Analysis of differences in home-price reports

A point that I've been adamant about when speaking to clients over the last few months has begun to gain some traction in articles online, in the paper and on NBC-2.com locally as well as CNBC.com. That is, the market here is improving and has probably over corrected for the most part and also that all real estate is local and you need to educate yourself on what is going on in that market. That is not to say nothing else effects it, but how it effects it can be very different. Just because the Midwest is mostly in a slump due to manufacturing their are and will always be people that have the desire and means to purchase in Southwest Florida (Naples, Bonita Springs, Estero, Fort Myers, etc). Opportunity in resort markets and the stock market is often clouded by avarice (or greed). It seems when the market was good the sellers were unreasonable and the buyers were eager to bend to the terms. Since the downturn in the market it now seems to have turned around and many buyers are not only looking for a great buy but they are specifically seeking "blood in the water" to squeezer out every last bit of value. In either respect when was getting what was perceived as a "good value" not enough?

In terms of the difference in housing numbers being reported, A recent article by Matt Carter of Inman News analyzes the differences between the housing numbers reported by OFHEO (Office of Federal Housing Enterprise Oversight), NAR (the National Association of Realtors) and the numbers reported by the S & P/Case-Shiller index. In short, Carter summarizes that their differences are easily explained, and they boil down to this:

1) Case-Shiller and OFHEO look at repeat purchases and exclude new-home purchases, but OFHEO also throws in appraisals that are generated when people refinance their homes. As we have all become very cognizant of lately, what a house will appraise for and what a house will actually sell for on the market can be very different things.

2) OFHEO doesn't consider transactions involving loans that are too big or too risky to be guaranteed by Fannie and Freddie, and acknowledges that homes with these mortgages on the upper and lower price ranges are seeing bigger price declines than the homes it tracks.

3) NAR looks at sales of existing homes listed by MLSs, and reports median home prices, which reduces the impact of price volatility in upper price ranges.

The result is that the Case-Shiller index can show more extreme swings in price -- both up and down -- than NAR or OFHEO's numbers.

Read the entire article : Click Here

Refer Garren & Expect Noteworthy Results!

Positive News or Media Hype?

Quite a bit of attention has been focused on the national real estate market in the last few years by both the news media and consumers as we saw prices run up and then come back down. Somewhere along the way, many of us, including those in the real estate business, lost sight of the most important fact. That is, “All Real Estate is local!”
Sure, you have heard that before and the national market certainly has some effect on local real estate. Tuning in to the right information and tuning out the information that really does not apply is increasingly difficult in today’s society when we are bombarded by sooooo many messages. There have been some positive articles both locally and nationally on the Naples real estate market lately. By no means is the market back to the way it was at the peak of the market, nor would any of us want it to be! Sure we want the economy to be better, our homes and vacation properties to be worth more and gas prices to be less.

During the run-up in prices many buyers in this market refused to buy because they couldn’t find what they wanted(lack of inventory) at the “right” price which really meant they wanted to spend less and get more. We all want more for less, it’s just human nature and of course “consumer behavior”. Many of those buyers waited and waited to purchase and watched prices climb out of reach over the past 6 years. Now that we have seen an average decline in prices of 10%-30% sales are on the upswing again as noted in the news (and my previous blogs below). What many don’t realize is that many of the prices in today’s market are actually below the construction cost while still being nearly 30% above where they were in 2002.

Let’s apply a little e logic in our decision making and consider the following. Even if you could duplicate the building today it would cost more than the current prices. Inflation and the growth of emerging economies has strained resources around the world as we’ve all witnessed first-hand at the grocery store and gas pump.
Just as we certainly overshot the prices on the way up, we have now overshot on the way down. Many buyers today refuse to accept that this is possible and waiting on prices to decline with the hope they will continue to defy market economics because of what they are hearing about national housing market. On the other hand many have realized that the abundance of opportunities in the market given that we have significantly more inventory than we did a few years ago. It’s now much easier to find the right property with a great view and location at a reasonable price.

Now back to my original reason for writing this blog. The Naples & Bonita Springs market is primarily a 2nd home market. Those with the desire and means to purchase should be entering the market over the next several months. Those that want a vacation home and are still sitting on the sidelines are making a big gamble with very poor odds. With interest rates expected to rise 1% over the next year due to inflation any further price decline (that some are waiting for) is almost certain to be wiped out by an increase in interest rates. For example the payment on a $300,000 property at 6% interest(30yr) is $1,800. If you were waiting for another $30,000 decrease (10% decline) but the interest rate went up even .5% you only saved $90 per month. Is the risk/reward of losing a property that you really want and is currently available worth the cost of waiting? Only the buyer can answer that question but in these terms it defies the logic of those that remain on the sidelines trying to time when the market has really bottomed out. You can’t time any market, just like the top or bottom of the stock market. All you can do is decide if you have the means and ability to pay for it and if the price is “fair”.

Let me bring some of the logic and statistics above to your real estate transaction and allow me to filter out some of the media hype that is designed to trigger emotions in all of us!
All good real estate consultants analyze the current market based on the past trends (which are the best indicators), what is currently happening in terms of price on comparable properties and what best represents your desires. My loyalty is in providing you with the hard numbers and statistics as well as their interpretation to best inform you so you can make the best decision possible.

I look forward to hearing from you when you’re ready to seek the services of a professional. I welcome any comments and thoughts you have below in the mean time.

Garren Grup, REALTOR

Achieving your real estate desires through technology with Noteworthy Results!