Downturn in Housing is Overstated By Major Indices
As a follow up to yesterday's post, an article from the Calgary Herald is citing the work of Collateral Intelligence, a real estate analytics firm based out of Massachusetts and California, states that most closely watched U.S. home price measures lack enough local data to truly reflect house values and are overstating the extent of price drops. Some key markets in those indexes are dominated by distressed foreclosure sales, exaggerating the price weakness that is often extrapolated to the national market.
“To properly track the real estate market you really need to get down to all the local markets,” said Sklarz. “Now we have the tools to properly track that. So why track these overly simplistic indicators that can be very biased, as they are in the current environment, when there’s so many more complicated things going on in the market?”
While Case-Shiller regional indexes show a 26% slide in prices since the peak in mid-2006 and its national index shows a more than 18% drop in the fourth quarter from a year earlier, Miller said a more realistic estimated cyclical drop is in the 12% to 15% range for the typical home owner.
So while it is true that there are good deals to be had, it is also just plain old smart to do your homework when shopping for a home. Looking at a new home that is priced at $750,000 and thinking that it will drop to $400,000 may be unrealistic, and you may find yourself continually waiting on the sidelines, getting ready to jump into the market at a price that will never happen. Prospective buyers should be thinking that similar homes will have similar prices, and that market forces have already affected the prices across the board.
Keep in mind that home prices have dropped already and mortgage rates are fantastic, and there are signs that the economy is turning already. Good hunting!
1 comments:
This article is very timely and relevant. As I quote Cameron Muir, an economist, "Home sales are unlikely to fall much further..That being said we expect home sales not to decline much further."
But it's never too late, with the right business plan set up, it will lead to valuable outcome. This is what most counselors would give as an advise.
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