Pricing graphs

[Smiling JOe]

dunefrog, I'm going from memory regarding the following. Peak sales in SoWal was June 2005. In particular, that refers to the quantity of sales, but the avg sales price trends to that month, too. In 2007, the quantity of sales was down from the peak by roughly half, so while a month or two of unusually high priced homes, will skew the avg sales price. Remember the home in The Retreat selling at around $13 million? Rosemary Beach Gulf-front home selling for $8+ million, which they tore down? Same buyer bought a $4million home two lots away in the same down market? Sales like that shift the average sales price, so sometimes, when you see numbers out of the norm, you need to look up the specific sales, and you will usually find the answer to why the numbers looked out of whack.

 

[Smiling JOe]

Good points, CCK. On that note, I will chime in and say that I do think that some prices of properties are at the bottom. However, I think the majority of homes are over-priced for today's market, and those prices will come down to replacement levels.

 

[dunefrog]

The CR graph is taken from the Case-Shilling series and depicts price to income ratio. That appears to be an affordability index as opposed to the ECAR graph which is "average" - I assume mean - home sale prices. Two different animals.

No doubt the two graphs are "two different animals," but 30aShopper implied that the two graphs are comparable in some way. My point was that one graph does not support the other, as he implied.

I think if we want to see how far the market has fallen from the peak, we need to first determine the proper way to measure these things. As SJ said, a small number of sales and a few extremely expensive homes within that dataset will skew the average numbers upward. So I don't think the average sales price (in such a small area with so few sales) is a good way to measure the peak or bottom.

I think a better way would be to look at properties that sold in 2005 that ALSO sold in 2007 or 2008. Get the percent decline on each property. Then average that. Is that data available in the ECAR MLS?

 

[traderx]

No doubt the two graphs are "two different animals," but 30aShopper implied that the two graphs are comparable in some way. My point was that one graph does not support the other, as he implied.

I think if we want to see how far the market has fallen from the peak, we need to first determine the proper way to measure these things. As SJ said, a small number of sales and a few extremely expensive homes within that dataset will skew the average numbers upward. So I don't think the average sales price (in such a small area with so few sales) is a good way to measure the peak or bottom.

I think a better way would be to look at properties that sold in 2005 that ALSO sold in 2007 or 2008. Get the percent decline on each property. Then average that. Is that data available in the ECAR MLS?

That is one of the methodologies used by Case-Shiller but they only have data sets for the original 10 MSA's and the later added 20 SMA's. It would be great to see such data for SoWal.

 

[30ashopper]

No doubt the two graphs are "two different animals," but 30aShopper implied that the two graphs are comparable in some way. My point was that one graph does not support the other, as he implied.

I didn't mean to imply they were the same graph, I just found the income to price one the most interesting. CS's sales graph from the same post is more in line with the local data I posted -

I think if we want to see how far the market has fallen from the peak, we need to first determine the proper way to measure these things. As SJ said, a small number of sales and a few extremely expensive homes within that dataset will skew the average numbers upward. So I don't think the average sales price (in such a small area with so few sales) is a good way to measure the peak or bottom.

It does reflect what people are paying for homes around here. If it's skewed because higher priced homes aren't selling, I think that implies two things - people are not buying high priced homes (over priced homes maybe?), and people are not able to get credit to purchase higher priced homes. This implies there is downward pressure on price, so I think it's relevent.

I think a better way would be to look at properties that sold in 2005 that ALSO sold in 2007 or 2008. Get the percent decline on each property. Then average that. Is that data available in the ECAR MLS?

You could pull that out of walton with a lot of manual labor, but it wouldn't be fun. That graph, if we could see it, would probably reflect a very large decrease in sale price, based on what I've seen from poking around in there over the last year or so.

 

[30ashopper]

You fail to take into account the replacement value of a home which will never go back to 1999 values and, therefore, homes will never go back to 1999 prices. Right now we are nearing replacement value per square foot on homes that are not in the large developments (Rosemary, Watercolor, etc.). Excluding land, a builder is looking at around $150.00 per square foots in just costs (materials, labor) in an averagely finished home. This does not figure in the builder's profit (salary). Using these figures and taking into account that the houses that are selling are under $349,999, a modestly sized home of 2,300 square feet could be BUILT for $150.00 per square foot of COST and be at the price point to sell. However, this does not include land or builder's salary. So, it is very unlikely that prices will continue to fall.

I wonder what the average price per square foot was in 1999? Take that, apply a standard inflationary appreciation to it to get to what it should cost today, and that is where I think we will end up, or slightly below it, since it's likely to overshoot as builders struggle to get sales moving again.

 

[30ashopper]

Can you chart this back to 1999?

.

No I can't, the data comes from Josh's blog, he only goes back to 2005.

 

[JoshMclean]

My data wasn't just for South Walton either. It included everything from Destin through South Walton.

 

[JoshMclean]

No I can't, the data comes from Josh's blog, he only goes back to 2005.

I just sent you an email with data since 1999. Let me know if you don't get it.

 

[JoshMclean]

I know that 30A is trying to give some useful information, but I don't think those graphs tell us much about our area. I think you are much better comparing graphs using average sales price, total sales, and inventory in this area. It would give a more clear view in my opinion.