Kansas City Real Estate Thoughts...
There are several housing measuring sticks that we often hear quoted in the national news. Unfortunately the information often times is sending mixed signals. If you don't like the news you're hearing just wait for the next report because the news could be vastly different. I often feel the local Kansas City MLS stats I share with you are more beneficial in determining how our market is doing than many of the national reports. But I'm just a Kansas City Realtor and I'm not saying I deserve face time on CNN and Fox News. I am saying that if you don't know the formula being used to get the results then they mean much less on a national scale as well as here locally in Kansas City.
Let's take a look at three of the major housing measures that I watch closely - The Office of Federal Housing Enterprise Oversight's Index (OFHEO), The National Association of Realtors Median Home Price and the S&P Case-Shiller Index (SPCS). There are some important distinctions to make between these housing market measures. The National Association of Realtors (NAR), of which I am a member, compares the median home price of sales reported through the various MLSs. Over the course of 2007, NAR reports that median home prices fell about 6%. The other two housing measurements haven't reported 4th quarter findings, but from the 3rd quarter of 2006 to 3rd quarter 2007, the SPCS reports home prices fell about 4.5%. Over the same period, OFHEO reports that home prices increased 1.8%. If I'm representing a home seller then home prices have increased 1.8%. If I'm representing a home buyer then home prices have decreased 6%. Hey, I'm just here to represent my client's best interests! Seriously though, these reports show that you need to understand what basis is being used to arrive at the results. SPCS actually researches the local public records to arrive at it's conclusions. That impresses me and no doubt exhausts a lot of resources. Unfortunately though, the SPCS only has the resources to analyze 20 of our countries major real estate markets. While their figures on those 20 actual markets should be pretty accurate, to use just 20 markets when making an assessment of property values across the country certainly has its flaws. In case you were wondering which 20 markets are used in the SPCS, here's the map... 
SPCS www.macromarkets.com ... and if I ever do get face time on CNN or Fox News, I'm gonna lobby to get Kansas City on that map! Moving on to the OFHEO front, OFHEO does take into account every real estate market across the country. However, since it relies on statistics from conservative Fannie Mae and Freddie Mac, they don't take into account many upper bracket homes with loans over $417,000 or many risky sub-prime loans. So when I take a look at OFHEO's measurements, I generally consider those numbers to be a best case scenario. I found an OFHEO link that let's you enter your local major market, the quarterly period in which you purchased your home and the price at which you purchased your home. It then calculates a value it predicts your home is now worth. Keep in mind this tool doesn't know if your foundation has since caved in or whether you have since finished the lower level (that's the marketing friendly way of saying basement). So don't get too excited if the number seems high or low but consider that it could be showing you the way the market in your area is trending. Here's the link... www.OFHEO.gov/Calculator/Default.aspx As an example for when you go there, here's what I did: Clicked on the "MSA/MSAD" so I could then scroll down and choose "Kansas City, MO-KS". Under "Select Purchase Quarter" choose the quarter in which you purchase your home. If you bought your home in February of 2005, you would choose "2005 Quarter 1". For the "Select Valuation Quarter" leave it at the default, which is 2007 Quarter 3 (remember 4th quarter 2007 stats are not yet available). Enter the price you paid for your home. If you purchased your home for $400,000 then enter that amount. When I entered the above example and hit the calculate button it said the home was now worth $411,700.
Be sure to read and consider the disclaimer on the page, part of which says "When using the House Price Calculator, please note that it does not project the actual value of any particular house. Rather, it projects what a given house purchased at a point in time would be worth today if it appreciated at the average appreciation rate of all homes in the area. The actual value of any house will depend on the local real estate market, house condition and age, home improvements made and needed, and many other factors. Consult a qualified real estate appraiser in your area to obtain a professional estimate of the current value of your home..."
As always, our readers are welcome to comment below!
| |
|