Housing Markets – The Right Measure?

Back in June, we provided some context for Money.com's 12 Cities Where Homes are Flying Off the Market. With the leaves coming down, I went back to the numbers over some hot cider and football this past weekend. A lot has changed since then, from industry merger news to world crisis...so I wondered if the US housing numbers would tell a different story.

There are many ways to look at a market

And it's easy to argue about which statistics are the most meaningful. Some recent examples:

• Forbes.com's annual "America's Most Expensive Zip Codes" – current asking prices
• Zillow's "Top 10 Seller's Markets" – close price to list price analysis
• NAR's Economist Outlook – Case Shiller Index
• Money.com's look at Days On Market (for sold homes in a given time period)

To me, each of the above has its flaws – as does any model of course. The most obvious being:

Asking Prices (by ZIP code) – In the methodology, they note that when inventory is low, and there are fewer than 10 active listings in a ZIP, they exclude it. This excludes some of the hottest markets out there. Low active inventory can actually be a sign that the market is hot. But even in markets with plenty of listings (like NYC), listing prices can be misleading. The news here in NYC over the last few months is that sellers are over-pricing and buyers are letting the majority of properties sit.

Close to List price analysis – This seems pretty intuitive. If the closing prices are on average over asking, then you likely have a hot market. But, as the Listing price proponents will state: by the time to sale is recording, the information is outdated. And they are right – this analysis trails accepted offers by 60+ days in many markets. And, given the interplay between re-pricing and days on market (neither considered here), you may be excluding some significant discounts.

Case-Shiller – Well, there's been lots written here from how it can focus only on the lowest tier of the market and overstates appreciation in an improving market.

Money.com - What about the homes that didn't sell? Maybe a segment of the market is hot while the rest is languishing (this was our perspective in June when we looked at the unsold market).