Interpretation of Housing Reports Can Be a Roller-Coaster Ride
By Bill Primavera
The Home Guru
As published in The Examiner, July, 2009
As readers of this column know, I report a quarterly round-up of home sales in the communities served by The Examiner that includes the number of sales during that period, comparing them with sales in the same quarter the year before, as well as list vs. selling price and median prices. Also quarterly, I present the findings of the Westchester-Putnam Multiple Listing Service (MLS) in its Residential Real Estate Sales Report, outlined here.
With the market experiencing significant loss in the past year, I’ve been impressed with the way the officers of the MLS Board seem to balance the somber news with any hint for optimism, much like a little roller-coaster ride.
For instance, the lead of this quarter’s report says, “Although recent Westchester and Putnam County sales volumes remained well below the levels achieved in 2008 and prior years, the trend to ever-weaker sales rates since 2007 was noticeably arrested during the second quarter of 2009.”
But then, in reviewing the statistics, we learn that conditions are just a little better by virtue of they fact that, while sales are down significantly, they’re still not as far down as they were in last year’s second quarter.
During the months from April through June, realtors participating in the MLS reported 1, 227 closed residential transactions (including condos and co-ops) in Westchester County, and 149 in Putnam County. Those closing volumes were respectively 31% and 14% less than last year’s second quarter volumes. But, they were considerably improved over the first quarter results where year to year closings were off by 37% in Westchester and 31% in Putnam.
The ride continues in an upward grade when we learn that, seasonally adjusted, Westchester’s overall second quarter sales were equivalent to an annual sales rate of 4,700 units, an increase of 12 percent from the prior quarter. The single family house component of that rate posted a healthy 19% increase. In Putnam County the seasonally adjusted single family house rate of 510 units per year was 11% higher than that of the first quarter. And these statistics are proffered as the first significant break in the unrelenting decline in sales rates since the first quarter of 2007.
You may wonder what “seasonally adjusted” actually means in the real estate business. A footnote in the MLS report tells us that it’s a way to project the annual performance of the market by establishing an annualized rate for a given quarter, then having that statistic project what total sales would be for the year based on that quarter’s customary share of total sales. For instance, if a quarter traditionally accounts for 20% of annual sales, the seasonally adjusted rate would be five times the actual number of sales reported for that quarter. This allows the four quarters to be compared to each other according to their equivalent annual rates.
I am no statistician nor am I a forecaster, but when I consider what has happened in the housing market in our area from the beginning of the last quarter of 2008, I’m wondering if there is anything that can be considered “customary” anymore in making these projections.
As we continue the ride, there are other solid statistics that bring us down, balanced by information that helps us up the incline a bit. For instance, consider a statistic like the fallen median sales price of a single family home in Westchester which in the second quarter was $565,000, 16.3% lower than in 2008. And in Putnam the single family house median was $325,000 a decrease of 19%. The Westchester news is ameliorated when the MLS tells us that this should not be considered an across-the-board depreciation, but rather an indication of the continuing weakness in the high end of the market with homes selling over $1 million.
In contrast, homes over $1 million in Putnam County are few and far between, and its descending sale prices result more from price cutting by sellers. Another interpretive matter is the amount of inventory found at the end of the quarter in both Westchester (down by 7%) and Putnam (down by 17%). This normally would be a good sign reflecting that houses are selling. But, in this market, it simply reflects the reluctance of potential sellers to venture into what they regard as an unpromising real estate market. .
All of this interpretive quandary is further exacerbated by the fact that all real estate is basically local in nature and news can vary widely from town to town. National headlines can lead some to believe that things are worse than they are because they factor in areas of the country that are doing far worse than we are. But, even within the bounds of very local news, there are even smaller pockets of sales results that would offer opportunities for either dismay or hope.
As an example of the last point, let me share news with you from my own office, which I‘ve never identified in this column but will do now for purposes of illustration. I am a realtor associated with Coldwell Banker in Yorktown. The managing broker there, Joe Monaco, a great guy and a great manager, conducts frequent and powerful workshops on all aspects of the business. Besides the nuts and bolts of what the complex business of real estate involves, his particular focus during the slowdown has been to maintain utmost optimism in the face of a challenging market.
And, you know, I think his brand of cheerleading, supported by solid business practice, is really paying off. Last week he announced that he is planning a new advertising theme to announce that our office has sold an average of one home every single day since May 1st. This demonstrates that in an area like upper Westchester, where homes are priced in a category that is very active right now, the news is very, very good and, if the market improves just a little, it can be even better
Similarly, while a lesser boost, the conclusion of the MLS quarterly report states that the incremental improvement of this quarter compares to market performance at the same general level as that of the early 1990s. It concludes that “the positive element within that low expectation is that we will have bottomed out this year and could hope for continuing improvement in 2010 and beyond.”
While that may bring us to the top of the loop of the roller-coaster ride for a brief moment, the conclusion adds the proviso that one quarter’s figures “do not constitute a trend and that the surrounding economic environment needs to be supportive of further recovery.” Surely, we’ll all be taking ride after ride on the roller-coaster as we “ride” this thing out.
Bill Primavera is a Westchester, NY-based realtor ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) and marketing practitioner ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) who can be reached for questions or comment directly at 914-522-2076.
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