Reporters for mass media outlets (yes, I’m talking about you LA Times) and many of my very educated colleagues can’t seem to analyze stats very well. Or, perhaps, they would rather parrot back the consistent doom and gloom articles they read in said mass media outlets. Either way I’m pretty irritated. BUT - before I take off on this particular tear, let’s do the daily numbers.
Northwest Glendale Real Estate Hot Sheet
Click here for chart explanation and disclaimer
2019 Chilton is a bank foreclosure and a decent buy for someone. The street is very pleasant and the price is decent for the size. Not a discount, mind you, just decent.
1201 Alameda is a LOL (little old lady) home that was one of those “price it really low and get lots of offers” strategies that some foreclosure and REO specialists are using. It is notable that, with all the emphasis on the sky falling, we can still get buying frenzies going. There were lots of offers and the house went for a more respectable $465k. Not a bad price for a small home on a small lot on a busy street.
Do you want to know how far prices have dropped in Northwest Glendale?
Ok. Time for my rantings. The last couple of days have been filled with news media reporting dire statistics showing that the Real Estate market has collapsed and local real estate bloggers blindly parroting back these stories. I am stunned that a “community specialist” would not take a moment to analyze the numbers for her particular marketplace… so I did. It took 2 cups of coffee, ‘cuz I’m no math wiz.
There are 2 main problems with the statistics that I see.
The most obvious is that mass media outlets are always looking at the big picture. They have to. The more responsible stories will tell you what they are looking at; regional LA county, for example, or The Valley, as another. The more salacious of the reports just use the most dramatic numbers and may not specify where. For all we know, when they talk about the drop in value, they are including Riverside and San Bernadino counties where things are truly dire!
The other problem is more insidious. I find that oft times the statistics will compare the real estate sales for a one month period against the sales of the same month, one year later. This will usually yield a very dramatic and compelling number - and that number is total BUNK! Like I said yesterday - with only 3 - 5 homes selling in a given month in our zip codes, just one abnormal high or low sale can completely hijack the stats.
Here are stats that work
I like to think that looking at “rolling 12 month” numbers gives a better picture of what is going on. This relatively simple number doesn’t factor in seasonal changes, but it will do for today.
In 91201 we see a dramatic drop in the number of homes sold, but a pretty modest number in terms of value dropping. Is the average numbers better than the median? Erm, your call. I personally think median is better, but I think it is a matter of point of view.
Here are the numbers for 91202, and they tell pretty much the same story.
What does this mean to me?
Now the fun part is the story people will tell themselves around these numbers. Potential home sellers will use this info to prove to themselves that their price is justified and they just haven’t found the right buyer. Buyers will assume that these numbers do not apply to them.
The truth, of course, is somewhere in between. Statistics are just an indicator of trend, not a mathmatical formula to assess accurate value. We are trending downward, just not a dramatic drop.
Sellers - If your home isn’t selling it is automatically too high. Period. End of Story. Don’t argue with me or your valued real estate agent. Seriously. The trend is downward, not holding steady, not going up. Everyday you hang on to your current price is a day that you lose value. Your individual home is worth what a willing buyer will pay for it, and if you don’t have a willing buyer, guess what? YOU are the buyer.
Buyers - stopping acting like the sky is falling. That’s nonsense. The clouds are getting lower, but the sky is still right where it has always been. If you need to buy, now is a great time. There are wonderful individual opportunities in this market. If the home is right and you are going to stay there a while, who cares if it falls a little more? If you don’t need to buy, stay home. There is nothing wrong with waiting for conditions to change.
Over the weekend 2 very notable listings came on the market. The first is actually a very old listing. 1542 Valley View. This home, right on the corner of Valley View and Cumberland has been “under construction” for literally years. This was originally listed nearly a year ago by a large volume agent and the price was $1,849,000. Today, the price is $1,799,000. This is less than a 1% drop. Now, I said values had dropped how much in 91202? Oh, right, 6%. So, if the house didn’t sell at $1,849,000, it was over priced. With this latest drop it is now 5% above over priced! But it is now listed with a Sudio City agent. Yep - those valley people will definently pay more than the home is worth, right?
