Real Estate Data and Analysis is Local. And always will be

Posted on February 23, 2011 by Jim Duncan

If you haven’t been paying attention to the national real estate data world for the past week, you might have missed the National Association of Realtors responding to claims that it has been inflating housing sales. CNBC notes that:

As for the Realtors’ data, I find this one more disturbing. While some I have spoken with today call the claim by CoreLogic (a housing data provider) that the Realtors overestimated home sales in 2010 by almost 1.5 million, “overblown,” the Realtors themselves admit there is a problem. They are “re-benchmarking” their sales calculation process.

This is a big and important conversation because the NAR’s data, along with Case Schiller, are important, widely read, and depended on by many to ascertain the psychology of buyers, sellers – real estate consumers. Their data tries to demonstrate where we are now in the real estate market and where we’re going.

To which I say – So. What. I trust my local MLS nearly 85.7324%* myself, so why would I trust others more? I’ve said it before, when you’re evaluating the Charlottesville real estate market, ignore the national data; it will only cloud your opinion. Perhaps use it as a guide, but don’t count on it for anything other than high-level, disinterested trend lines.

Or, as my friend Dan Green said this morning:

No matter what Case-Shiller says about the U.S. housing market as a whole, what matters toyour local market is what’s happening in your local market. Each neighborhood has its own economy and that’s something that will never be captured in a national report.

The NAR, along with Case Shiller, Core Logic, etc provide national perspective. I try to provide (for myself and you) local real estate analysis specific to Charlottesville, Albemarle, Fluvanna, Greene, Nelson.

I know this: as usual, I agree with Jonathan Miller; “data drift” is the coolest phrase I’ve heard in a while. “Data drift.” Heh.


If you have questions about the Charlottesville ** real estate market, ask me .

* give or take, depending on the person entering the data.

** “Charlottesville” = Charlottesville, Albemarle, Greene, Fluvanna, Nelson, Louisa

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  • Seriousbuyer1

    Jim,

    More often than not I find the local MLS data incomplete, inaccurate, and lacking transparency. The realtor presenting listing data generally takes minimal responsibility for it. He/she verbally brushes it aside as unimportant as you just did with the published NAR sales data.

    Why should MLS data, especially sales numbers, widely used as a gauge of US economic health, be ‘local and always will be’? How is a pattern of faulty NAR data that drives national forecasts and consumer sentiment any less significant than the MERs fiasco?

    Today the Federal government backstops over 85% of the mortgage market worth $10.6 trillion through the FHA, Freddie Mac and Fannie Mae with taxpayer dollars to slow price erosion. FASB rules were changed in ’09 to forestall markdowns. Federal tax incentives were given to new homeowners in ’10. These were not local resolutions to a contained local problem. Is it really too much to ask the local real estate industry to take responsibility for reporting essential data accurately, and the NRA to collect and summarize it accurately for a US taxpayer supported industry. The local industry is part of the larger financial industry that has not ended or paid back its government subsidies. In fact, all parties associated with a real estate sale continue to earn fees irrespective of the loss a seller takes or future losses a new buyer might assume.

    Robert Shiller’s interview in June ’10 foretold the moral dilemma of homeowners walking away from homes and the government’s change in limits on conforming loans (which is set to be further reduced in 2011 if Treasury gets its way).

    http://money.cnn.com/2010/06/02/news/economy/shiller_housing_qa.fortune/index.htm

    To those who might take your advice and ignore national data trends, they will overpay. The Albermarle/C’ville inventory is still not priced in line with the national market and only began to tumble in 2010, four years after the start of problems in 2006. I, for one, am relieved that my opinion has been clouded and I didn’t buy.

    • Shannon Harrington

      Seriousbuyer1: Jim is right on target here.

      Pricing is based on supply and demand. It’s super simple stuff. Every day we agents battle with the media and their blanket statements, when we all know that real estate is local – period.

      I am very heavily active in both the Greater Richmond area market, and the Greater Charlottesville market, and they are completely different – night and day – from pricing on down. There is so much more inventory in Richmond that it is not to be believed. Therefore prices are lower, on average – only one nuance of unique-ness.

      But we can take it even further to say that RE is local to neighborhood, and this would be absolutely true. Average price per square foot will vary by specific location, and the public’s perceived value of living in that area. Desirability.

      Everywhere in the US is not equal in desirability. There are only so many mountains, rivers, etc. There are power-lines, factories, and highways to consider (as far as less desirability) – not to mention crime, schools, walkability… None of this stuff is National, and it never will be.

      An experienced agent can help you with those nuances, and can help you understand how to interpret the media as it pertains to the microcosm of local markets.

      The moral dilemma of people walking away from their homes exists, and I was just discussing this with another agent last week. But, forest for the trees: interest rates are still low and are indicated to rise, and – while there is less surplus inventory in Charlottesville than other places (higher prices/maintained value) – there is still a whole lot to choose from, and great deals to be had if someone would like to pay into their own pocket, instead of lining the pockets of an investor-landlord.

    • http://www.realcentralva.com Jim Duncan

      Seriousbuyer1 –

      I am sorry for taking so long to respond. What I meant, and meant to convey is that national data is trending data, not specific data. When analyzing one house on X road in Albemarle County, what Case – Shiller says is mostly irrelevant, except for what it means about consumer psychology. Why? Because they don’t cover the Charlottesville MSA.

      Our market has been “tumbling” since well before 2010; I’ve been telling my buyer clients for years – consistently – that in general if they buy today and sell in the next couple years, they are likely to lose money. It’s why I’ve consistently told those who are planning to be here for less than 3-4 years that they should rent. Have I sold houses to some who are on that short timeline? Absolutely. My job is to advise and guide, not make decisions for others.

      “Is it really too much to ask the local real estate industry to take responsibility for reporting essential data accurately …”

      Nope; it’s one of the reasons that I started writing this here blog six years ago – because I wanted to provide an honest, transparent assessment of the local market.

      I was asked yesterday if we’d seen a bottom and my answer was (and is) “I have no idea and won’t until I have 18 months of hindsight.” The fed, gas prices, foreclosures, short sales, title issues, inflation, all of these are national data points to which I pay and tell my folks to pay close attention; in context they matter. But … when evaluating comps when doing my analysis, the most important factors are the best comps. And that’s what I meant with my hyperbolic headline and premise.

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