December 6, 2006

Even fishier

(c) copyright View from Silicon Valley, 2006.  All rights reserved.



Tracking weekly housing statistics, you get used to being surprised on Saturday morning.  After several weeks of declines in the summer, Santa Clara County sales prices stabilized.

Given flat prices, an objective observer expects y-o-y percentage price increases to steadily decline.  However, published Santa Clara County y-o-y price gain figures have stabilized, or even improved slightly, over the last few weeks.  How is this mathematically possible?

The relevant 2005 snapshot is:

November 26, 2005:
Median Price        Nov.09'05 from'04
All homes           $660,000   17.9%
Total resale houses $713,000   18.8%
Total condominiums  $470,000   17.5%
Total new homes     $660,000    1.4%

Then the current week's data is:

December 02, 2006:
Median Price        Nov07'06  from'05
All homes           $675,000    2.7%
Total resale houses $732,000    3.1%
Total condominiums  $500,000    5.3%
Total new homes     $612,500   11.4%

Ignoring the 2-day difference, an accurate 2006 table would read:

December 02, 2006:
Median Price        Nov07'06  from'05
All homes           $675,000    2.2%  
Total resale houses $732,000    2.7%
Total condominiums  $500,000    6.4%
Total new homes     $612,500   -7.2%  

"All Homes," "Total Resale Homes" and "Total New Homes" are all wrong but in the "right" direction.  (i.e. they all claim higher figures than proven by DataQuick's own data.)  "Total New Homes" is massively wrong, published at +11.4% when DataQuick's own data shows -7.2%.

The "Total Condominiums" y-o-y price gain in Santa Clara County is actually under-reported.  Checking further, we find errors in  reported y-o-y condo price changes in San Mateo County (+0.9% reported vs. data showing +1.2%) and Santa Cruz County ( -7.1% reported vs. data showing -7.5%).

When the y-o-y condo number is positive, it's reported as less positive. When the y-o-y condo number is negative, it's reported as less negative. Could this be a coincidence?  Or an honest error?  Perhaps.

On the other hand, if you're thinking of buying or selling a single-family home, you might be re-assured to see condo prices are not inflating or deflating the market.

If there was a conspiracy to minimize the effect of condo sales on overall numbers, deflating y-o-y sales percentages is an obvious place to start.   (FYI, condo sales are 23% (Santa Clara County), 16% (San Mateo) and 18% (Santa Cruz) of last weeks' totals.)

Except for Santa Clara County "Total new homes," the changes are small.  How much impact can such mis-reporting really have?

Pressing on, the last couple weeks' data showed a narrowing the y-o-y decline in unit sales volume.

Admittedly, there are several possible exaplantions.  It could be:
1) a sign of impending local real estate strength,
2) the reversal of 27-month trend,
3) an additional layer of DQ and/or SJMN incompetence
4) another example of View from Silicon Valley making a mountain out of a mole hill or
5) another step in a data reporting conspiracy.

Y-o-y sales volume has been so negative for so long we readily admit it's possible the numbers are actually becoming less negative.  Unfortunately, as usual, we prefer to check the actual numbers and subject our readers accordingly:

Santa Clara County:          Oct.25   Nov'07   actual
Median Price        Volume  from'05  from'05  Nov7vs'05
All homes            1,905   -28.8%   -26.8%   -23.9%
Total resale houses  1,193   -27.4%   -25.9%   -25.2%
Total condominiums     442   -28.9%   -27.9%   -26.7%
Total new homes        270   -34.5%   -28.8%   -11.8%

San Mateo County             Oct.20   Nov.03   actual
Median Price        Volume  from'05  from'05  Nov7vs'05
All homes              558   -19.2%   -16.3%   -20.1%
Total resale houses    455   -17.1%   -15.4%   -18.9%
Total condominiums      91   -24.1%   -22.9%   -26.6%
Total new homes         12   -44.4%     9.1%    -7.7%

Santa Cruz County            Oct.20   Nov.07   actual
Median Price        Volume  from'05  from'05  Nov7vs'05
All homes              230   -43.4%   -15.8%   -15.8%
Total resale houses    173   -39.8%   -18.0%   -18.0%
Total condominiums      41   -41.5%    -4.7%    -4.7%
Total new homes         16   -61.5%   -15.8%   -15.8%

Make no mistake, y-o-y volume is still negative by double-digit percentages!

For reasons we cannot explain, Santa Clara County reported worse, San Mateo County reported better and Santa Cruz County reported the same as the actual results.

Alert readers may also notice 2005 DQ reports tended to publish 15- to 18-day-old data.  Even with sales volume down, 2006 DQ data is running 22 and even 31 days behind.  In a rising market, fresher data helps lead to higher prices.  In a falling market, older data helps hold up prices.  Is this apparent shift to older data just another coincidence?