COMMENTARY

What are current are actual current real estate market conditions?  It is difficult to determine the exact state of the overall real estate market and where it is going.  All of the available statistical data is historical and tells us where the market has been but there is little to assess the state of the market as of right now.  Of course there are pending sales but the only thing we can ascertain from pending sales is the number of sales and not sales prices.  The sales prices of pending sales are not made public until closing which, in effect, make them "historical" data.  At the moment we might know that the number of sales is increasing or decreasing but we cannot determine whether sales prices are increasing or decreasing, that is left to "historical" data.  The problem is, by the time we receive market data, it is already one to two months old and not truly relevant to today. 

The Standard & Poor's Case-Shiller Home Price Indices is one of the benchmark sources for statistical data regarding home sales and the condition of the market.  Although it may be the benchmark, is it truly accurate?  The Case-Shiller home index is released on the last Tuesday of every month and shows data from two months prior and beyond.  How does that apply to the current market?  I don't think it does but that is all we have to base our opinions on.  There are other reliable sources of market data such as the Federal Housing Finance Agency and others but they also rely on historical data.  What I am getting at is, unless you have the proverbial crystal ball or an omniscient intuitive sense, no one knows the actual state of the market.

When completing appraisals I research Realcomp Multiple Listing Service statistical data for the individual neighborhood and the entire community.  The data that I have been finding has, in most instances, been inconclusive.  Median sales prices, in many areas, have fluctuated significantly and do not point in any specific direction.  In other instances, in many areas, there are signs of stabilization or a downward direction.  My conclusions about the current state of the market are, and this is only an opinion which may or may not be correct, that the market has, at best, temporarily stabilized but show signs that it may be weakening and declining. 

I know it sounds a bit wishy-washy but what else can you ascertain from historical data?  My overall view of the real estate market is that it will take several years to recover.  Will we ever see prices rise to their peak levels?  Nobody knows.  Southeastern Michigan has lost several thousands of jobs during the past 5-6 years and thousands have relocated to other states.  New hires at the auto companies are being paid approximately 1/2 of what their predecessors were paid and workers in other jobs and professions have taken a pay cut and/or have had their wages frozen.  These facts tend to indicate that most people will never be able to afford peak home prices again or that many people will be priced out of the market completely. 

Be aware that you cannot depend on media reports or expert opinions about the market.  No matter how educated the experts are or how conclusive the data is, it is all based on historical data which has nothing to do with the present or the future.