Don’t believe everything you read! Sage advice, especially when it concerns how some of the media report on the real estate market.
It’s the end of the month and with it always comes the much anticipated release of the Case-Shiller Home Price Indices report. The headline on Yahoo! Finance is enough to scare most buyers right back across the fence:
Home Prices Drop by Record 15.8% in May
That’s a very misleading headline (my opinion). Home prices did not drop 15.8% in May!
What the headline should say:
Twenty City Home Price Index Falls 15.8% From May 2007 to May 2008
That conveys the truth. Because that’s what really happened. The composite value of homes in 20 cities fell by 15.8% in a year. To say that home prices fell by almost 16% in May is a bunch of BS! (my opinion)
But real estate is local. What’s the value in a composite of 20 cities spread across the USA, if I’m in Tampa? But that’s the media’s way of creating dramatic headlines. Home prices did not drop 15.8% in May!
So what’s really happening in Tampa? Let’s just take the Case-Shiller numbers and graph them. Shall we? Graphs put numbers into perspective and help us to better understand the facts. Below is a chart of the Case-Shiller Tampa numbers from May of 2007 through May of 2008.
The decline is beginning to subside (flatten).
So here are some facts, not some BS headline that conveys a non-truth (my opinion):
- Fact: The drop in the Tampa Case-Shiller number from April 2008 to May 2008 (1.36) was the lowest drop since March of 2007.
- Fact: Since March of 2008 the drop in the Tampa Case-Shiller index has been slowing.
- Fact: The drop in the CS Tampa index from February 2008 to March 2008 (6.05) was the greatest of the current down market.
So maybe the slow down in price declines is only temporary. Time will only tell. But maybe, just maybe, we are approaching, or are at the bottom regarding price declines. But the fact is Home prices did not drop 15.8% in May!
My 2 cents.
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