Are You Contributing to the Case-Shiller Decline in the Housing Market?
January 4, 2008
Post Tags: S&P-Case-Shiller-Home-Price-Index , Tucson Real Estate Market
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Reading Real Estate Market Reports can be a Thorny Issue
I’ll confess, I am contributing to the decline in the Case-Shiller reports. I am one of the reasons the October 2007 numbers on the housing market have declined by a record 6.7 percent. Now here is my question, “Are You Contributing to the Record Decline in the Housing Market Report?”
- If your home hasn’t been sold twice since it was built it isn’t included in this Housing Index Report.
- If you sold your Townhome, Condo or Co-op your transaction is NOT INCLUDED in the Index.
- If there is new construction in your subdivision and you are competing with this in the resale market then the Index will reflect lower but without reason.
- If you own your home for a long period of time the positive value of your transaction has less weight down in the Index report. (The assumption is you might have made improvements which could be why it sold for more)
What this means to the Tucson Real Estate Market
- This is strictly about Single Family Residences that have been sold at least twice, but not with a six month period.
- If you have lived in your home for a period of time that is not disclosed, but probably longer than two years the value (weight) of your transaction is downgraded because there is the assumption you might have made upgrades to the property.
- Based on the Market dynamics over the last three years and the de-regulation of the mortgage industry the way the data for the Case-Shiller is pulled is not very relivant considering it was written on a 1988 dynamic which is now 20 years out of date.
In other words, when you read reports in the paper quoting the Case-Shiller index on the housing market it is best to move on to the next article. You won’t really get any information that is useful for todays market. It is an out of date reporting methodology.
If you are happy with your home and actually enjoy living in it instead of viewing it as an investment vehicle or ATM machine then you are making the economy look bad. I have no plans to sell soon. Could I make money? YES! but I didn’t buy my home to make money I bought it because of proximity to the High School and it had a three car garage for our 3 cars and my tiny woodworking shop.
Read this post for a more in-depth look at the S&P Case-Shiller Home Price Index at Tucson Real Estate In The News.
January 4th, 2008 at 1:18 pm
thorny?