Real Estate Trends March 2007
Team Weurding Realty
The subject of my monthly article is titled “Real Estate Trends.” So I ask, who do you believe when the different surveys seem to be in conflict with one another? For example, the National Association of Realtors reported last month that the “median” price of an existing home nationwide fell by 3.1% in 2006. On the other hand, the federal agency OFHEO (The Office of Federal Housing Enterprise Oversight) reported that home values rose by an average 5.9% last year.
To best answer that question you have to know what each survey is measuring. The various surveys tend to focus on different aspects of the market, and for the most part report on the median price —the mid point among all homes sold in a given period. This has a serious limitation when trying to report on sales in an area like Poway or RB 92127. It all depends on which segment of the market is selling that month. For example, it doesn’t take many million dollar sales to skew the numbers upward, especially when “average” sales price comes into play.
Taking a closer look at 92127, we notice that almost 89% of the housing inventory is priced over $600K, and yet only 24% of that segment is in escrow. That leaves around 11% of the inventory under $600K in price, with approximately 51% of these homes in escrow. The same scenario is taking place throughout our 1-15 marketplace.
Nearly 60% of the Poway homes are priced over $600K, yet less than 1 in 5 of that segment are in escrow. Only 3.6% of the Poway SFR listings are priced under $300K, with more than 55% of those in escrow. Sixteen percent of Poway ’s inventory is priced in the $400K - $500K range, and 20% are between $500K - $600K. As the price goes up the percent in escrow goes down.
RB 92128 and PQ also have the bulk of their housing inventory priced over $600K, but because there are fewer homes that exceed the $1 million price level, the percentage of homes sold is more evenly distributed. Also, both of these zip codes have managed an overall higher percentage of homes under contract or in escrow. For example, PQ has nearly 41 % of their active listings in escrow compared to 27% for Poway & RB 92127.
Getting back to my original question on who to believe: I tend to deal with actual numbers. The actual number of listings, the number of sold listings, and the actual sales price, all hard to dispute. I gather my information primarily from the Multiple Listing Service and the tax rolls but limit my search to only SFR listings unless otherwise stated. In any case, whatever the result of a survey it doesn’t automatically mean all homes are going to be impacted the same. A neighborhood can be in a declining market, and yet any given property can and often does break the trend.
Source: Sandicor, MLS, and Dataquick
