WSJ just published an article stating that the housing crash may have been more severe than what initial estimate show. The National Association of Realtors as well as CoreLogic (real-estate analytics firm) both have varying results from 2010.
There are several reasons for the discrepancies. The 2010 Census didn’t include questions about home sales, so information previously gathered from census data must now be obtained in other ways. The vast change in pricing as well may have overwhelmed many when market corrections occurred.
Many reports, including the ones I use here as well to track residential and commercial real estate are from the area’s multiple listing service. The one problem however with using MLS data is that the information does not include sales sold directly by the owner. In Chicago, real estate sales directly by the owner are a small percentage. Nationally, 9% of sellers have sold their home without a broker[i].
For many, corrections in the information may have minimal bearing. The greater effect for individuals, would be during a home seller’s listing market time, especially in heavy supply areas where the months supply of inventory time could increase, thus days on market (rate at how long it will take to sell the current inventory at the current sales rate). Negotiations could also be harder driven, where home buyers possibly use market conditions (if agreeable) to obtain more desirable terms.
Chicago’s downtown/Loop area show a MSI-UC for attached resales, a value of 8.8 months supply of inventory; one of the lowest in the past two years (June 2009 showed 8.2 months and July 2010 – 7.8 months) down from Jan 2010’s value of 22.3. Lincoln Park’s MSI-UC for January was 10.3 months, the third lowest in the year after March and April which may have been influenced by the tax credit. Subscribers to this blog can view the MSI spreadsheets for both Lincoln Park and the Loop.
There is much more to this data and understanding the relationships involved would give us a more definitive outlook of the local market.
Real estate related business and investment groups would feel more direct consequences from the corrections. The broader economy, however, uses new construction data (or building permits) to determine growth.
Sherwin L. Sucaldito, REALTOR®, GREEN, ABR, CRPM
The Institute of Luxury Home Marketing
Green REsource Council, GREEN
Accredited Buyer’s Representative , ABR
Certified Residential Property Manager, CRPM
” Deciphering the Data” by Sherwin Sucaldito is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Photo courtesy of Javarman.
[i] 2010 NAR Profile of Home Buyers and Sellers