Atlantic City Press article on MSA prices

As you know, I've been saying that statistics can lie. Actually, lie may be too harsh of a description..."misinterpreted" or maybe "misunderstood" or maybe (my favorite!) "taken out of context". Or maybe there isn't enough room in the article to explain everything!

Below is an article that appeared in this morning's Atlantic City Press that discusses yesterday's government report on home pricing by Metropolitan Statistical Areas (geographic regions). Kevin Post and I have exchanged notes on some of the recent housing data for our market and he called me for some insight into the recently published numbers.

Sometimes I wonder if the others who are quoted even read the report (it was 88 pages long!) but that doesn't matter since I read the areas that referenced our regional market.

Kevin was examining the first pricing decline for many moons in the Atlantic City and Ocean City MSAs. While that may be interesting and newsworthy, I was more interested in examining the big picture of our market. Where are prices right now?

Here's the picture from my eyes:

-- the price decline in AC was 0.72% for the year, 0.95% for the 4th quarter, and 77.3 percent GAIN for the previous five years (that is NOT A TYPO)

-- the price decline in OC was 3.37% for the year, 2.89% for the 4th quarter, and a GAIN of 69.89% for the previous five years ( NOT A TYPO!)

-- The Vineland, Millville and Bridgeton markets increased 2.95% for the year

-- The overall US market increased 41.3% for the previous five year period

Could the fourth quarter be the beginning of the decline? Perhaps. But I am betting that we are experiencing a flattening of the prices. I would be surprised if prices fell for a few quarters but these future declines (if they occur) will be after extraordinary pricing growth.

The author's comment on optimism was interesting...I never used that overused word (at least in real estate & political corners) and what I thought the quote implied was 1) one relatively small decrease doesn't make a trend, 2) as I have been reporting, this is indicative of a pricing bottom forming, and 3) our area is significantly above national averages for the five year average.

Our pricing growth was ALMOST DOUBLE the national average! This was one hot market and a bit of cooling off on the pricing front is probably warranted. Now I don't want to see the volume of transaction declining but that is another statistic and requires another blog...too funny.

Here's the article and the moral of this blog is don't focus on a tree to determine the overall health of the forest. Enjoy...time for more coffee.


Time for more coffee....TW

*************************************************************************************

Survey shows home prices fell 1 percent in 4th quarter


(Published: Wednesday, February 27, 2008
)
House prices fell about 1 percent in the Atlantic City metropolitan area in the fourth quarter of 2007, a federal survey said Tuesday, the area's first decline since the recession of the 1990s.

Home prices in Ocean City and the rest of Cape May County fell 3.4 percent in the fourth quarter, according to the Office of Federal Housing Enterprise Oversight's house price index.

Both declines were the largest since 1995. The survey tracks sales and refinancings of the same homes to prevent home size from influencing the results.

Franklin Williams, president of the Ocean City Board of Realtors, said he and others in the industry there hadn't seen significant price weakening.

"Actually, it's looking like the first quarter of this year is going to be above the last," said Williams, who is a broker/salesman with Prudential Fox & Roach Realtors in Ocean City. "January sales are showing an increase over January the previous year."

Williams said that in 2007, prices in Ocean City were unchanged, while sales volume was up nearly 12 percent.

A real estate professional who works in Philadelphia and has a house in Margate said the new figures are just starting to reflect significant price drops in the market.

Marc Wiser, vice president of Legend Properties, was shocked by Realtor figures earlier this month suggesting prices in Atlantic County were still going up.

"It makes no sense, when every single property that is within blocks of my Margate house has been lowered due to a lack of activity," Wiser said then.

The housing price decline reported in the federal survey makes more sense, but it too has further to go, he said.

"The house next door to mine was listed at $799,000. It's now $535,000. Around the corner a home was listed for $649,000. It's now $449,000. Both have been on the market well over two years, and I can go on and on," Wiser said.

Tom Wilhelm, with Century 21 O'Donnell of Ventnor, Brigantine and Egg Harbor Township, remained guardedly optimistic.

"The data suggest a pricing bottom forming in the Atlantic City and Ocean City Metropolitan Statistical Areas," Wilhelm said. "These relatively benign pricing decreases are on the heels of extraordinary five-year gains and I wouldn't draw any conclusions until the data trends are more substantial. Overall, area homeowners have fared very well in their property investments over a five-year period."

Nationwide, house prices gained a 10th of a percent in the fourth quarter, the federal report said. In New Jersey, prices fell a quarter of a percent, ranking it 41st out of the states in home price appreciation.

A companion survey by the Housing Enterprise office that only includes house purchases and not refinancings showed a grimmer trend: a nationwide price drop of 1.3 percent in the quarter.

The Standard & Poors/Case-Shiller Home Price Index, also released Wednesday, painted a bleaker picture still: a 5.4 percent plunge in home prices in the fourth quarter.

That index tracks typical single-family homes in 20 selected cities nationwide. It also includes houses bought with jumbo and subprime loans that aren't covered by the federal survey. (end of story)