Dennis Norman Musings

By: Dennis Norman

Just in case you haven’t heard enough about real values median prices and the like I have another housing report to talk about.  Yesterday Radar Logic published it’s report on October home prices for 25 metropolitan areas.  Radar Logic has only been publishing this housing report since 2000 so they are a fairly newcomer compared with the Case-Shiller Report or the National Association of REALTORS(R) reports that I discussed in my last post about home prices last week.

What’s interesting about the Radar Logic Housing Report, and I think that at first blush may make it more representative of the market then the other reports I mentioned, is that the Radar Logic Housing Report is based upon the price per foot that homes sell for in the 25 metropolitan markets they report on.   This would tend to lead to a more “apples to apples” comparison in my opinion as just looking at sale prices and not home size could end up skewing the data in areas where the size and/or type of housing stock changed over time.  For example, in Clayton, Missouri, an affluent area in St. Louis County, Missouri, over the past few years there has been an extensive amount of “tear downs” to make way for new homes.  In most cases the new homes are many times larger than the homes that were razed and sell for 3 to 5 times as much.  During this transition period this would result in the the appearance of a significant increase in median prices for the area since the new homes are so much larger then the old homes.  In using the sale price per foot in this example you end up with a more accurate picture of the market I believe.  It is still skewed however as you are looking at a home that was sold simply for lot value versus a brand new home however in the several examples I reviewed the square footage approach was much more reflective of the market.  Of course, the larger the market area surveyed the less of an impact this has since in a lot of ways things balance out, however I still think it is worthy of noting. 

According to the Radar Logic Housing Report Milwaukee fared the best in the past year with a 5% increase in property value, the only metro they cover that showed a gain.  San Francisco came in last with values dropping by 1/3 in the past year.  See the chart below for all the metros. 

Source: Radarlogic.Com