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Saturday, February 25, 2006

One year of experience eleven times...?

Our most favorite real estate oracle, Catherine Reagor of the Arizona Republic weighs in with some observations that may actually be as undefended as they are unthought out. In fairness to Ms. Reagor, I'll quote her text as I explore it:
Bad news for the many homeowners trying to sell: It's likely only going to get tougher.

The number of home listings in metro Phoenix is at an all-time high. In January, there were 30,113 houses for sale across the Valley. A year ago, there were 3,402.
The source for this is probably an article by Betty Beard, who is actually a responsible journalist. Witness:
The last time the Southeast Valley had listings in the 10,000 range was in late 2002 and early 2003, according to the Arizona Regional Multiple Listing Service Inc.
You see, like seemingly no one else at the Republic, Betty Beard is aware that there were years prior to the completely anomalous 2005. Here's more from Ms. Beard:
Robert Rucker, the multiple listing service's chief executive officer, said he couldn't determine that 11,512 is a record because the records are not set up easily to compute that.
It may be that Ms. Reagor has a source for her claim that the current inventory is a record, but she doesn't say who it might be. In any case, since a normal inventory prior to the completely anomalous 2005 was around 25,000 homes, and since we've built tens of thousands of new homes since then, it would be very difficult to say what is by now a normal market. The NAR's standard for normal, a six-month absorption rate, is substantially longer than what we're seeing locally.

More from Ms. Reagor:
Some sellers still don't realize the housing market has deflated from last year's peak. Not only are the bidding wars gone but so, too, are many of the buyers. Most of the speculators who sparked multiple offers on homes early last year are long gone, and there aren't as many regular buyers because fewer can afford today's higher home prices. The typical house costs 50 percent more, and the typical income climbed less than 5 percent in the past year.
In January 2004, 5,103 MLS-listed properties sold in an average of 67 days on market at 97.7% of the list price, on average. In January 2006, 5,252 properties sold in an average of 50 days on market at 97.7% of the list price, on average. The paragraph is mostly editorializing, but the claims about the market are easily demonstrated to be false to fact.
Want a reality check? Go to, a new Web site with a program that calculates a home's value for free. It values several Valley homes for tens of thousands less than the price listed on them.
If you want to know what your house is worth, do not go to a, which delivers completely useless estimates of value for free. Even Net Value Central, a tool used by professionals, lags the market by a month or more. The only way to price a house is to work as rigorously as possible from current and recently-sold listings for extremely similar properties. If you price your house to sell from sources like, you will give thousands of dollars away. If you rely on to tell you how much to offer on a home, you will see it sold to someone else.

(You can prove all this to your own satisfaction, if you like. Most of Ms. Reagor's mistakes seem to come from falling in love with ideas she doesn't check out. Here she tells us that she ran on live listings and found it came in much lower than the listed prices. How did it do against sold listings? She didn't check, but you can. Run on the sold homes documented in your local section of the Republic. You'll see that, time after time, is substantially under real-life market results. It's a useless toy, which Ms. Reagor might have discovered on her own had she bothered to test it properly.)

It gets better, believe it or not:
Any Valley homeowner with a good crystal ball would have sold last summer and rented until now to be able to take advantage of all the deals out there.
It's no kindness to lie to a fool: This is stupid. The average suburban home that you might have sold for $252,000 last July would have cost you more than $263,000 in January, not counting transaction and closing costs and the costs of renting a home and moving twice. The home prices are all rigorously documented, and I've pointed Ms. Reagor to the source data more than once.
I didn't, but I wish I had.
It's because she's bad at arithmetic.
Who would have guessed home prices would climb 50 percent in a year?
I did. I actually predicted higher and longer, but events haven't borne me out so far.
And who knows where they are headed?
In the long run, up. It's not a lead-pipe cinch, but it's a great bet for the Phoenix market. We are an excellent fit for many, many monied demographic segments.
Analyst forecasts run the gamut from prices dipping 10 percent this year to climbing 10 percent.
I have not heard a single prediction about values dropping for the year. If Ms. Reagor has a source for this claim, she should name it.

Everything Catherine Reagor said in the matter I quoted is dumb. In the next segment of her column, she wonders why homeowners aren't facing foreclosure. Seemingly, the question "Who would have guessed home prices would climb 50 percent in a year?" doesn't connect in her mind to the idea that even the most financially-troubled of homeowners is sitting on a ton of equity. Because the Republic has become such a cesspit of corruption, it's hard to distinguish stupidity from calculation. With a writer as oily as Jon Talton, the malice is palpable and you know the man is lying in pursuit of propaganda goals. But I don't like to think the worst of people where a more innocent explanation will suffice. In email to me, Ms. Reagor has bragged that she has eleven years' experience "covering real estate in metro [P]hoenix". I'm thinking maybe she's had one year of experience eleven times.

posted by Greg Swann | 11:30 PM  


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