Timely, local real estate data trumps national reports
Perspective: A call for more useful real estate statistics
By David Charron, Tuesday, June 14, 2011.
Broad housing market reports are a dime a dozen these days, and if you ask me, that's a good approximation of their worth. Markets are sliced and diced and compared across the board, drawing multiple -- and often conflicting -- conclusions with shaky, obsolete data. The market's up, or maybe it's down. It's good, it's bad, and it's confusing.
For most people, even with access to all this information the results are more inconsistent than ever, often dated and out of context. But they don't have to be.
Timely and accurate information, provided on a local level with a real-world perspective, is the real estate market's most important commodity -- and the ability of the public, government, financial institutions, investors and real estate professionals to make informed decisions on local housing markets is the cornerstone of an eventual housing recovery.
Isn't it time we stop trying to drive by, looking in the rear-view mirror, and insist on seeing just the facts, clearly, as they unfold?
Considering the critical role that real estate statistics play in just about every housing-related decision, it is time for our industry to rally around better data. We owe it to ourselves, our clients and our profession to insist on timeliness and clarity while delving into the motivations and methodologies of every metric we disseminate.
The most recent Case-Shiller Home Price Index of May 31 is a perfect example: It noted, of all the U.S. markets it tracks, the Washington, D.C., metro area as the only market to experience an increase in housing prices for the first quarter of 2011.
While this index may be useful for Wall Street, it hardly constitutes breaking news. Improving market conditions were reported three weeks earlier in an index produced by an MRIS subsidiary.
Metric discrepancies are about more than selling products or securing a reputation in the marketplace -- they go to the heart of how we think about information. The one real estate mantra that has remained unequivocally true through some of the most tumultuous years in the history of our profession is that all real estate is local.
By focusing on broad market-to-market comparisons instead of individual markets, we undercut our value as real estate professionals. Instead of chasing fleeting affirmations that change day in and day out, we should ensure that real estate professionals know how to read and apply local data.
Let's focus more on whether single-family homes or condos are more prevalent in a single area, the variance of seasonal market shifts, or the changes in sales activity that often precede major trends.
Let's talk about the facts as they stand today and refrain from basing decisions on reports that are already five to seven months behind the market when they hit newsstands.
We're never going to move forward as a profession by basing decisions on old data, and we'll never overcome paralysis if we compare our local markets to every other market in the country without considering the context of local driving forces.
Most people won't buy stocks today based solely on six-month-old research, nor will they decide what to wear today based on the average temperature in New York. Why don't the same principles apply to real estate?
David Charron is president and CEO of MRIS, the largest multiple listing service in the nation. MRIS facilitates more than $100 million a day in real estate transactions in the mid-Atlantic region.
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Submitted by Leon d'Ancona, B.T.L., M.T.L. on June 14, 2011 - 1:29pm.
Mr. Charron is very correct. Case-Shiller is a rather narrow index based on the principal variable used for index calculation of the price change between two arms-length sales of the same single-family home. For each sales transaction, a search is conducted to acquire information on any previous sale of the same property. If an earlier transaction is found, the two are paired and considered a “repeat sales transaction”.
In the last 25 years I have found its results very rarely reflect true small city or neighborhood values.
To dispel some of the negativity of this benchmark have a look at www.happyrenews.com a free service we provide to negate the poor press of real estate values.
Leon d'Ancona, B.T.L.,M.T.L.
President/CEO IMS Incorporated
WWW.Realestatestatistics.com
Submitted by Keith Byrd on June 14, 2011 - 1:53pm.
Consumers want facts. Our industry's image has taken a hit from all the "now is a good time to buy" comments from agents that don't have a clue what's going on in their local market. Guess it's the difference between being a Sales person that will say anything to sell a home vs. providing a Service.
In my area, the local paper writes about the local real estate market using a single piece of data from a stats company. This value is county-wide and lumps all residential properties in one bucket and is missing any foreclosure info. In my county, foreclosure rates of sold properties in cities range from 0% to 60%.
I've been reporting statistics on my website for years but it was a tedious process to gather and report the info. I recently developed an interactive tool that displays detailed info about the local market for the last 11 years. There are over 20,000 graphs of info that I now make available to consumers in an easy-to-use presentation that's updated every month.
Check em' out here:
http://www.slocountyhomes.com/dashboard.html
Keith Byrd
SloCountyHomes.com
San Luis Obispo, CA
Submitted by C.H. Naamad on June 14, 2011 - 2:32pm.
I agree with you a 100%!!!
C.H. Naamad
Boston Luxury Residential
Cell: 617-407-9740
Ch@blrboston.com
Submitted by Travis Wright on June 14, 2011 - 2:54pm.
Well put, David. I have seen the impressive data reports coming out of ARMLS and I bet yours are awesome, too. Here's hoping your wisdom sinks in to all MLS'. T.
Travis In Texas
travis-wright@comcast.net
Submitted by Albert Clark on June 15, 2011 - 3:10am.
Tagging on Tip O/Neils line, All Politics is Local we know "All RealEstate is Local" We provide a unique e-newsletter service to agents and see many agents adding their local market data that is fresh and usually zip code specific. I can attest that the local data is the most widely clicked on feature in the newsletters. Everyone wants to know what's going on in their marketplace. Long and Foster provides very attractive and useful Market Minute Reports. MRIS agents (David's area) is really Amp'ing up the availability of local stats with www.rbintel.com. We show agents how to use this data as they become advocates for their clients and prospects. Local stats, at the zip and neighborhood are a powerful marketing and retention tool
Albert Clark
Home Actions Relationship Platform
Scranton, PA
570 510 3507
aclark@homeactions.net
Submitted by Patricia Plastiras on June 16, 2011 - 4:52pm.
I agree with David's comments 100%. The national data has placed Nevada as the number one foreclosure state. Our office deals with buyers coming through our doors assuming this is true for our area.
Incline Village located at Lake Tahoe, Nevada is a year round resort community, only 35 miles away from Reno. The inventory of Reno homes is 2500 for sale. Our local inventory of residential property totals just under 400 homes.
Within our community we offer 15 very different subdivisions and neighborhoods from lake fronts at $7 million + to different neighborhoods with a median price of $900,000. Even lumping statistics together for our 15 subdivisions can sway the median price depending of what is selling and where.
Buyers assume if Nevada is hit this hard all of Nevada must be in a drastic downward crash. We are experiencing foreclosures but not at the magnitude of other areas such as Las Vegas or Reno.
So thank you for the article, knowing our area is small does not make it a simple community to understand because one must be educated on the regulatory agencies which effect building costs and selling prices.
It is our job as brokers to take the time to educate buyers to our area and explain what the impact of REO's on our small community has had. As a broker you must know each neighborhood which comes with experience and first hand knowledge.
Our website has pulled together current information on each neighborhood to help buyers and sellers stay on top of the local market.
www.inclinebrokers.com
Patti Plastiras
Lakeshore Realty
Incline Village, NV
Broker - 25 years