Doom and Gloom in the Housing Market? Let Me Be the Contrarian

Best Boomer Towns - Town Blogs

Written by Hank Bailey, from Athens, Georgia on Mar 11, 2009

Well here we are again. Another quarterly report from Case-Schiller, and another report of doom and gloom for the housing market while very quietly the Office of Federal Housing Enterprise Oversight (OFHEO) has updated for 4th quarter 2008 their Home Price Index (HPI) in the last few days with no hurrah from the national media.

As I indicated in my post of January 2, 2009, OFHEO, or the Office of Federal Housing Enterprise Oversight, has published information about the differences in their methods of indexing their House Price Index from the Case-Shiller® Home Price Index. Here are some of the points:

Case-Shiller only uses purchase prices, while the All-Transaction OFHEO HPI also uses refinance appraisals.

Case-Shiller mortgage data comes from county records, while OFHEO uses conforming mortgage data from Fannie Mae and Freddie Mac.

Case-Shiller is value-weighted, giving more weight to higher priced homes, while OFHEO equally weights all prices.

Case-Shiller has no data from 13 states, while OFHEO covers all states; important when some areas are growing rapidly.

At times, one of these indexes can show a trend of increasing prices, while the other can show the opposite. So these differences should be carefully considered when you’re deciding on information on which to make investment decisions.

This Link is a FAQ Page discussing OFHEO, Case-Shiller, and HPI or the home price index as used by the OFHEO. For a Technical Description of how OFHEO determines their HPI index please Click Here.

However, back to the newest Case-Shiller report.

“Home prices post record 18% drop”

While this is news, is it not really news when you consider that we all live in a local market, not the United States housing market as a whole. What I mean by this is that Athens Georgia, for one example, has an increase of 1.32% in four quarter percentage change through the 4th quarter of 2008. That’s right, Athens Georgia as a whole has “appreciated” by 1.32% in the past year.

What about your town? Check out http://www.ofheo.gov/hpi.aspx to find out how your locale has performed. That is the biggest issue I have always had with Case-Shiller and even the Zillow quarterly real estate market report. The Zillow Real Estate Market Reports track 161 metropolitan statistical areas, or MSAs as they call them, throughout the United States. I would probably contend that the Zillow report is more accurate than Case-Shiller to today’s market. I feel it is in every property owner’s best interest to understand their own individual market, and by providing this information I hope to assist home owner’s everywhere in this endeavor.

At the OFHEO website there is also a useful map of the United States entitled, “FOUR-QUARTER APPRECIATION U.S,” that allows you to drag your cursor across the United States to see how your state performed over the previous four quarters through the last quarter of 2008. It shows Georgia, for example, at a loss of 2.7% with Florida at a negative 19.5%. The site also provides more information for state by state research and of course, and as noted, city to city.

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