Tuesday, 27th of May 2008 at 08:21:21 PMSo the latest report on the resale market hit the streets, the S&P/Case-Shiller® Home Price Indices is a refined research that strives to collect, sort, organize and adjust data to achieve, what they like to call an apples-to-apples comparison.
Needless to say, this report didn’t produce a lot of confidence in the market. Which is okay, it’s an index of how the market stands when the data was collected and can only be reviewed historically. What does that mean? Well, we can look for a trending effect, has it been going up or down? This may help predict the future, but there is no guarantee of that.
However, what got me interested in this report was a blog entry by Tom over at The Real Estate Blogger. He did a new twist on the index, he researched when the last time that index was set for that city. For the Phoenix area, our index is 166.97, the last time it was this was March 2005. What is significant of this time? Couple of things, one that is commonly known is that this is right before the big run up on this market, this was just before Phoenix went beyond a hot market into something crazy. The second is that this is typically the timeframe that I use for a second CMA on my investment properties. To get another view of what a property is worth, I pick properties of same time that sold during early 2005. It’s just another number I use when deciding if a property is worth buying. My broker was the one that suggested this to me during one of our conversations and I just started doing that to get a feel for what is happening with a property.
I’m hoping that now that we’ve returned to the time right before the crazy state that this may be the indication that we will be back to moving forward in a normal appreciation cycle. Let’s cross our fingers
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Great post and thanks for the link.
If I would have to guess, things will go down below the logical line as real estate is an emotional purchase. But once the bottom is hit you will see a quick appreciation as buyers flock to the market.