George’s County, climbing 19% from Feb 2016 to Feb 2017”  WA Post 03/31/17

Double-digit median price increases year over year is a normal housing market? 2.9% increases month over month?  Sounds more like a rapidly rising market.  Only one of the counties in the study had a median price increase less than 5% (Fairfax County, VA 4.8%).  According to Keeping Current Matters, who provided your blog, 38% of the US states had year-to-year price appreciation greater than 6%.  Washington (including Seattle & King County) had 12.9% appreciation statewide.   

I do not believe the study was done in a “normal market”.  

Also, it does not appear the study excluded Flat Fee Listings, which are typically used by FSBO sellers to advertise in the MLS.  Including Flat Fee Listings as agent represented most likely leads to overstating agent represented results and under-representing FSBO results.   

Finally, one comment my stat professor consistently mentioned: "Correlation does not necessarily mean causation".