“Rising Prices” and Reality
Home prices have found their floor for the most part and are even trending upward in certain markets, said Paul Diggle, property economist for Capital Economics.
Diggle said seasonal adjustments along with a high level of distressed home sales could be giving the misleading impression that home prices are strengthening in recent months. But he says even when accounting for these market distortions, “it appears that home prices have found a floor and, on some measures at least, are rising modestly.”
Diggle points out that both the Case-Shiller and CoreLogic home price indices reported gains in February, March and April. “Indeed annualized growth over that period was 6.2% and 10.9%, respectively, on the two indices—higher than our already above-consensus forecast for house prices to increase by 2% this year,” Diggle said.
The psycho-babble on rising home prices is starting to ramp up. It is unfortunate that those in the media insist on publishing the tasty soundbites, without any investigation.
None of the forms of measurement are very accurate – because they are measuring different houses/people/locations/conditions during each period. At best, we might identify a trend, but those are only good for a very localized area.
Now that June, 2012 is almost in the books, let’s compare detached sales in San Diego’s North County Coastal region, year-over-year:
|Data||June, 2011||June, 2012||Chg.|
|# of Sales|
Are prices going up? It depends how you look at it. The average cost-per-sf is virtually flat, and the median SP may be 5% higher – but the average size of the houses sold this June was bigger too.
I think the environment has changed from buyers-licking-their-chops-while-waiting-patiently to let’s-try-to-get-a-decent-buy-while-rates-are-low.
A subtle change, but enough to move some product.
The whole “prices-rising” phenomenon is mostly psychological, being pushed on unsuspecting buyers and sellers through the media and by realtors with an agenda. Don’t believe anything you hear, and only half of what you see!