A lot of Twin Cities Realtors today are muttering variations on the above in the wake of yesterday’s latest housing statistics.
If you’re not aware, Case-Shiller’s just-released March numbers indicate that the national housing market has officially now re-tested its lows (“double-dipped”), and that Minneapolis is the worst performing major U.S. market over the last 12 months (down 10%).
In turn, that news is prompting not a few local Buyers (and just-closed Buyers) to call their Realtors for their reaction(s) — and reassurance.
Case-Shiller’s “matched-pair” methodology overcomes the apples-to-oranges problem inherent in many other housing market gauges.
However, in only tracking homes that have re-sold during a specific time period, it introduces other problems.
–Case-Shiller doesn’t break out foreclosures vs. non-foreclosures.
When foreclosures account for something like half the market — the case locally this Spring — it’s likely that Case-Shiller will overstate price drops. That’s because foreclosures are concentrated at the lower price rungs — and are deeply discounted by their bank-owners.
–Reason(s) for deep discount.
Of course, one of the reasons foreclosed homes sell for such a deep discount is their (poor) condition.
While Case-Shiller attempts to correct for this, the only way I know to assign an accurate discount for various damage and neglect is to tour the inside of the home — something Case-Shiller doesn’t do.
It’s misleading to take statistics dominated by distressed home sales and generalize them to the overall housing market.