Let’s examine the Case-Shiller Index methodology with the March sales in Carlsbad.
They only use SFRs, so the condos, mobiles, and multi-families are omitted, which is good.
Last month there were 43 MLS sales in Carlsbad, but only 20 of them would count towards the Case-Shiller Index.
The 23 that wouldn’t count:
11 – REOs
9 – Previous sale was brand new
2 – Recent sale was brand new
1 – No previous record
23 – Total
Here is the breakdown of the remaining 20 March sales:
| Previous Sale | % diff |
| +187% | |
| +192 | |
| +150 | |
| +124 | |
| +87 SS | |
| +82 | |
| +42 | |
| +59 | |
| +27 | |
| +21 | |
| +12 | |
| +8 | |
| +4 | |
| -7 SS | |
| -14 SS | |
| -16 SS | |
| -18 SS | |
| -19 | |
| -20 | |
| -25 SS |
The Case-Shiller method uses an algorithm for downweighting the older sales, which, if I’m reading it right, adjusts the data based on how far away each sale is from the first. It gives a lot of weight to the short sales and other highly motivated sellers, and discounts the how the long-timers did, but if all they want to do is measure off-peak pricing, it’s probably as good as any.
I like things simple, so I’ll just say that Carlsbad is around 2003 pricing.
I saw an add in the sacbee this morning advertising homes for 25000.Machine gun credited to buyer in settlement sheet.Caveat emptor!!!!!!!!!!
Thanks Jim. That’s encouraging. From my own analysis I came to the same conclusion. I only tracked sales history in Carlsbad for the past few months so I didn’t want to put to much stock in my results.
This gives me new hope.
How come the 11 REOs don’t count?
Rich
Thanks Rich, in the Klinge-Klang Index, they all count – let’s add them in!!
Let’s look at the properties that had both a sale in 2003, and in March 2009:
$754,000 $940,000 +25% (was new in ’03)
$492,500 $550,000 +12%
$600,000 $645,000 +8%
$629,500 $652,000 +4%
$900,000 $891,000 -1% REO (sold for $1.255 in ’06)
$689,000 $660,000 -4% SS (sold for $875K in ’05)
$659,000 $610,000 -7% SS
$1.188K $975,000 -18% REO
The two REOs both had gobs of offers, and the short-sale buyers deserve a 5% discount for enduring.
The Klinge-Klang Index still looks like 2003 pricing for Carlsbad. If you can find a house you like at 2002 pricing or better, it should go fast.
2003 pricing is very much what I’m seeing out there. This is a pretty firm plateau for now.
It doesn’t make sense that it doesn’t count REOs. There are areas where the majority of sales are REOs. At least it counts short sales, which function as a proxy for REOs. And, like you said, short sales probably deserve a discount due to the length and hair pulling stress of the transaction. One could make an argument that REOs are probably in worse physical condition than organic sales and maybe short sales and therefore deserve a slight discount as well, although that’s hard to quantify for sure-I’ve seen some REOs that were turnkey.
My friends who sold their home recently in Olivenhain sold it at what they paid for it in 2003.
Thats pretty close to 2003 pricing. After pool and improvements then minus selling costs, oops. 2001 pricing!