With Today’s release of the Case-Schiller home price index showing record declines, and the new OFHEO Monthly Index (PDF!) hitting the street, it is appropriate to point out a fact the we’ve discussed before:
There is no such thing as a "National" real estate market. Or, put another way: National real estate statistics don’t necessarily have any meaning or import for our local market, and as we’ve explained before, even the idea that there is a homogenous "Twin Cities" real estate market is misleading.
For instance, we know from last week’s post that Twin Cities Home Prices declined 12.5% in February, but if we drill down further into the data, you’ll find some surprising variation.
In Minneapolis, comparing February 2008 with February 2007, the Average Sales Price declined 19.4%. Within that figure, however:
- Longfellow average sales price declined 37.2%
- Northeast Minneapolis average sales price increased by 7.6%
Get outside of Minneapolis into the suburbs, and there is a similar story:
- Edina’s average sales price swelled by 14.1%
- Minnetonka’s average increased by 26.2%
- Saint Louis Park’s average sales price decreased by 2.7%
- Golden Valley’s Average Sales price declined by 19.7%
Now, the above numbers can be skewed by sample size (in Minnetonka, there were only 21 closed sales in February, Saint Louis Park only closed 34) and seasonal variations, so this data may speak to how little real estate activity there actually is, as much as it describes the hyper-local nature of real estate price fluctuations.
But you get the point.
Anyway, the preceding paragraphs are a very long segue into this point: Take any headlines relating to the real estate market with a dose of salt, and consider your source, and read the full content critically.
Yesterday’s existing home sales report is a prime example. Let’s look at a few headlines:
Headlines like that might lead the casual observer to conclude that the worst is behind us, and the real estate market is on the mend. But a deeper look at the underlying factors might lead to a different conclusion:
- The reported 2.9% rise in home sales only represents a rise in February as compared to January – two notoriously slow real estate months subject to a lot of seasonal statistical "noise," weather, etc.
- Compared to February of last year, February 08 home sales have declined 23.8%
- Inventory remains elevated, and prices continue to decline precipitously in many areas.
Does not present quite the same rosy picture, does it?
Believe us when we say we are as anxious as the next person for a return to a normal, balanced real estate market – and since these decisions are almost never made on the basis of price alone, even now there remain many good reasons to buy. Just be sure to dig deeper than headlines and National AP articles if you want to take the pulse of your hood.
Data and Stats Courtesy of The 100, By MAAR [mpslrealtor.org]