I am a numbers guy. I like numbers because generally they don't lie and can paint a pretty good picture of a market or investment. However, this week saw the release of what appears to be conflicting home data for Albany NY released. The Greater Capital Association of Realtors (GCAR) home sale data indicated a 20% drop in the volume of single family homes sale sold in January from a year ago. This would tend to indicate that demand for homes is dropping. GCAR Data indicated home prices were level or down in all of the Capital region counties for January except Saratoga which showed a 4% increase. On Tuesday, the Office of Federal Housing Enterprise Oversight (OFHEO)released data indicating single family median home prices in the Albany market actually increased while on a national level prices fell. I love OFHEO data. I used a variety of data sources completing my thesis and found OFHEO data very reliable, due mainly to the sample size utilized. The OFHEO gathers data from thousands of transactions. So what is up? Demand is down yet prices are going up? The main problem is GCAR's data with only one months worth of sales is simply not a large enough sample size to draw any conclusion on price moves. As a broker we talk about median home prices to track prices. That is the price at which half the homes sold fall below and half are above it. As an appraiser we use "paired sales" to track home price changes. To do this we find a home that sold and then resold and compute % price differences to figure annual appreication or depreciation. Ideally the home has not been changed during the holding period. These "paired sales" give a good indication of price increases or drops. Paired sales while tedius are a more accurate way of estimating home appreciation or depreciation. For example, suppose AMD moves in 200 employees to Saratoga county all making $100,000+. These buyers will be buying homes in the $300+K range. This surge will move the median home price up slightly but that does not necessarily mean home prices are going up. Demand for homes in the $300K range will increase and prices in that range may go up but prices for homes under $200k may still fall. It is an indicator but not a sure bet. Lately I have seen multiple cases of paired sales with homes losing ten of thousands of dollars in value in the past year. I also have homes that have gained in value over the same period. However, when you look closely at the sales that dropped each had a story. It may been a relo, a divorce, a job loss. Whatever it was it was a motivated seller. The current market as I see is it "segmented" certain sements and price ranges are very active and certain segments are very slow. Some sellers are not motivated and many many sellers are in tough financial situations due to 100+% mortgage products taken out a year or two ago. Now these sellers have a divorce, lose a job, and they need to sell and sell quick. This segmentation helps explain the apparent contradictory sales data. Soon the market should clear itself of desperate sellers and move on. Remember Albany is centered around state goverment and has a highly educated work force in comparison to other areas of the country. Albany will not see the huge market swings brought on by the speculators in Florida and Vegas.
If you have any questions please do not hesitate to contact me. Thank You!
Sincerely,
Kevin Clancy
Clancy Real Estate
518-861-7016
kevin@clancyrealestate.com
http://www.clancyrealestate.com/
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