I am not trying to sell you a house, and I could really care less who buys, who sells, unless it’s my home and my home is not on the market. But I worry about the housing market and the national news about it that keeps dragging us down. This week, the stock market was lousy because of poor jobs and housing reports. Our local market is holding up in the storm, and I have told you about some amazing transactions this week. I’ve also said that I worry that Bob Shiller, one-half the duo of the Case-Shiller twenty city index report that we lap up like the froth on a latte, is creating a generation of home-ownership phobics. Well, now someone else (sorta) agrees with me.
The good folks at CNBC quoted Ajay Rajadhyaksha, the co-head of US fixed income strategy at Barclays Capital, in a research “note” on Friday as saying that housing is not as bad as we think it is. Why? Because we are weeding out the distressed properties. We are weeding them out and soon we will be able to have more accurate sales numbers, that is, home sales that are not a mishmash of regular sales and distressed properties. (All those distressed homes have been mixed in with regular sales, distorting data. Maybe we need to separate the data — here are distressed home sales, here are “normal” home sales.) Here’s what he says, God love him:
“For investors who look to the home price indices for clues to the macro-economy, we recommend focusing on the index of voluntary sales, since non-distressed borrowers will increasingly determine the true health of the housing market,” he wrote.
Of course, the fact remains that foreclosures drag down home prices for all of us. Something else about Case-Shiller, correct me if I am wrong: it does not include new home sales. New homes are selling in the likes of Plano and Frisco — not $2 to $6 million dollar palaces, but perfectly nice homes in the $150,000 to $600,000 range, says Plano broker Brad Holden. I was up at CEDA Realty today — cool story, stay tuned — and agents were dashing off to closings. Allen’s hot, I was told. Frisco did get spooked by the foreclosures and overheated market, but the inventory seems to have settled or is being absorbed. So I looked at the table of excess housing on Calculated Risk and it was very interesting: Texas has 1.4% more homes floating out there (excess inventory, I guess) compared to what we had in 2000. Compared to 1990, we have 0% more. The U.S. average is 2.2%; we are at about half of that.
I don’t know if we can make this assumption, but I think this means that whenever you hear the national news reports droning on about how bad the real estate market is, just take whatever numbers they are throwing out and divide by two — that’s Texas. Six months is an average sales of market time, and we are at seven months in Dallas, slightly more the further north you venture where we have, surprise, more new home developments.