- The Washington Times - Wednesday, December 27, 2006

Despite the recent slowdown in the Washington metropolitan real estate market, home prices have not fallen very much.

Prices even may be up, depending on whose data you use. Statistics are squirrelly like that.

Let’s begin with the Realtors’ data, which is culled from the big regional database of homes listed by Realtors. The company that runs the database for the Realtors in this area is called Metropolitan Regional Information Systems (MRIS).

From the MRIS figures, it’s obvious that November prices were down in some areas (mostly in Virginia) and up in others (mostly in Maryland).

Be sure you are looking at the median price data, however. Median prices are much more helpful when you are looking at real estate data because a few expensive sales can really skew average prices.

If you want to argue that prices are up everywhere, just look at quarterly data from the Office of Federal Housing Enterprise Oversight (OFHEO). Folks there have tracked the same houses since 1980, logging each time the homes are sold or refinanced.

Doing it this way removes a major problem with the Realtors’ data: The MRIS data is always comparing apples to oranges. You see, November’s MRIS data compares thousands of homes to thousands of different homes that were sold a year earlier. That makes it hard to determine the present value of a particular home at a specific time.

OFHEO data, on the other hand, compares apples to apples. Tracking the same homes for the past 26 years makes the OFHEO data more helpful, but OFHEO doesn’t track by counties. You can only get state-level data and metropolitan statistical area (MSA) data, which makes the data a lot more general.

According to the OFHEO, home values in 2006 in the Washington MSA were up 11 percent over 2005 in the third quarter.

Values in the third quarter were up 0.7 percent over the second quarter.

Prices were up? How could the OFHEO data be so different from the Realtors’ data?

Besides the apples/oranges thing, it’s also important to note that the OFHEO only tracks conforming mortgage transactions from Fannie Mae and the Federal Home Loan Mortgage Corp. (Freddie Mac).

Although that provides a huge amount of data, conforming loans top out at $417,000, so homes that carry a mortgage balance of more than $417,000 aren’t included in OFHEO data.

The problem with this is the large number of expensive homes in our area. Those are the kind of homes that have experienced the sharpest drop in prices, while relatively affordable homes have remained popular with buyers and, therefore, often have retained their value or even gone up.

Contact Chris Sicks by e-mail (csicks@gmail.com).

The statistics in this story reflect a metropolitan area that includes the Maryland counties of Montgomery, Prince George’s, Anne Arundel, Howard, Charles and Frederick; the Virginia counties of Arlington, Fairfax, Loudoun, Prince William, Spotsylvania and Stafford; the city of Alexandria; and the District.

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