Every day, it seems, a new report is released on the state of the housing market. It’s up, it’s down. It’s good, it’s bad, and it’s confusing. For most people, even with access to all this information, the results are more inconsistent than ever, often dated and out of context. But they don’t have to be.
This is a rant: you’ve been warned.
Timely and accurate information provided on a local level with a real world perspective is the real estate market’s most important commodity – and the ability of the public, government, financial institutions, investors and real estate professionals to make informed decisions on local housing markets is the cornerstone of an eventual housing recovery. But decision makers are inundated with conflicting real estate reports based on “black box” calculations, undisclosed motives, misunderstood geographic inclusions and irrelevant timelines. Considering the critical role that real estate statistics play in just about every housing related decision, shouldn’t the bar be set higher? After all, possessing accurate and timely market knowledge is critical to buying and selling a home, accessing mortgages and regulating the financing process among other purposes, isn’t it?
The most recent Case-Shiller Home Price Index of May 31 is a perfect example: It noted, in of all the US markets it tracks, the Washington, D.C. metro area as the only market to experience an increase in housing prices for the first quarter of 2011. Perhaps they missed the memo earlier this month. Improving market conditions for DC Metro were reported three weeks earlier by MRIS, the largest multiple listing service (MLS) in the nation through its RBI Pending Home Sales Index, a two-year moving window on the housing market using pending sales and average sales price. The RBI report was based on April contract data presented 182 days faster than Case Shiller but only 11 days after the close of the actual reporting period on May 11.
While the results of Case Shiller’s data equivalent of RBI’s most recent pending sales data won’t be seen for another six months, the RBI results for Washington, D.C., Virginia and Maryland have been available to the public online since mid April and they change in real-time, as sales occur and as list prices change.
The Case-Shiller index was designed to enable Wall Street to trade financial instruments to “hedge” the housing market in good times and bad. It was not intended to become a monthly consumer metric. Unfortunately it has also evolved into a proxy for our confidence in residential real estate. This monthly report is just one example of many attempts to report on a national housing market with vastly different submarkets without accounting for different types of dwellings (single-family vs. condos, etc.), seasonal market shifts (understood better to parents as “move in the summer before school starts”) and changes in sales activity that might precede future trends. Most importantly, it is already five to seven months behind the market when it hits newsstands.
Conclusion? Most people don’t decide what to wear today based on the average temperature last November. Why don’t the same standards apply to real estate reporting? Good grief.
RealEstate Business Intelligence, an MRIS company, releases its next Washington DC Pending Home Sales Index on June 10. To learn more, click here.