At about 7:30 a.m. this morning, I received an “alert” from one of my news services telling me that home prices had fallen 4.5% in the third quarter of 2007 compared with a year earlier. My thoughts: Where and who says? I had just last night posted an analysis focusing on the Flagstaff market in light of the data released on November 21 by the National Association of Realtors®. While the NAR press release focused on the positive news that median home prices increased in most metropolitan areas (though not yet in Arizona), this morning’s press release from Standard & Poor’s /Case-Shiller asserted “there is no real positive news” in 2007 housing numbers. Well, it makes a startling headline at the breakfast table! Not that last week's NAR report covering the same period was all bubbly and positive, but it is much broader-based than the Standard & Poors/Case-Schiller data released today and it did find some positive news. Here’s an explanation of what’s behind the numbers: the “Case-Schiller Index” is a composite of single-family home price indices for the nine U.S. Census divisions. The S&P/Case-Shiller® “Composite of 10 Home Price Index” is a value-weighted average of the 10 original metro area indices. The S&P/Case-Shiller® “Composite of 20 Home Price Index” is a value-weighted average of the 20 metro area indices. (Confused by 3 different indices with similar names? – Don’t worry about it, that’s why you have me.) The NAR data reports on 150 metro areas, not just 10 or 20. S&P says its composites are “constructed to accurately track the price path of typical single-family homes located in each metropolitan area provided” and they are based on average prices. Rather than average prices, the Realtor® price reports are based on median prices – half of homes sold are above the reported number and half are sold above. By reporting from 150 metro areas, the Realtor® numbers emphasis the truism that all real estate is local, and are able to report that in some areas, and even regions, the market seems to have turned upward. (Unfortunately, not yet in Flagstaff, AZ.) Lawrence Yun, NAR chief economist, said “Some metro areas are hot while others are experiencing localized problems.... The [NAR] report also shows that home prices in the vast midsection of America, from the Appalachians to the Rockies, are affordable and, perhaps, even undervalued.” For more details about the NAR data and a prognosis for the Flagstaff market, see yesterday’s post: National Real Estate Report Shows Upswing in Most Metropolitan Markets Giving Hints About Flagstaff's Market. Remember, whatever you read or hear in the news about the “national” real estate market may not help you make decisions. To know what is happening in the market that matters to you, you need to drill down to local data, and you should consult with a professional that is able to help analyze the market information in light of your own personal and financial situation. For Flagstaff real estate decisions, please consult Team Heitland at RE/MAX Peak Properties. |
Email to a Friend
