Say you were standing with one foot in the oven and one foot in an ice bucket. According to the percentage people, you should be perfectly comfortable.Here’s the real problem with year-over-year statistics:
~Bobby Bragan, 1963
The follow is quote is from the comments on Which California did you mean?!
Year-over-year appreciation in your markets (by city) was as follows:Here are the actual unscreened statistics taken from the Multiple Listing System:
Albany -8.6% ~David G from Zillow.com
| Market Summary Month of April 2007 | ||||||
| Price Range | No. of Listings | Dollar Volume | Average Price | Median Price | DOM | |
| Detached | ||||||
| $550,000 - $554,999 | 1 | $550,000 | $550,000 | $550,000 | 13 | |
| $565,000 - $569,999 | 1 | $565,000 | $565,000 | $565,000 | 29 | |
| $580,000 - $584,999 | 1 | $580,000 | $580,000 | $580,000 | 12 | |
| $595,000 - $599,999 | 2 | $1,195,000 | $597,500 | $597,500 | 17 | |
| $605,000 - $609,999 | 1 | $605,000 | $605,000 | $605,000 | 21 | |
| $645,000 - $649,999 | 1 | $645,000 | $645,000 | $645,000 | 13 | |
| $725,000 - $729,999 | 1 | $727,000 | $727,000 | $727,000 | 12 | |
| $795,000 - $799,999 | 1 | $795,000 | $795,000 | $795,000 | 15 | |
| $875,000 - $879,999 | 1 | $875,000 | $875,000 | $875,000 | 14 | |
| $1,005,000 - $1,009,999 | 1 | $1,006,000 | $1,006,000 | $1,006,000 | 8 | |
| Sub Total | 11 | $7,543,000 | $685,727 | $605,000 | 16 | |
| Condo | ||||||
| $285,000 - $289,999 | 1 | $285,000 | $285,000 | $285,000 | 156 | |
| $430,000 - $434,999 | 1 | $430,000 | $430,000 | $430,000 | 56 | |
| $450,000 - $454,999 | 1 | $450,000 | $450,000 | $450,000 | 3 | |
| Sub Total | 3 | $1,165,000 | $388,333 | $430,000 | 72 | |
| Townhouse | ||||||
| $485,000 - $489,999 | 1 | $485,000 | $485,000 | $485,000 | 9 | |
| Sub Total | 1 | $485,000 | $485,000 | $485,000 | 9 | |
| 15 | $9,193,000 | $612,867 | $596,000 | 26 | ||
| Market Summary Month of April 2008 | |||||
| Price Range | No. of Listings | Dollar Volume | Average Price | Median Price | DOM |
| Detached | |||||
| $350,000 - $354,999 | 1 | $350,000 | $350,000 | $350,000 | 98 |
| $610,000 - $614,999 | 1 | $610,000 | $610,000 | $610,000 | 14 |
| $625,000 - $629,999 | 1 | $625,000 | $625,000 | $625,000 | 18 |
| $680,000 - $684,999 | 1 | $681,500 | $681,500 | $681,500 | 8 |
| $765,000 - $769,999 | 1 | $767,500 | $767,500 | $767,500 | 17 |
| Sub Total | 5 | $3,034,000 | $606,800 | $625,000 | 31 |
| Condo | |||||
| $340,000 - $344,999 | 1 | $342,000 | $342,000 | $342,000 | 7 |
| $345,000 - $349,999 | 1 | $348,000 | $348,000 | $348,000 | 31 |
| $385,000 - $389,999 | 1 | $385,000 | $385,000 | $385,000 | 55 |
| Sub Total | 3 | $1,075,000 | $358,333 | $348,000 | 31 |
| 8 | $4,109,000 | $513,625 | $497,500 | 31 | |
1. Because of low inventory, many statistics rely on a small handful of closed transactions. Last year the City recorded 15 closings in the month of April compared with only eight in 2008. One of the five single family homes (three were condos) used to derive this years statistics was a freeway impacted fixer on Polk street which sold for an artificial low of $350,000. This home alone has a dramatic impact on the statistics representing 20% of the remaining single family homes recorded.
2. Many of the sales forced by the mortgage melt-down are in lower price ranges where sub-prime financing played a key role in the purchase. 40% of this years sales in April were condominiums verses 26% last year.
3. Conversely, many of the sellers with significant equity in desirable neighborhoods are choosing to stay put. The resulting inventory has shifted towards lower priced houses which in turn affects the statistics. The property with the highest value last year ($1,006,000 for 1749 sq ft of living space) was at 1031 ORDWAY STREET, which is Albany's top location. This year the highest value ($767,500 for 1372 sq ft of living space) was on 535 STANNAGE AVE just two blocks above San Pablo Avenue a good two tiers below Ordway in neighborhood desirability.
The year-over-year sales jumped to different locations within Albany, and to smaller properties-- while presenting fewer properties to test the averages. What does -8.6% mean if the statistics are chasing a moving target?
Tip for Sellers: The transactions we see daily do not behave according to the stats. We see the specifics change dramatically neighborhood by neighborhood and street by street. If you want to know what your home is worth in all of this, have your real estate agent prepare a Comparative Market Analysis, which will pull the most current sold prices for homes nearest to your property. Compare apples only to other apples. Random percentages don’t cut it anymore; you need to see for yourself where the statistics are coming from.
Tip for Investors: The twisted statistics do create an opportunity for investors. Since institutional lenders are not here in the trenches, they must rely on statistics, regardless of how faulty they are. What's more, in the current climate they are happy to act conservatively based on the numbers. Short sales and foreclosures (where they exist) do present an opportunity for investors as it is easy to negotiate and justify a low price to someone who is judging our market by the statistics.
2 comments:
"Conversely, many of the sellers with significant equity in desirable neighborhoods are choosing to stay put."
I wonder why that is...
Some are reading the statistics and believe this is the market bottoming out. The belief is that if they hold out for another year or two, they prices will rebound. Some have not had the benefit of direct information about their neighborhood and could be surprised to discover that they do not need to wait.
For some Prop. 13
has created an incentive for staying put. Those who have benefited from Prop. 13 will have to spend more on taxes each year (if they can not take their tax benefit with them) based on the price of their new home. In order to take your tax basis with you, you must be over 55, and chose to move within the same county or within one of the handful of counties which has voluntarily adopted Prop. 90. Prop. 90 allows for a one time exemption for those moving to a cooperating county within the state. If you can’t take your assessed valuation with you, a scenario where an empty nester wants to move to a smaller home may cause their tax base to go up significantly. It is possible for this homeowner to pay more for a smaller house based on the jump in taxes.
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