It seems that EVERYONE wants to jump on the doom and gloom of the Real Estate Market nowadays without ever REALLY figuring out what the data means. The post jumped out at me yesterday from the Inman Blog. "Case-Shiller: Home prices drop in 19 of 20 metros"
Now typically I take everything with a grain of salt, but yesterday I just about jumped out of my chair. After months and months of compiling information for one of the most in-depth market reports of Chicago ever, (See Report Here) I knew for a fact that Chicago HAD TO BE that one metro area... Well it wasn't and I was p*ssed.
The data, accoring to Inman and the S&P website stated that, "A monthly home-price index that tracks 20 major U.S. metro areas dropped 12.7 percent in February compared to the same month last year. Nineteen of 20 metro areas in the monthly S&P/Case-Shiller index experienced annual declines in February, with double-digit percentage declines in 10 metro areas." (Read their full press release here)
Then continued with, "There is no sign of a bottom in the numbers," said David M. Blitzer, chairman of the Standard & Poor's Index Committee, in a statement.
The worst areas, according to the report included; New York, Miami, Chicago, Las Vegas, and more. That's when I got to thinking... New York and Chicago??? What Gives? I always thought these were two of THE MOST stable or slide-resistant areas in the U.S.? Don't I know for a FACT according to exhausted research on my own, that Chicago's average price grew over 2% as a WHOLE?
So then I took a look at their information and what they actually include in their data. (View the Full FAQ Here) They state that to be included in their report, homes must fall into the following criteria:
2. What types of homes are included in the index calculations?
To be eligible to be included in the indices, a house must be a single-family
dwelling. Condominiums and co-ops are specifically excluded. Houses included
in the indices must also have two or more recorded arms-length sale
transactions. As a result, new construction is excluded.
So, in major metro areas like New York and Chicago, where the attached vs. detached home sale ratio is astronomically skewed, NONE of the condos, town homes, or coops are included? What the heck does this data include then for Manhattan or the Chicago Loop neighborhood???
Unfortunately, this is just another example of a major company with huge ties to the media releasing semi-represented data and furthering the fear of American Home Owners. Do the right thing in this... all of you. Make sure that you know the facts. Make sure you share them with your clients. And when you see things like this that don't support your research, make sure you call them out to everyone you can.
"Differentiation Through Your You Factor"