Category Archives: loganville

Prices Up? Prices Down? WTH??

Wednesday, 25 April 2012 08:00

Written by Lane Bailey

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Case-Shiller Home Price Index (Photo credit: planspark)

Just in the last two days I have heard reported on the national news that prices have stabilized (link to the NAR release here) and that prices were declining in 16 of the 20 top metro areas (Case-Shiller link here).

How can these two stories be squared?

Honestly, I don’t think that they can be… and given experience with past “interpretations” by the NAR, I’m inclined to not believe the NAR numbers. Actually… I believe the numbers, but not the interpretation.

Case-Shiller looks at actual properties in some of their surveys. Rather than looking at averages or medians, they sample properties. By looking at repeat sales of the same address, they can better determine what prices are doing.

Pretty much every other study looks at all of the sales and then breaks it down to average or median prices. The problem then is that if more expensive homes are selling, it looks like values are going up. If less expensive homes are selling, it looks like prices are going down.

Of course, nothing is perfect.

The problem is that there are a LOT of ways that data can be sliced and diced. And EVERYONE that looks at the data has an agenda. Some may be better at ignoring their personal bias, but it is still there.

My take? I don’t think we are quite ready to recover. Yet. I think that the bottom line is that until there is a recovery in jobs (not the unemployment rate, but the employment rate), there will be no recovery in the hosing market. And that shakes out to local areas…

U.S. housing market shows signs of steadying: Case Shiller(business.financialpost.com)
Case-Shiller 20 City Down 3.5% YoY – The Limbo Rock Continues!(confoundedinterest.wordpress.com)
S&P: We Know The Case-Shiller Home Price Index Has Problems But There’s Nothing We Can Do About It(businessinsider.com)
UNEXPECTEDLY: Case-Shiller home price index falls. “Home prices in the U.S. fell for the fifth mon…(pjmedia.com)

Wayback Wednesday… Zestimate Accuracy in Atlanta

Wednesday, 14 December 2011 08:00

Written by Lane Bailey

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You just have to love Zillow’s Zestimates. Log in and look… poof… there is the Zestmate for your home. Couldn’t be easier. It’s almost too easy. OK, it IS too easy. And while I love the Zestimate just as much as everyone else, I also know that the chances of it being right are pretty slim.

I don’t want to slam Zestimates, though. They actually ARE quite useful. Their usefulness isn’t in their application to individual houses… it has more to do with looking at Zestimates for larger areas… ZIP codes, cities, regions. The statistical variations that are the problem with looking at individual houses start cancelling each other out. what we are left with is a pretty good measure of home values for an area.

Last year I posted up a breakdown of the Zestimate accuracy of individual listings in the Atlanta Metro Statistical Area. The bottom line is that the Zestimate has about a 1 in 5 chance of giving you a value within 5% of the real market value of your house. And the y are just as likely to be high as they are low.

If you are just curious, it is a fun tool. If you REALLY need to know, you should talk with an Appraiser or a Real Estate Agent (depending on WHY you really need to know). And remember, the real estate agent that tells you the highest value is probably wrong… and might even know they are wrong. In the business, we call it “buying a listing”. The strategy there is to promise a high listing price, and then come back after you are in a listing agreement and try to get the price down to where it should have been in the first place. The biggest problem with that strategy is that it completely wastes the prime market time… when the house is first listed. The end result is that the price usually ends up lower than if you had opted for a slightly lower price to begin with.

Change to Local Market Reports (lanebailey.com)
Wayback Wednesday… Absorption Rate, What Is It? (lanebailey.com)
How to Figure Internet Home Values (online.wsj.com)
Wayback Wednesday… Median Home Prices (lanebailey.com)

Wayback Wednesday… How ’bout Those Housing Starts

Wednesday, 12 October 2011 08:00

Written by Lane Bailey

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Old photo of the estate Hollander Höfe (Höben)...

Image via Wikipedia

Three years ago I published a little article about how housing starts were at their lowest level since 1991… There were 820,000 starts in September of 2008. And to me, that was a good thing. If there is too much inventory, making more inventory isn’t the best idea.

Well… that was three years ago. In August of 2011 (the last month with available numbers that I could find) there were 571,000 starts. And furthermore, aside from a couple of bumps, starts have been bouncing along under 600,000 starts since December of 2008. And I STILL say that it is a good thing.

Inventory is WAY more balanced than it was, even compared to just a year ago. However, values are still well below where they should be. And there are still the persistent rumors that “the banks” are going to release millions of foreclosed homes that are “in the pipeline”. Personally, I have been discounting those rumors for a few years… because the same rumors have been around for several years. For a couple of years now, there have been rumors alluding to “shadow inventory” that was 3-6 months from the market.

So, if inventory is balancing, and starts have been down for years, how could I think that they need to stay low longer? Well, it comes down to a few factors…

Pricing… It still doesn’t pay for builders to put up houses in many markets. Basically, pricing almost has to be below the cost of materials plus land in order to get the house sold.
Vacant Inventory… Even in the depths of the crash, I didn’t see as many vacant homes as I do now. I don’t have stats to back it up, but it seems like vacant inventory is surging. (BTW, I think that is actually a sign of a recovery forming…)
Buyer Fear… Despite incredibly low interest rates on mortgages and very low prices on homes (even Clark Howard is saying it might be time to move back into real estate), most buyers are still nervous.

Oddly, if you look over my market reports, I specifically refer to a couple of segments as being WELL into Seller’s Market territory. And it is hard to square these two points…. that there is an active Seller’s Markets (in some segments) AND that starts need to stay low because the market is still weak. But it comes down to averages… One city might be rocking the sales, while just up the road everything is stagnant.

Location…

Housing Start Source.

Wayback Wednesday… From the Meltdown. (lanebailey.com)
Chart of the Day: Housing Starts vs. Unemployed (craigkamman.wordpress.com)
Wayback Wednesday… Bankrupt Subdivisions… Good Deal? (lanebailey.com)
Time to be bullish US Home Builders? (part 2) (tradingfloor.com)

Wayback Wednesday… Still Bickering…

Wednesday, 18 May 2011 08:49

Written by Lane Bailey

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Gwinnett County Historic Courthouse, Lawrencev...

Image via Wikipedia

Last year I wrote about how Gwinnett County and 15 cities in the county were involved in a lawsuit. At that time, they only had days to get things straightened out before there were serious issues with the “Qualified Status” of the local governments.

A year later and they are still bickering over it.

There are a few changes… Some police departments were de-certified to use radar. The Gwinnett County Sheriff’s Department stepped in and ran radar. The lawsuits are continuing. The County could go bankrupt if the cities win. Residents in the cities could continue to face double charges for services provided by the cities.

This would be more fun if we could just break out the popcorn and watch without financial implications or worry about city and county service delivery.

For more…

Wayback Wednesday… Property Tax Valuations… (lanebailey.com)
Wayback Wednesday… Value Pack, a Twofer (lanebailey.com)
Wayback Wednesday… It Isn’t About The Money… (lanebailey.com)

Local? Hyper-Local? National? What IS the Market?

Thursday, 10 February 2011 08:20

Written by Lane Bailey

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old photo of peachtree street, atlanta, GA

Image via Wikipedia

I love watching the news… but when they talk about the real estate market, I cringe. I like to hear the national numbers, but I also know that they are just a framework for a smaller discussion. Yep… a smaller discussion.

It matters what the overall market is doing, but it’s not nearly as important as what is happening in your neighborhood. It matters what is happening in Georgia, and the Atlanta Metro market, but not nearly as much as what is happening in your specific city. Real estate prices and demand react to specific local issues much more than to national trends. In fact, the national trend is just a compilation of local and hyper-local trends. What the national market does is create a headwind or a tailwind. That’s about it.

Here locally, we look at things like…

changing employment statistics
companies relocating into or out of the area
school performance and trends
tax burdens
quality of local governmental services
proximity to recreation and entertainment
ease of movement (commuting, shopping, etc)

As we see these things change, we see the market move in one direction or another. A prime example at the moment is the City of Atlanta schools issue. It is possible that the Atlanta City Schools could lose their accreditation. If that were to happen, it would drive down the price of most of the homes served by those schools. The price would be driven down because there would be a lack of demand on the part of buyers, combined with an increase in supply as sellers seek to move to districts without the same problems.

Gwinnett County has one of the lowest unemployment rates in Georgia, below the national average. But there is also a tremendous overhead of foreclosure action. We also have one of the highest performance school systems in the region… and reasonably low tax rates.

The market in Miami or Las Vegas doesn’t have an effect on what is happening in Georiga, much less what is going on with real estate in Gwinnett County.

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Category Archives: loganville

Prices Up? Prices Down? WTH??

How can these two stories be squared?

Wayback Wednesday… Zestimate Accuracy in Atlanta

Wayback Wednesday… How ’bout Those Housing Starts

Wayback Wednesday… Still Bickering…

Local? Hyper-Local? National? What IS the Market?

What's YOUR Home Worth?

Browse Listings

Custom Listings

Follow Me on Pinterest

Category Archives: loganville

Prices Up? Prices Down? WTH??

How can these two stories be squared?

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