Lies, damn lies and statistics

It’s been interesting to see how both sides of the housing bubble are putting their spin on the monthly real estate numbers. The same statistics can show a positive trend and a negative trend. You’d think that’s impossible, but it’s really pretty easy and underscores the adage of ‘lies, damn lies and statistics’.

Lies, damn lies, and statistics

One of the phrases I hear a lot lately is ‘pending sales’ are going up. Realtors grab hold of this and use it as evidence that the market is picking up. “It’s time to get off the sidelines before it turns into a seller’s market and/or loan rates go up.” Sure enough, in February, pending sales were up … from the month prior.

In Walnut Creek, it looks like pending sales in February 2008 were up a whopping 40% from January 2008. Hey, hey, the good times are back, right?! Wrong. Compare that to February 2007 and pending sales are actually down 10%!

The natural real estate cycle will make some of these months look good if they’re presented in the right context. But do the digging, compare them to last year and even the year before that. And don’t look at one statistic in isolation. Look at pending sales, actual sales, inventory, days on market and price all at once to get a sense of the market in your area.

Extra credit? Read up on the difference between median price and average price. Yes, it can be important.


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4 Responses to “Lies, damn lies and statistics”

  1. T Says:

    I just listed my house in Lafayette, hoping to sell into the pent up winter demand and supposed bottom fishers. I expect something of a bear market rally this spring – but the trend is still decidedly negative. I’m going to sit on the cash for 6-18 months while inventory hopefully rises and prices drop further. Don’t want to wait too long, lest interest rates get cranked up again.

  2. wcrealestate Says:

    I think you’ve got the right idea. There’s going to be a seasonal rally and many a buyer will simply say they “must” buy this year and won’t wait. So, I think you’ll find a market if you’re pricing it well.

    A recent listing in Walnut Creek’s Diablo Shadow neighborhood went on the market at $750K – which was a very attractive price for the area. The result? It sold in the first weekend.

    I still think it was overpriced, but there were 4+ offers, showing that there is demand, particularly for what is perceived as value in this market.

    Worst case scenario is that the prices remain the same and interest rates rise slightly. I personally think we’ll see another price drop in late Fall after the seasonal flurry of activity and that rates will be essentially unchanged in the face of a flagging housing market.

  3. T Says:

    I think we are priced right… and the supply in this price range is limited… we’ll see. I don’t NEED to sell, so that takes some of the pressure off.

    Even if prices stay flat, I’ll have the advantage of a no-contingent offer. It will indeed suck if rates rise, but I’m presuming that won’t happen until after the election at least. Though I’m also hoping/betting that the spreads on jumbos will come down from the 150 bps over conforming too.

  4. Lee Says:

    So, T, any luck selling your home ? Any nibbles ?

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