ASU’s Dr. Jay Butler’s housing numbers for October 2006 have been released:
The Valley’s single-family home-resale market clicked higher in October though sales are well off from last year’s frenzy.
There were 4,985 sales in October, up slightly from 4,875 the previous month but down nearly 41 percent from October of last year, according to the Arizona Real Estate Center at Arizona State University Polytechnic.
The median price stayed essentially flat. The new median of $257,000 is marginally higher than $256,900 in September.
Here’s the juicy news, though:
The new median is a little more than 1 percent lower than in October of last year.
Butler has median values down 3.78% from the peak in Jun 2006.
Almost this sounds like a houseful of bad new stuffed into a baby bootie, but it is actually a nice illustration of the uselessness of Butler’s methods. He strikes a median among all sales, Valleywide. If houses are selling well at the high end of the price spectrum and poorly at the low end, this will tend to make the market as a whole look healthier than it is.
John L. Wake at Arizona Real Estate Notebook has a better set of median values, charting October’s numbers city-by-city.
We work from a completely different set of numbers in our Market Basket of Homes, and I realize the curse of these analyses is that they’re all based on different assumptions. But we’re interested in the houses we actually sell and that the people in the middle of the Bell Curve actually buy. Moreover, by working with a representative subset of that market, we can read every listing, one-by-one, to try to determine what really happened.
How did those houses do in October? Down 4.07% from September, down 7.97% year-over-year, and down 9.88% from the December 2005 high. This is not the disaster it might be portrayed in the newspaper. After all, two-year appreciation on an average Market Basket home is 38.21%. Three-year appreciation is 63.15%. But this news is in stark contrast to the news reported by Dr. Butler.
MLS inventories are down, and some people want to argue that this means the market has turned. But some of those listings are simply expiring after six months of failing the test of the marketplace, where others are coming off the market (or not coming on) because of the impending holidays. We missed the Summer selling season, but otherwise buying activity has been fairly normal for 2006. If, after the start of the year, buyers come out with their checkbooks open, then it will be time to talk about the market turning…
Technorati Tags: arizona, arizona real estate, phoenix, phoenix real estate, real estate marketing
Jeff Brown says:
November 9, 2006 — 9:16 am
mike says:
“Uselessness of methods?”
Still not quite ready to transition from denial into acceptance? Ok, maybe next quarter…
November 9, 2006 — 10:21 am
Greg Swann says:
Sorry to disappoint you. I live by facts, not faith. I know nothing about you particularly, but I’ve been listening to hysterical faith-based bubbloid predictions for coming on three years now. Those predictions might yet turn out to be true — albeit erroneous through tardiness — but the facts so far have argued to the contrary. Is there any fact-based rebuttal you care to make to this?
November 9, 2006 — 10:27 am
Jeff Brown says:
Greg – Please stop. Hit the mercy button. I can’t type while laughing coffee out my nose.
November 9, 2006 — 10:46 am
cj says:
The data on home sales prices does not include all the cash back offers to buyers, which is potentially huge.
November 9, 2006 — 3:26 pm
Phil Hoover says:
Greg ~
Are the lights still on down there in Phoenix?
This article makes it sound like it is all over for Phoenix and, well . . . the entire country:
http://blogs.business2.com/realestate/2006/11/phoenix_and_hou.html
Gee, guess I need to close up shop and just give up.
But what about the home I sold Tuesday and the one I will be selling tomorrow?
I am really conflicted ~ dunno if I am doing well or if I should jump off my front porch (one step) and end it all.
Why is it that everyone and their cat becomes an expert in a down market?
November 9, 2006 — 5:31 pm
mike says:
Sorry to disappoint you. I live by facts, not faith.
Live by them? Uhhh, not exactly … you refuse to accept them.
Case in point: The NY Times publishes a rather extensive piece on the Phoenix area market and your response is to deny it any credibility, picking at it for silly reasons, such as it calling a 4 br home a McMansion.
November 9, 2006 — 8:15 pm
David G says:
Greg –
You make a good point about reporting trends in median sales values; they can skew towards the end of the market that’s (relatively) accelerating in its rate of sales. So, in a swing from a sellers to a buyers market, where you often find (like here in Seattle right now), that high end homes slow in sales before the low end does, a median sales metric will trend down before actual house values do.
That’s why we chose to report the Median Zestimate (or Zindex) in Zillow’s quarterly reporting; equally weighing the estimated value of ALL homes, not just those that sold (though that was an option we considered). This median also does a good job of ignoring “off” Zestimates (in case you were wondering).
FYI: Zillow released Q3 Zindex reports for Phoenix, and the area’s cities and neighborhoods yesterday:
http://www.zillow.com/static/pdf/2006QuarterlyReports/QtReport_Phoenix_Q3.pdf
November 9, 2006 — 9:06 pm
mike says:
But what about the home I sold Tuesday and the one I will be selling tomorrow?
The typical selfish attitude. You’re making money, so there’s no problem.
What about the people who are upside down on their homes and going further under every quarter? Can you even be bothered to consider their plight?
November 9, 2006 — 10:23 pm