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Real Estate is Local: How is your housing market fairing? August 17, 2009

Posted by John Watch in News Feed.
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Daily real estate reports have been released, speculating on the housing market and when it will reach a bottom in values. Some reports declare a bottom in the near future, while others see a much more prolonged recovery in real estate due to foreclosure and unemployment. But real estate remains local, as well as cyclical, seasonal and emotional. The economic crisis has hit some markets harder than others. With this in mind, how can one predict a home values bottom for the entire housing market? Property data analysis must reflect macro and micro real estate trends, like this New York City Real Estate Report.

Coupled with public records, (as well as the Northeastern Queens Report), this report found that NYC home values as a whole were affected by the real estate crisis. Also, the city saw a diminished level of sales activity so far this year, well below the peaks of previous years. But when analyzed deeper, Manhattan two-family buildings and buildings with a residential unit and stores are in demand with increasing values. So is the real estate crisis affecting this market the same way that it’s affecting others?

The same can be said for many different markets of the country. While tools like median sale price are essential, painting the market with broad brush blurs the deeper analysis. Startifying the data with price per square foot analysis gives a more comprehensive view of the market.

What does your market look like? What does your location say about the housing market? How is your property holding up?

For property search on records, ownership, sales data  for insurance underwiritng, fraud investigations and valuation, CLICK HERE.

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Housing Market News: Still Cyclical, Seasonal and Emotional August 13, 2009

Posted by John Watch in AccuriZ News.
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There are conflicting reports on the housing market today. According to news sources and public records, the median sales price nationwide is down close to 16% from a year ago, to $174,100. Simultaneously, there are property data reports about existing home sales being up close to 4% from the last quarter. All the while, foreclosures are up 7% from the last quarter. But there is one fact about the housing market that arises out of all of these reports: Real Esate is Cyclical, Seasonal and Emotional.

Cyclical Cycles: Run about 15 years in length with the current cycle beginning in late 2006.

Seasonal Changes: Occur every year and follow a fairly consistent pattern. 

Emotional Changes: Fear of the unknown is the worst element of any financial market.  That is what we’ve experienced for the past nine months.

For property searches, real estate reports and market trends, CLICK HERE.

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Staten Island Square Footage and Median Price Differentials August 7, 2009

Posted by John Watch in AccuriZ Reports.
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A new AccuriZ report titled “Square Footage and Median Price Differentials,” highlights the property data and  sales activity of New York City and the differnces between median sale price and price per square foot. Below is an excerpt from the Staten Island section of the report. To see the full Staten Island report, as well as the additional boroughs, CLICK HERE.
 
Real Estate is like a set of Russian Nesting Dolls.  Analysts tend to focus on the entire market, with minimal effort given to the underlying components.  As you examine various segments of the markets, different pattern emerge. Generally in real estate there are three rules:  Location, Location and Location.   And in the current market, if you do not have to sell you don’t.
 
It is comprised of three elements:  Cyclical, Seasonal and Emotional. . The present market comprises of all three, which is extremely rare.
 
Change by Property Type Staten Island

 Public records show that Staten Island is experiencing the slowest value decline of all of the Boroughs at -5.17%.  In complete opposite of the other Boroughs, Staten Island is experiencing a greater decline in the Single Family market, but showing increases in two to three family units, as well as properties with a residential unit and commercial unit. 

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NYC Square Footage and Median Price Differentials: Brooklyn August 6, 2009

Posted by John Watch in AccuriZ Reports.
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A new AccuriZ report titled “Square Footage and Median Price Differentials,” highlights the property data and  sales activity of New York City and the differnces between median sale price and price per square foot. Below is an excerpt from the Brooklyn section of the report. To see the full Brooklyn report, as well as the additional boroughs, CLICK HERE

Real Estate is like a set of Russian Nesting Dolls.  Analysts tend to focus on the entire market, with minimal effort given to the underlying components.  As you examine various segments of the markets, different pattern emerge. Generally in real estate there are three rules:  Location, Location and Location.   And in the current market, if you do not have to sell you don’t.

Real Estate comprises of three elements:  Cyclical, Seasonal and Emotional. The present market comprises of all three, which is extremely rare.

Source: AccuriZ.com

Source: AccuriZ.com

Public records and statistical analysis show that unlike Queens and the Bronx, Brooklyn appears to be experiencing more of a valuation decline in the two and three family market, as well as properties with residential units with a commercial component.  Single family residences are declining at a lower rate than the Borough as a whole.

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NYC Square Footage and Median Price Differentials: Bronx August 5, 2009

Posted by John Watch in AccuriZ Reports.
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A new AccuriZ report titled “Square Footage and Median Price Differentials,” highlights the property data and sales activity of New York City and the differnces between median sale price and price per square foot. Below is an excerpt from the Queens section of the report. To see the full Bronx report, as well as the additional boroughs, CLICK HERE

Real Estate is like a set of Russian Nesting Dolls.  Analysts tend to focus on the entire market, with minimal effort given to the underlying components.  As you examine various segments of the markets, different pattern emerge. Generally in real estate there are three rules:  Location, Location and Location.   And in the current market, if you do not have to sell you don’t.

Real Estate comprises of three elements:  Cyclical, Seasonal and Emotional. The present market comprises of all three, which is extremely rare.

Source: AccuriZ.com

Public records show that residential properties in the Bronx are also decreasing and reflect a similar pattern that exists in Queens. One notable difference is that properties that contain a residential unit and commercial unit appear to be declining at a greater rate.

For more Real Estate Reports and detailed statistical analysis, CLICK HERE 

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How Median Home Prices Can Be Misleading July 20, 2009

Posted by John Watch in AccuriZ Reports, News Feed.
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Reported from: Investor Centric: How Median Home Prices Can Be Misleading

“The median can be a deceptive statistic when it comes to real estate growth. Often home sellers will point to an increasing median and say that homes prices are increasing, but they can actually be decreasing.” – Investor Centric

This Investor Centric article explains the deception in the median sale price and how it isn’t a true indicator of market stability. What the article does not explain is a clear way to rid the deception; price per square foot.

As shown in the chart above, the median sale price of San Bernardino County has drastically increased. That doesn’t mean that the county’s home values are plummeting necessarily. As the article states, “they just don’t have enough higher price homes to sell.”

That’s why analyzing property data on a price per square foot basis broadens the scope on particular areas of the market. Public records show that higher priced homes have more square footage generally. It can be clearly seen that by analyzing San Bernardino county solely on the median it is not doing do well.

But based on price per square foot, is the San Bernardino County market good or bad?

In a recent report by AccuriZ titled “Square Footage Matters! Large homes indicate stable values” Northeastern Queens values proved not to be declining as significantly as Queen County in its entirety. This is based on price per square footage:

Source: AccuriZ

Source: AccuriZ

 Median Sale Price

 “Analysis of the Queens County single family market have declined 18% from 2008 and 21.3% since 2006. The sub-market of Northeast Queens indicates that property values are down 12.8% since 2006, with most of the decline occurring in 2009.”

Queens Price Per Square Foot

Source: AccuriZ

“A more detailed analysis of the median sale price based on the square footage of the residence indicates an entirely different pattern of price value changes. When the sales data is stratified into the calculated rate per square foot based on sale price, the rate of change for Queens County is -10.58% since 2006 versus -21.3% based on the Median Sale Price. For Northeastern Queens the rate of change is -.37% versus -12.8%. The data clearly indicates that building size represents a significant impact relating to the value of the property.” (For more of the “Square Footage Matters!” report, click here.)

With these statistics we would like to add on to the quote in the beginning, “Often economist and analyst will point to a decreasing median and say that homes prices are decreasing, but they can actually be stable.”

 So realtors, what do you think? Is the median deceptive? Is it used primarily as a selling point? Or is the median a true indicator?

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S&P Case-Shiller housing index probably overweights foreclosure sales July 9, 2009

Posted by John Watch in News Feed.
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“What I notice is that the sales pair counts are becoming increasingly weighted toward the biggest bubble – i.e., foreclosure – metro areas: LA, San Diego, Phoenix, etc. Sales in these areas are really dragging down the overall value of the index. Presumably, the foreclosure sales are weighted less heavily, but it is somewhat suspect to me that the share of Phoenix’s housing market, for example, has increased its share of pair counts by 8.7% over its sample average, 5.4%.”

We agree with Rebecca Wilder.

In her July 2 article, Rebecca discusses the S&P Case-Shiller index and how it could be potentially creating a foreclosure bias when weighting its 20 city index.

Thank you, thank you!

We have been analyzing the Case Shiller data for years and as you have indicated very concisely, the index does have a potential for bias.

Your direct comment about Phoenix and Arizona hits the mark. Case Shiller refers to the overall sales price and does not consider the fundamentals of the sale price such as square footage, age of home and land area. Nor, in our opinion does it recognize the weight of the general population size to sales activity size.

Based on property data and public records, our analysis indicates that the price decline, if developed on a sales price per square foot basis, is not as drastic. Furthermore if you establish a weighting influence for the impact of foreclosures, the decline would be even less.

Maricopa County (Phoenix) had a study completed to determine the influence of foreclosures for assessment purposes. This report clearly shows a differential of 10% to 15% (depending on level of foreclosures). This report is based on the sales price per square foot. So if 1.5 million homes in the 5th largest city are valued recognizing these influences, why isn’t Case Shiller recognizing this.

Many will argue that foreclosures are market value and hence are the market. In my opinion this is not true. Yes foreclosures influence the market, but adjustments must be considered for these sales under market conditions and financing in an appraisal.

In addition to your comments on all of the regions, I will clearly state this: More weight should be developed based on the general population of properties, not the sales activity alone.

Kudos’s for pointing this out. Case Shiller represents two-thirds of the housing market? Well what is it leaving out? An index that tracts Metro Market should be based on a consistent parameter (say 60 mile radius) and it should identify the total properties covered, residential properties and annual sales activity. This index should also categorize properties into groups. I find it very difficult to accept that a 1,000 square foot house has the same economic and demographic buyer as a 2,500 square foot house.

Yes, I understand the need for a general overview, but the resources exist for a more expansive index and it should be developed. This is no easy task. Our current property data tracking covers 45 million properties versus Case Shiller at 70 million. Our analysis clearly indicates that Case Shiller, while being a benchmark is not a true indicator of the overall market.

Based on this past real estate crisis, we simply cannot afford to use indexes that lack total coverage and stratification levels which will enable financial institutions, realtors, builders and the general public the ability to understand a very complex financial market.

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Does it add up? Metro reports NYC property values down nearly 25% July 9, 2009

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  “The real estate crisis that’s slammed the rest of the country is finally catching up to New York, with home prices dropping by nearly 25 percent.”

Price plunge
Manhattan: Down 19% to $1.3M
Queens: Down 13% to $403,000
Brooklyn: Down 12% to $503,000
Staten Island: Down 10% to $388,000
Bronx: Down 9% to $356,000

Above reported by: NYC Metro Newspaper

For starters, according to the price plunge graph above, the only borough that has property values down anywhere in the vicinity of 25% is Manhattan with 19%. And since Manhattan “usually bolsters the citywide average” as the article states, it shouldn’t be cited as the true indicator for all of NYC.

The problem that continues to persist in today’s market analyses is the complete neglect of property data reporting on a micro level. Based on our findings in recent reports and public records, property value declines affect some units differently than others, based on price per square footage.

So does it add up? It depends on the sector of the market that is being analyzed. Based on price per square footage, some units have flat property values while others suffer declines. But the findings in most of today’s reports DO NOT qualify as legitamate observations for the entire market. They just don’t. Because whenever you compare apples to oranges, you never can get a complete understanding of what’s really go on.

So if the newspapers and the media can’t get it right, who can you trust?

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Are You Tired of the B.S.? July 7, 2009

Posted by John Watch in AccuriZ News, News Feed.
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Apples and Oranges

Let’s stop comparing apples to oranges.

Rates are up. Values are down. The market is in shambles. This is what you’re used to hearing. Right?

Wrong.

The majority of market reports that we as the masses use to foretell trends only provide a fraction of the facts, based on a fraction of the data and public records, like the median sale price index. To determine the market outcome solely on a median sale price is like blindly picking different weighted fruit from a hat and determining sales; you can pick out an apple – but how much that apple is selling for or how many apples have been sold – says nothing about the oranges or watermelons still in the bag. It would be ridiculous to base watermelon sales off of the median sale price of all fruit.

Yet this is what we do with real estate. Why?

If more high-end homes are sold in a month (watermelons), the median sale price is higher. If more low-end homes sell (oranges), it’s lower. What more can you get out of this information, but a broad generalization?

Nothing. If more reports based their property data data on a price per square foot basis, the conclusions of the data would look much different. Sure, apples may not be selling as much, but that should lead to more questions than general answers like,

– Are there too many apples in the market? (Oversupply) – Do they cost too much? (The rise of square footage in homes over decades) – Are they out of season? (“McMansions” sitting on the market)

These question can’t be proposed, nonetheless answered, based on a median sale price.

While some say New York has another 40 percent to drop on home values, we say, by accurately looking at the data, it’s more like 15 – 20 percent. And this is based on a price per square foot basis.

So let’s get rid of the BS, and start really analyzing what’s out there. Because it is not as bad as some make it seem.

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