New-Home Price Decline Biggest in 35 Years | Tucson Listen Up!
October 30, 2006
Post Tags: New-home-price-decline , Tucson Real Estate News , tucson-new-homes
This was the headline that swept many of the nations newspapers on Friday October 27, 2006 Here is the link to the story in the “Arizona Daily Star”
Now Let’s Unbury the Bone. Instead of reading the headlines and panic, let’s take this apart and see what it means for Tucson.
Where does this story originate, is it local, regional, state, national, international, it makes a difference.
WASHINGTON — Is this what a housing bust looks like?
Ok it is national, meaning we need more information to see if it impacts us.
New-home prices fell last month by the largest amount in 35 years, and owners are being warned to brace for further declines, especially in formerly hot markets.
New-home, not existing homes for resale, so if you are in the resale market and not the new home market, this isn’t about you.
“largest amount in 35 years” wow that sounds like a lot. We have to break this phrase down even further and gather some information in the next few sentences.
“owners are being warned“, last time I looked the owners of new-homes were Builders.
After years of increases, some buyers say prices still are out of their range.
The Commerce Department reported that the median price for a new home sold in September was $217,100, a decline of 9.7 percent from September 2005.That was the lowest median price in two years and the sharpest year-over-year decline since December 1970, providing dramatic evidence of the slowdown in the once-booming housing market. The report didn’t break down price data by state or individual market. (The median price is the midpoint, where half sell for more and half sell for less.)
Largest Amount is tied to the median price not the sales price “(The median price is the midpoint, where half sell for more and half sell for less.)” The 35 years doesn’t mean the lowest in 35 years, but the greatest year-over-year decline in 35 years.
Now we need an example:
- Bread is our object (median price each year)
- 1950 20 cents
- 1951 22 cents
- 1952 24 cents
- 1953 25 cents
- 1954 24 cents
- 1955 27 cents
- 1956 23 cents
- 1956 was the largest median price drop in 7 years because 1955 was the largest price increase.
Unless you are into statistics or just love to make everything sound bad this year-over-year basis means very little to the market at the consumer level.
The price decline for new homes followed a report Wednesday that prices in the much bigger existing-home market also dropped on a year-over-year basis in September by 2.5 percent, the largest decline in records going back nearly four decades.
Here we have to assume they mean median price not sales price. Again it is year-over-year basis; remember last year saw huge appreciation in many markets making it obvious that when prices come down, it will be the largest on a year-over-year basis, meaning, last year was the largest appreciation gain in 4 decades in some markets.
The price decline for new homes in September came while the sales pace picked up, rising by 5.3 percent to a seasonally adjusted annual rate 1.075 million homes.
It was the second consecutive increase in sales after three months of declines.
Prices on New Homes came down and sales picked up by 5.3 percent and for the second consecutive month.
But even with the improvement, sales activity is down 14.2 percent from a year ago.
Never make a postive statement without a pessimistic follow-up.
UnBury The Bone
- National level news not specific to Tucson
- New Home not the Resale Market
- Median Price not the Sales Price
- Year-over-year, not the lowest in 35 years
- Sales picked up by 5.3 percent in September
- Sales increased for the second month in a row
The Tucson Statistics were in a sidebar of the local angle.
” New-home prices in the metro Tucson market have slipped in recent months, though they are still up from last year.
Third-quarter data released by the Commerce Department on Thursday doesn’t include state or local figures.But according to a local real-estate consultant firm, the median new-home price in the Tucson market in September was $256,645, up 12.5 percent from September 2005.“
From the national article above:
“The Commerce Department reported that the median price for a new home sold in September was $217,100, a decline of 9.7 percent from September 2005.”
UnBury The Local Bone
- Median National New Home $217,100
- Median Tucson New Home $256,645
- National Decline 9.7% from Sept. 2005
- Tucson Increase 12.5% from Sept. 2005
It is so important to put the “News” into context. This headline would make you think Real Estate as a whole were in trouble. “News” like this isn’t meant to inform, or educate it is designed “TO SELL PAPERS” and papers are sold on the basis of:
- Celebrity Gossip
- Politics (don’t get me started)
- Any News made to look bad
If you are living your life and making decisions based on the headlines, here is one for you.
WAKE UP!
and have a nice day!
It’s better than you think.
