These are confusing times. You probably read in the newspaper or heard on the radio or TV that housing prices are down sharply. You may have seen or heard at least 3 different reports about DFW housing prices and, in addition, you have probably heard about the huge number of foreclosures on the market.
It's all true and also wrong!
"How can this be?" you may ask.
Well the national reports are true if you are talking about all sales nationwide. The 3 different reports on the local DFW market that are parts of the national reports are true but they use different data sets. That's why they do not have the same answers.
The financial press is enamored with the Case-Shillered Home Price Index. This report covers only 20 markets in the U. S. and appears to be heavily weighted to the Pacific coast. It is a proprietary report that was created and is used to trade futures on the Chicago Mercantile Exchange. The exact makeup of the data and its weighting is not disclosed. It's not transparent. Heard that before?
The report from the Office of the Federal Housing Enterprise Oversight's data comes from FANNIE MAE and FREDDIE MAC. This data includes condos and townhouses but does not include non-conforming loans.
The data from the National Association of Realtors is compiled from sales reported by all of the local MLS systems across the country.
Foreclosures are a serious problem if you are trying to sell a house in California, Florida, Arizona, Nevada, Michigan, Ohio, and a couple of other states, but if you are looking in most of the DFW area foreclosures represent only a very small part of the inventory and are heavily concentrated in the southern part of Dallas County. In the vast majority of neighborhoods, foreclosures are not a problem.
The data I use in my reports comes from the Real Estate Research Center of Texas
A & M University. They compile the data from our local MLS. The average sales prices in the monthly data can also not truly represent what is happening in the market because from one month to the next you may have more sales in the higher price ranges than normal and this can pull up the average sales price for that month. Conversely the next month you could have more sales in the lower price ranges that would pull the averages down. The year-to-date data probably represents the closest to the market.
What does all this mean to you as a Buyer or a Seller?
It means you should not pay much attention to what you hear or read about the market. All real estate is local and that means down to the neighborhood level. Every neighborhood is different and what's happening to the market in each neighborhood is different.
If you are a Buyer, you need a real estate agent who is familiar with the area you are interested in and can help you find the right house at the right price. In some areas there is actually a shortage of homes on the market and the best homes sell quickly.
If you are a Seller, you also need an agent who is familiar with the area and can help you price your property correctly. If you overprice your property in this market your house will just sit there and you will not get offers.
Whatever you do, please do not use one of the online sites that claim they can tell you what the value of a home is. They use computer models that have no idea of the condition of the property and in most cases(especially in Texas) do not have a large enough data set of sales in a given neighborhood to work properly.
