The Florida Housing Numbers Game - June 10, 2010

Up? Down? Sideways? With so many companies issuing reports on the Florida housing market, figuring out the landscape can be confusing.

BY ANA MARIA LIMA
anaalaya@yahoo.com

First-time homebuyer Gabriel Muniz would rather forget the statistics nightmare he suffered when he was looking for a house.

The 28-year-old government employee had a tough time figuring out the plethora of housing reports in the news about home sales, prices and foreclosures. He turned to consumer websites like Trulia and ZipRealty for data, but discovered some outdated information. He scoured government websites for numbers.

"It was probably the worst time of my life,'' said Muniz, who recently bought a three-bedroom townhouse in the Catalina Isles development of West Miami-Dade. "I thought it would be fun.''

Indeed there is a vast array of housing numbers available to consumers and investors and it can be difficult to get a true picture of the market. In order to take advantage of the information, experts say, buyers and sellers should be aware of different methodologies behind the statistics, the motives of the groups that publish reports, and the source of their data.

And in an area as diverse as South Florida, home to everything from luxury waterfront condominiums to urban neighborhoods, everyone needs to be extra cautious of housing statistics that may offer an overly broad view.

"It's a pretty confusing cloud of data out there to a lot of people,'' said Andrew Leventis, senior economist for the government's Office of Federal Housing Enterprise Oversight. "Even to experts it's sometimes difficult to reconcile the different numbers.''

The federal government analyzes home values for the same single-family houses over time, but the data is limited to mortgages of less than $417,000, the maximum amount allowed by Fannie Mae and Freddie Mac, the government's lending agencies.

The Standard & Poor's Case-Shiller Index, widely reported housing information that is targeted to economists, government officials and financial services companies, looks at all single-family homes sales over time, regardless of mortgage amount, but it excludes new construction. For each house that has sold twice, a computer model assigns a weight based on several factors, including whether a home was remodeled, or neglected, and how much time passed between sales.

Florida Realtors, which also releases housing data, uses yet another methodology. The group calculates the median price -- the point at which half the homes sold for more, half for less -- of all the homes sold during a particular month. The data is collected from the Multiple Listing Service, where real estate agents list properties for sale.

Realtors data does not include new homes sold by developers, private transactions and homes sold by the owners.

Different methodologies have led groups to different conclusions.

"It seems like a lot of times the numbers will come out and they are opposed to each other,'' said Jack McCabe, CEO of McCabe Research & Consulting.

Experts stress that conventional methods using the median prices of homes in a given month provide only a snapshot in time, and may be skewed or influenced by what type of homes are selling in a particular period of time. If, for example, there happen to be many more sales of high-end homes one month, the median price will be high.

Ron Shuffield, president of Esslinger Wooten Maxfield, one of the largest real estate brokerages in Miami-Dade and Broward, suggests looking at another set of numbers to get a sense of housing market trends: inventory.


"We're selling twice as many homes today as we were a year ago as an industry and we have half the inventory,'' Shuffield said. "Our business is about supply and demand. Less supply will bring prices up.''

But for those thinking of selling their house now, McCabe reminds them they're "selling near the bottom.''

"Don't think that you're going to get 2005 prices. That was imaginary wealth. That's gone. What you're going to get is a market price and you'll be competing with foreclosures and short sales,'' he said.

McCabe said it's important for buyers and sellers to be aware that data can be "manipulated to present a very positive or negative view,'' and some government data published four times a year can be "antiquated.''

Consumer websites, on the other hand, "can be tremendously out of whack,'' McCabe said. "Some are based on formulas realistic in a normal housing market but not really functional in a boom and bust marketplace like Florida.''

Experts say it is also important for those who use consumer-oriented websites like Zillow and Trulia to cross-check data with public records and other sources.

Trulia gets its information from sale listings on the local Multiple Listing Services, major brokerages across the U.S. and individual real estate agents. It also has foreclosure listings from RealtyTrac.

Zillow takes a different approach and offers what they call the "Zestimate'' home valuation, which is Zillow's estimated market value for a house, calculated using a proprietary formula. It uses public data. Users can update information on their own house.


Besides the array of data Zillow provides, what sets its data apart is its ability to zoom from the U.S. level all the way down to the state, metro area, county, city and ZIP code, said Zillow's chief economist, Stan Humphries. "Other approaches are not able to go that low (in scale) because they need a sufficient volume of homes that sell twice (Zillow includes new home sales),'' he said. "Typically that is the size of a county as opposed to a neighborhood.''

Veteran real estate agents like Riley Smith of EWM said people should ultimately look at local numbers when buying or selling. "Most Realtors will just say, draw a map around the house and ask what's closed in the past six months,'' Smith said. "That's still the best way to do it.''

For folks like Jim Terrill, statistics are key.

Dubbed the "king of stats,'' by his real estate agent, Terrill scoured every housing statistic he could find. When the Key Largo resident and his wife, Linda, decided to move to Pinecrest to live near their grandkids, they searched government records, consumer and Realtor sites and more.

"We had this plethora of information,'' said Terrill, who expects to close on a house in July. "I just can't imagine buying a house without this information because there it is in black and white.''


Buying a home in South Florida can be confusing in the current market. Talk to a Realtor for the most current information to help you with your home-buying decisions. We can also provide you with an up-to-date snapshot of recent sales and current listings in your community. For a free personalized report, call us at 305-456-6456, or click below.

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