Every month about this time, the National Association of Realtors and the Florida Association of Realtors publish different reports regarding the performance of various markets for the previous month. While I believe that the intent of these groups is to disseminate accurate information for the good of the public and for the benefit of their membership, I also believe that the format of these reports leads to misunderstanding and confusion among those that receive the reports.
You Have To Read What It Really Says
For the purpose of this article, I am going to be using the Florida Sales Report – July 2008 which was created by the Florida Association of Realtors and the University of Florida Bergstrom Center for Real Estate Studies. You can download The Florida Housing Report here.
What this says is that this study covers:
- Realtor Sales
- Single Family Homes
- Resales Only
What this means that it does not cover
- New Home Sales
- For Sale By Owner (non-Realtor) Sales
- Condo Sales
- Townhouse Sales
You Have To Draw Your Own Conclusions
While I believe it is beneficial to break-down sales into sub-categories such as new versus resale and single family detached homes versus condos versus town houses, I also think that this specific report is being used by journalists to report the condition of the Florida Housing Market. There is nothing wrong nor misleading with this report, but I am concerned that it is being grossly misinterpreted by people who are overlooking what it really says.
For example, the report shows that year over year in July, statewide Realtor sales were virtually unchanged. Year-To-Date, Realtor sales are showing a 13% decline over last year. So what’s the problem?
I have read reports and seen articles that says our market is stronger (due to the year over year July figures) when in fact our sales levels are still dropping (see year to date data). The one market that I am very familiar with, the Tallahassee real estate market (identified in the red above) shows that the market is down 13% on a year over year report (meaning July of 2008 versus July of 2007. Now we have to piece it all together….
First of all, the MLS only represents 67% of the market in Tallahassee. While I like to know new home sales versus resales, if we are going to talk about the state of the market, we have to throw both in the pot. In a nutshell, this is not the report that should be utilized to report a state of the market.
4 Critical Real Estate Market Stats
What home consumers really need to know about the real estate market’s overall health is this:
- All Housing Units (single family detached, condos, and townhouses)
- New and resales
- Total Unit sales (MLS and otherwise)
- Average Price (not as important as most reports try to make it)
So why am I making such a big deal out of all of this? The report above, because it is being based upon a small piece of the market, will lead people to believe that the entire market is that way. Here’s an example.
Tallahassee Real Estate Market – July of each Year
Take a look at the above graphic (note that time moves from right to left). This is information from the Tallahassee real estate market and does not come from the MLS (as does the information in the table at the top of this blog). This graphic comes from all sales recorded in Leon County (the Tallahassee real estate market), both new and resale homes, and shows that compared to last July, the Tallahassee housing market is down 33%. The table says 13%, the media says 13%, the reality is 33%.
Also note in the graphic that this July is hands down the worst July on record. Compared to the average July, the Tallahassee real estate market is down 35%. Would you have known that without looking at the right data? Most likely not.
Without looking at the entire housing market, it is easy to find a differing conclusion than what is really going on. My recommendation is to find a source of data for your real estate market that includes the four key points: Look at all housing units, new and resale, all the sales (not just MLS), and look at what the average price is doing. If you do that, you will be able to make an informed decision in your real estate buying and selling.
Please provide some feedback or a contrary viewpoint below in the comments section. I look forward to providing the kind of information that you, the reader, are interested in reading. If you like the general flow of this blog, please subscribe to the Really Better Real Estate Blog to receive each new post when it happens.
{ 2 comments… read them below or add one }
Good stuff.
Chris
Thanks Chris. There is so much data out there and yet it can be very confusing when it is published in a reckless fashion.