National Economic Outlook - October 2013
Written By:
Ingo Winzer, President
Ingo Winzer, President
Local Market Monitor
The
government shutdown means there are
no statistics for us to analyze or comment on. So it's a good time to discuss
the reliability of the data we use to understand real estate markets.
The
most well-know statistic for real estate is
home prices; particularly, how much home prices have changed in the past
year. Sophisticated methods use actual sales data to calculate this number for
the country as a whole and for local markets.
A
very big problem right now is that the sales data do not tell us how the value of the average house changed in the past year, because many of the actual
sales in the past year were not of average homes. They were sales of foreclosed
properties.
The
contamination of the data with foreclosures makes it seem that home values are
sharply higher in many markets, and that the housing bust is quickly turning
into another boom. I believe, instead, that we are in for a long period of very
modest value increases that only becomes apparent once the foreclosures are washed
out of the system.
We
won't know for a while.
