How much are home prices down? Pick your number
You might think a simple question like "how much have home values dropped" would get you a simple answer. Sorry, no.
Reports out within the last few days have very different figures for the loss in home-sale prices in the Baltimore region -- the city and nearby suburban counties.
Real estate data firm CoreLogic puts the drop at 1.7 percent in September, compared with a year earlier. Clear Capital, another data firm, calculates a loss of 6.4 percent for a slightly longer period that includes that month -- July through October, compared with a year earlier.
Both firms track repeat sales of homes over time to try to capture the real change in value, but CoreLogic is looking at single-family homes while Clear Capital says it also includes condos.
Zillow, meanwhile, says its "Zestimates" of homes' value -- not just recently sold homes -- suggests a 4.1 percent price drop in the Baltimore area in September compared with a year earlier.
And Metropolitan Regional Information Systems, which runs the local multiple-listing service, says the average price of all homes sold in the Baltimore area in September fell less than 1 percent from a year earlier. (October numbers are due out on Thursday.)
Confused yet?
Some of it is about different ways of measuring, especially when you're comparing repeat-sale methods with the oft-criticized Zestimate and the average of everything that sold. (The sort of homes that sold this month aren't necessarily much like the homes that sold a year ago, for instance.) But it's interesting that CoreLogic and Clear Capital are fairly far apart.
Buyers (and would-be sellers) who are watching the prices of comparable homes like a hawk are in the best position to say how values have dropped in specific areas. What are you seeing out there?
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Comments
I would guess between prices are down 3-5% from last year. Whether prices are stable or falling slightly there does seem to be consensus that they aren't moving up...
Posted by: direwolfc | November 8, 2011 4:44 PM
It's confusing because it is hard to make an apples-to-apples comparison between selling prices. These numbers are all about the methodology and the mix of homes they are looking at. Do the numbers include foreclosures, short sales, and all-cash purchases?
I like the Case-Schiller methodology because they look at the same houses over time. Their methodology treats foreclosures, short sales, and all-cash purchases the same as mortgage purchases, which is the way it should be. I've seen other methodologies that do not include foreclosures or short sales. Thus, these surveys fail to capture how much the real estate market has really dropped.
Is anyone accounting for the shadow inventory that has been foreclosed but has not yet been offered for sale?
Posted by: chappy10 | November 9, 2011 10:59 AM
Hi, chappy10 -- CoreLogic's figure accounts for foreclosures (and, as far as I know, short sales). I believe the Clear Capital figure does as well because the company tracks foreclosures as a percentage of the market.
The MRIS figures include anything listed for sale on the multiple-listing service, which includes a lot of short sales, foreclosures and deals purchased with cash.
I've seen some attempts to get at shadow inventory, but they generally look at delinquencies -- potential future homes for sale -- rather than REO.
Posted by: Jamie Smith Hopkins | November 9, 2011 11:02 AM
Chappy10,
Clear Capital is a repeat sales index. As a data subscriber to a couple of different data providers, I find Clear Capital to be most reflective of the market due to their understanding of REO Saturation and timeliness of releases.
-Bubblemore
Posted by: Bubblemore | November 9, 2011 10:03 PM
Again, very much related to the unpredictable foreclosure rate. It would seem that shadow inventories are now the largest culprit for devaluation in the Baltimore area. I think Clear Capital’s numbers really cannot take this into account.
Posted by: Grant | November 14, 2011 2:23 PM