Are we being too hard on Realtor associations?

I wanted to clear up a common misconception on this blog, that home price statistics provided by Realtors are somehow tainted or suspect. The insinuation is that Realtors have underestimated home price declines to save their shirts.

I disagree. And I've got the numbers to prove my point.

Many vouch for the superior accuracy of the S&P Case-Shiller Index. No doubt it's among the most accurate gauges out there. But Case Shiller actually shows smaller home price declines than Realtors do.

According to Case Shiller, Tampa Bay area home prices peaked in July 2006, when the index read 238. By February 2008, the index had fallen to 188.59. That's a drop of 20.7 percent from peak to present.

Meanwhile, Realtors say Tampa reached its peak median home price in June 2006 at $239,600. By February of this year, the median price had dropped to $178,900. That's a drop of 25.3 percent from peak to present.

If Realtors are toying with statistics to obscure the awfulness of the housing market, that's a strange way to do so.

The best explanation for the difference is that Case-Shiller weeds out foreclosure sales and other distortions of the market. Realtors report most everything that moved on the Multiple Listing Service, including sales of bank-owned properties and bottom basement short sales.

Assail Realtors for their "best time to buy" pronouncements if you wish. But their stats are fairly sound.

Comments

[k]

Oooo are you going to get flamed for that!

Speaking of stats, I will post some on Thursday for April's SFH for Hillsborough. So far they've outpaced Jan and Feb and look to be settling very close to March's numbers... Median and Volume.

Will they be lower than 4-2007? Absolutely...probably by some 25% in volume and 17%(again) in median price.
Spin it any way you like, but for two months it's been relatively stable...at least for Hillsborough.

[Rachel Sartain]

You can always view the Pinellas County monthly MLS statistics on my website. It is on the front page, just click on the link. I update it on the 10th of every month with the previous months numbers. These statistics are straight from the Pinellas Realtor Organization.
www.RachelSartain.com

[Not a Realtor]

I believe the bottom is here. There are finally multiple offers on places. It is the best time to buy. I'm putting offers in right now.

[Tino]

I think someone highjacked Fuzzy's name.

I am seeing much more inventory coming online than last year, which is not good for a recovery. Why would there be multiple offers when there are so many properties for sale? Just offer the guy next door the same deal.

The NAR hasn't issued incorrect numbers (with the exception of days-on-market, which is blatantly wrong). How they explain the numbers is fraught with outright deception.

[btw]

1. Rachel, thank you for posting the info. You are a credit to your profession.

2. James, interesting that the information is available on Rachel's site, yet last week "Realtors from Pinellas and West Pasco counties failed to report their numbers. They blamed glitches with a new computer system." I guess they fixed the computer system.

[Fuzzy Bear]

I wanted to clear up a common misconception on this blog, that home price statistics provided by Realtors are somehow tainted or suspect.

I would agree that the stats are much better now than in the past for the local realtor associations. However, the past has not been that great and it has caused a credibility issue for the associations. Bottom line, the realtor associations need to provide the public the true and correct facts.

On the other hand, the NAR has been twisting the stats for many years and the information they provide the public is simply not true.

Example: Houseing prices double on average every ten years. If that were the case, nobody could afford a house in the USA. This type of information only hurts the realtors in the long run and it needs to stop if the realtor associations want to gain the trust of the prospective buyer again!

[Fuzzy Bear]

I think we have finally reached the bottom.

The above statement was not posted by me and is false information posted by some incompetent individual!

James, have your I.T. department research this blogger who is posting false information and block them! Compare their email address with mine to determine their true identity.

We are only about half way through this correction and we are not even close to the bottom!

[Fuzzy Bear]

I think someone highjacked Fuzzy's name.

Tino, You are correct on your post.

I am asking the ST. Petersburg Times to investigate and expose this blogger. It is a simple task to trace this individual and expose them for their posting of false information under my blog name.

[Fuzzy Bear]

I think we have finally reached the bottom.

Posted by: Fuzzy Bear | April 29, 2008 at 09:50 PM

James:

Please remove the above post as it was not posted by me and it is false information to make it look like I am calling the bottom. I would also like to have your I.T. department investigate which IP and email address this came from to expose the individual.

[James Thorner]

I removed the post in question. We'll see where it came from.

One of the problems with sales statistics from Realtor Associations is what is included in the stats. The information from the Pinellas Realtor Organization needs to be statistics from JUST Pinellas County. That doesn't always happen, some Pasco County and Hillsborough County sales are included. There are no pure statistics....unless you go into the MLS and run the numbers by MLS Area. Because of "Board of Choice" Realtors can join the Realtor Association they want to join...not the geographic association where their office is located. This will always muddy the statistics. It is not a conspiricy!!!

[k]

I didn't think that was fuzz either when I read the post. I think everyone here knows his/her opinion that a true bottom is still far off. Given other economic pressures (inflation, jobs, dollar dilution, foreclosures, etc.) there's certainly an argument for such a prediction.

On HB county inventory, the total number of listings et al, have been hovering around 15,300 for a few months now. SFH composes roughly 2/3 of that figure.

9:18 - Totally agree. I like the county-by-county take for accuracy.

[Fuzzy Bear]

I didn't think that was fuzz either when I read the post. I think everyone here knows his/her opinion that a true bottom is still far off.

K, you are correct, it was not posted by me and I agree with your post! I appreciate your comments even though we may not always agree. It also looks like the same party may have done this to you not too long ago.

Those who have to post using someone's blog ID to provide false information clearly is showing their criminal intent and questionable business conduct to the public! It's time for this individual to be exposed to the public by the Times!

[Fuzzy Bear]

This will always muddy the statistics. It is not a conspiricy!!!

Why include data from two different counties when it can easily backed out so only the data from a particular county is reported?

The Fuzzy One writes: Why include data from two different counties when it can easily backed out so only the data from a particular county is reported

How do you know the data is easily backed out? I know you think you know everything....but you don't. It is time consuming and Realtor Associations, just like many other businesses right now, are cutting back on staff. Why don't you take the time to get your real estate sales license...take the training, pass the classroom test, pass the state test, pay to join NAR and FAR as well as your local association, (unlike Tino who plays licensed real estate salesperson)beome a Realtor and learn about the Code of Ethics. Then you can pay annual MLS fees and spend your time making sure the monthly MLS statistics are accurate. You will be a hero!!!

[Mathias Bergendahl]

Dear Mr. Thorner,

Each month you provide information quoting the S&P/Case-Shiller Home Price Index. Today we are again seeing a reference to the report on your blog. As we reported to you already back in November last year, the report is misleading to say the least unless properly explained.

Referencing the report is perfectly valid. Leaving out pertinent information as to how the data is derived, obvious limitations with the report, and who benefits from it, is not.

The report was developed by using quite an involved formula (a 44-page description on their website) and doesn’t necessarily accurately represent the total market conditions locally. The Case-Shiller Index is heavily weighted to capture price changes in expensive homes only. It is skewed and does not take into account the whole market. The home price index produced by the OFHEO provides price changes for homes under the $417,000 (conforming loan limit). Using one without the other distorts the market picture and is misleading to your audience. They should be used together to provide a complete picture of the market.

Interested in who benefits from the index? Please go to http://realtytimes.com/rtpages/20080402_realtyviewpoint.htm to read an article written by Blanche Evans of RealtyTimes.com. According to the article, “The S&P/Case-Shiller Home Price Index is licensed by Macromarkets LLC” and the writer further states that one of the owners of Macromarkets LLC, a hedge product according to the article, is “none other than Shiller.”

Quoted in the article, Lawrence Yun, Chief Economist of the National Association of REALTORS®, states “Every time a CME hedge is made, revenue flows to Macromarkets.” He adds "People would hedge only if they believe prices will fall big time."

Real estate is local, not national. While national data may provide some level of guidance as to the current real estate trends in the country, local data should be properly presented to avoid the risk of providing skewed information.

Mathias Bergendahl
Director of Marketing & Communications
Pinellas REALTOR® Organization

[Tino]

1. Typical comments from a monopoly that cannot stand competition. This is the same organization that is attempting to BAN their competition in a number of states. I expect that they will probably try to pass laws banning housing data other than theirs.

I've read the description of how the S&P/Case-Shiller Index is calculated, and, while complex, it is certainly less open to manipulation. I would love to hear the reasoning behind NAR's definition of "days on market" -- a number that can be reset arbitrarily to make it look much better than it is.

2. The number of dollars is tiny, since the number of active CME hedges is tiny. In fact, volumes are so low that the contract may not survive.

You're not going to believe this, but the Dow Jone Industrial Average is licensed from Dow Jones. Oh the horror!

Well they're trying again! Screwing the homeowners with SB 2504, the "Home Court" bill!

Homeowners associations will no longer have to give you NOTICE of an alleged violation. Nope, they just call their lawyer who sends you a Notice of Mediation (in front of a mediator THEY choose). You have a choice then - to either agree that you are in violation AND pay the fine AND pay their attorney's fees and costs OR go to mediation with THEIR mediator. But BEFORE you can go to mediation you have to pay 1/2 of the mediator's fee. If you win in front of THEIR mediator you get your money back. If you lose you can either pay the ENTIRE mediator's fee AND the Association's fine AND the Association's attorney and costs OR demand to go before an arbitrator. The Association gets to choose the arbitrator too!

But before you go before the arbitrator you have to FIRST pay 1/2 of his fee. If you win you get your money back if you lose you pay the ENTIRE cost of the mediation and arbitration and fines and all of the Association's attorneys fees.

If you decide that you'd rather go to court instead of taking your changes with the Association's mediator and arbtrator you can do that, but if you win you can't get attorney's fees or cost and if you lose you still have to pay the Association's attorneys fees and costs and, of course, your fine.

Yep, another attempt by the Republicans to screw the average citizen!!!

[k]

Hillsborough Single Family Home stats through April:

SFH Average

......2007 2008 Change /Month to Month Change
Jan $297,615 $309,299 3.9%
Feb $290,006 $263,649 -9.1% -14.8%
Mar $295,313 $261,411 -11.5% -0.8%
Apr $301,342 $257,337 -14.6% -1.6%

SFH Median

......2007 2008 Change /Month to Month Change
Jan $233,400 $218,000 -6.6%
Feb $239,000 $219,000 -8.4% 0.5%
Mar $242,000 $200,000 -17.4% -8.7%
Apr $240,000 $204,000 -15.0% 2.0%


SFH Volume

......2007 2008 Change /Month to Month Change
Jan 654 474 -27.5%
Feb 738 530 -28.2% 11.8%
Mar 886 620 -30.0% 17.0%
Apr 812 636 -21.7% 2.6%

[Fuzzy Bear]

As we reported to you already back in November last year, the report is misleading to say the least unless properly explained.

The S&P Case-Shiller report is not misleading providing you understand how it works.

To put it in lay mans terms, the report follows homes as they are sold over and over again and tracks the increase/decrease in the sold price. Therefore, it removes the manipulation that we often see in medium price as reported by some special interest groups.

Details beyond that are complex unless you understand the math on how it is computed.

[k]

I think the intelligent types will *always* seek independent data sets. If it happens to come from someone with an opposing agenda, then it's up to you to filter.
That said, I appreciate the expose' on Shiller. While everyone here would widely recognize Yun's realtor bias, they might not be aware of Shiller's.

Mr. Thorner seemingly does a fair job of presenting what he feels are the most respected data sets from all sides. I don't believe he would be serving the public to do otherwise.

[Fuzzy Bear]

Mathias:

The information you posted pertaining to your assumptions on the S&P Case-Shiller reports is not correct. I would suggest contacting them directly at the number listed in the below response.

The following is a summary in simple terms of the methodology that the S&P Case-Shiller report uses:

The S&P/Case-Shiller® Home Price Indices measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan regions across the United States. These indices use the repeat sales pricing technique to measure housing markets. First developed by Karl Case and Robert Shiller, this methodology collects data on single-family home re-sales, capturing re-sold sale prices to form sale pairs. This index family consists of 20 regional indices and two composite indices as aggregates of the regions.

The S&P/Case-Shiller Home Price Indices are calculated monthly and published with a two month lag. New index levels are released at 9am Eastern Standard Time on the last Tuesday of every month.

In addition, the S&P/Case-Shiller® U.S. National Home Price Index is a broader composite of single-family home price indices for the nine U.S. Census divisions and is calculated quarterly.

Note: The S&P/Case Shiller Indices are calculated by Fiserv, Inc. In addition, Fiserv also offers indices covering thousands of zip codes and metro areas using the Case-Shiller methodology. For more information, please call 877-279-2272.

[James Thorner]

Mathias, you seem to be missing the point of the post. The home price decline reported by Case-Shiller IS MORE MODEST than your own. If they're sneakily running a side business that's hedging on further price declines, I'd suggest they tweak their methodology to show a larger decline than the 25 percent you guys show. I always welcome your input here, but your criticism escapes me on this point. I like Case because it compares apples to apples: Sales price changes on single houses. You mention that all housing markets are local. I agree. Case specificially tracks the Tampa market. The post didn't quote the national housing price decline, but the local housing price decline. Instead of bashing Case, you might want to spin some gold from this straw. (Buy now when prices down 25 percent!)

[Fuzzy Bear]

I know you think you know everything....but you don't.

To the unknown blogger:

Show me one time in the past two years of posting on this site where I have claimed to know everything.

Your above statement bears the markings of a unprofessional and unethical reply of a person who lacks confidence in their own abilities by attacking others with false information.

In fact, I have made it perfectly clear in past posts that you must do your own research and form your own conclusions! What part of that do you not understand?

[Fuzzy Bear]

I think the intelligent types will *always* seek independent data sets. If it happens to come from someone with an opposing agenda, then it's up to you to filter.

K, you are correct and I support your statement.

In fact I have said that over and over in my posts in the past that a person must for their own conclusion based on their own research. If people disagree, then all they need to do is dig deeper and deeper until they find or verify the correct information.

Those who attack by posting personal attacks such as "I know you think you know everything....but you don't." are often lacking the ability to perform extensive research.

It is time consuming and it can be very difficult for those attempting it the first time. I have been doing research for many years and after many years it does become much easier than the first time!

For those who don't want to verify information, just wait and watch what happens as time will most certainly prove one is correct or incorrect!

[Fuzzy Bear]

1. Why don't you take the time to get your real estate sales license...take the training, pass the classroom test, pass the state test, pay to join NAR and FAR as well as your local association, (unlike Tino who plays licensed real estate salesperson)beome a Realtor and learn about the Code of Ethics.

In my research, I prefer to stay totally independent of the industry as to avoid a conflict of interest. A realtors license would be a conflict of interest. The code of ethics and laws I abide by are driven by the SEC and go far beyond the code of ethics by special interest groups.

[Florida - Paradise Lost]

Mathias,
Employing a person with as bad as a reputation as Blanche Evans for a reference really hurts your case.

This woman has been one of the housing bubble's worst inflators - just check into a history of the outright lies she was spewing during the half-decade of false prosperity. She has been a cause of financial ruin for the thousands of families who got caught up in her rhetoric.

Her propensity for distorted arguments and ridiculous claims makes Lawrence Yun seem like Abraham Lincoln.

Many thanks to k, Fozzy, Tino, and all the others who continue to post on James' site here.

Look out below!