Prices falling

Are Home Prices Headed Up or Down?

Yesterday I received an email from a client who is on vacation in another country.  He said that he heard that prices were still going down and was concerned about the value of the Orange County condo he was about to close escrow on.  I wrote him sent him the MLS printout of two model match homes which closed escrow in the last two weeks.  They were not as nice as his and sold for the same price he was buying his for.  I reminded him that prices are not only local, but they vary by price range and style of home.  For an example, $800,000 homes in Orange County may be falling while 3-bedroom $290K to $450K homes are stable and may be slightly climbing.  One bedroom condos are a deal as buyers can often skip 1-bedroom housing and go straight to 2 or 3 bedroom properties because of the current extremely low prices.

First Team’s  friends at Keeping Current Matters bring home the point that news on the real estate market can be conflicting and confusing.  It also brings to light once again that real estate is extremely local and that you must get to know your market place by talking to a professional that knows what the local trends are.  That’s what I specialize in. Stats can even vary from city to city and complex to complex, so before you jump to conclusions about the state of real estate – dive deeper into the story and get the facts so you can answer the question…Are Home Prices Headed Up or Down?

Here are two headlines that appeared in print last week:

LA Times: Case-Shiller Home Price Index Hits New Low 

Forex: CoreLogic: Home Price Index Increased 0.7%

In the Los Angeles Times story, David Blitzer, chairman of the S&P index committee, was quoted as saying:

“This month’s report is marked by the confirmation of a double-dip in home prices across much of the nation. Home prices continue on their downward spiral with no relief in sight.

In the secomd article, Forex quotes Mark Fleming, chief economist for CoreLogic: 

“While the economic recovery is still fragile and one data point is not a trend, the month-over-month increase based on April sales activity is a positive sign.”

The Case Shiller and the CoreLogic price indices are both very well respected. How can they come to seemingly opposite conclusions? There are two reasons for this. 

1. Each Index Has a Different Lag Time

Each report is actually looking at data from different periods of time. Therefore, they are not technically comparing apples to apples.  Read the rest of the story: