Housing: Skip the Spin, Read the Data

Linked here is the data from the National Association of Realtors on existing home sales for May 2009. If you get tired of sensationalized headlines and spin in the articles, take a look at the data for yourself.

The non-seasonally adjusted numbers show some nice gains from April and I wonder in this new economic age if seasonality is still in play as much for real estate.

On the sale price numbers, the median is the midpoint price in the listing of sales prices. Mean price is the average, or total sales dollars divided by number of sales.

Comments

[conceptwizard:]

This is a good link. I find the Realty Trac is good too, it gives real raw data. Both co-incide with one another that the market is still going down. The Media's job is to inspire the markets in any and every way possible, they cannot be trusted for factual statements. If fact if you watch close enough they try to make bad news look good. Lets face it. BAD NEWS is BAD NEWS. it isn't less bad or not as bad as last month or still down but getting green shoots or light a the end of the tunnel or any other of the dozens of way they spin the top. The numbers are the numbers. I am so tired of washed through reporting, i don't know what we would do without sites like these just to keep sane.

May 27 05:45 PM

[Steven Hansen:]

first, the 30 year fixed home loans are now over 5% and will take off like a rocketship as the fed has lost control of long term interest rates. do you think this has a positive or negative effect on affordability?

second, spring is the time for home sales. even comparing the terrible last year to this year - this year sucks.

third, home sales are a function of volume. volumes are terrible.

finally, the nar data looks good until you compare mean to average home sales value. average prices dropped.

May 27 10:21 PM

[sickofthehype:]

With the declines in prices and a 5% loan, or even a 6% loan, if you can't hack the payment you shouldn't be buying in the first place.

Secondly - this year is UNREAL compared to last year. What rust belt city are you in?

Third - volumes are UNREAL in many cities. What planet are you on?

Finally, of course averages are down. It's the free market at work. And it's working in many places right now.

Speaking of affordability, what do you think inflation will do to future rents for all of those renting vs buying? Rents will NOT be dropping.


On May 27 10:21 PM Steven Hansen wrote:

> first, the 30 year fixed home loans are now over 5% and will take
> off like a rocketship as the fed has lost control of long term interest
> rates. do you think this has a positive or negative effect on affordability?
>
>
> second, spring is the time for home sales. even comparing the terrible
> last year to this year - this year sucks.
>
> third, home sales are a function of volume. volumes are terrible.
>
>
> finally, the nar data looks good until you compare mean to average
> home sales value. average prices dropped.

May 28 01:10 AM

[Sean in CA:]

yes, yes, yes, yes, but no.


On May 28 01:10 AM sickofthehype wrote:

> With the declines in prices and a 5% loan, or even a 6% loan, if
> you can't hack the payment you shouldn't be buying in the first place.
>
>
> Secondly - this year is UNREAL compared to last year. What rust
> belt city are you in?
>
> Third - volumes are UNREAL in many cities. What planet are you on?
>
>
> Finally, of course averages are down. It's the free market at work.
> And it's working in many places right now.
>
> Speaking of affordability, what do you think inflation will do to
> future rents for all of those renting vs buying? Rents will NOT
> be dropping.

May 28 09:04 AM

[reluctantQuant:]

It's not about the rates, folks.

I'm looking at 30yr fixed, conventional first home mortgage loan rates, a composite from BanxQuote with 13 years of daily history on Bloomberg. This provides a base index for discussion, let's not get particular points, fees, etc.

On a weekly basis, over the last year, the rates have gone from a high of 6.71 (oct'08) to a low of 4.70 (apr'09). Yesterday they posted 4.93. Rates are not punishing anyone right now, running at least 150 bps lower than last October.

Also, the practical cashflow impact of a rate rise in mortgage rates is really a question of mortgage size, not the rate.

On a 100,000 loan (for base comparison), the difference in monthly payment between 5% and 6% annual rate is...
$65 dollars a month. whoopee.

More realistic example: if I'm buying a $400,000 home with 20% down, and rates go up fifty basis points from today, it's about another $100 per month. That's not a make-or-break decision for a buyer considering a 400k house.

And if buyer doesn't have 20% downpayment, said buyer should be looking at cheaper houses and stop listening to real estate and mortgage brokers. Most of this problem today is about buyers buying things they can't afford because that rate looked so sweet. Here, honey, look at this rate! Don't look at the fact that we're telling you this 3BR/1Bath 1800sqFt. on 1/5 acre next to an unfinished mall 26 miles from town is a steal at $625,000. Just look at this rate! Sooo low!

Today's mess has very little to do with rate mechanics.
--rq

--rq

May 28 09:11 AM

[fireball:]

sickofthe hype
having to keep an apartment as a second home out of some neccesity, from what i can tell rent is already headed up. i really hate paying rent. i would buy something but property taxes seem to be ignoring reality and rising as that taxable base shrinks. apparently my home went up in value according to the taxman.

the next big reset looks at least as big as the first.
the snowball is rolling down a steepening incline. housing, commercial real estate, unemployment, less consumption, wholesale creation of money. better step aside if you can.
buy some p.m. insurance if you are able.

May 28 09:24 AM

[Accuriz:]

Tim, good reference link. What concerns me are two issues.

1. Census Bureau (uspricemon.pdf) reports a median sale price of $201,400 for March 2009 and NAR reports $169,900.

2. Census reports a declining Median Sale Price for 2009, yet NAR reports increases from January to April in all four regions.

If we are to understand the data, do we not need to know which data set is the most relevant?

Our own data analysis which covers 50 million properties is more in-line with Census Data and it does indicate that value for 2009 are adjusting upward during the 1st Quarter, similar to NAR data.

There are several sources of data NAR, NAHB, Commerce Department and Census Bureau which show conflicting results. This issue needs to be addressed if we are to better understand these very complex markets.

May 28 10:06 AM

[TracingError:]

I can't speak to anywhere else, but rents in New York are dropping like a shot. Landlords are offering 20% reductions to tenants who make any noise about moving. Brokerage fees--the landlords are covering them. And just wait until August when the usual crop of young I-bankers and lawyers doesn't come to town.

May 28 12:08 PM

[mallarde:]

Rents in the best parts of L.A. are dropping fast, too. We are seeing some capitulation, but apartments still do not rent. I expected rents to eventually stabilize and go up as more people looked to rent. It is not happening. Instead, renters are losing jobs/income and fewer can afford to pay premiums for fancy apartments.

May 28 01:34 PM

[Hmm?!:]

Here in the Dallas area, rental numbers can be very misleading. An apartment complex offers you one month free and/or pays your moving expenses on a 1 or 2 yr lease at $800 a month.

Your true rent is 10 to 20% below the stated rates.......in addition your current complex is going to offer you a month or two or more to stay. In addition, how is anyone getting an honest accounting of vacany rates?

May 30 12:36 PM