The Standard & Poor’s/Case-Shiller home price index struck again this week — but this time the Oklahoma Association of Realtors struck back.
The index of 20 cities — but not Oklahoma City or Tulsa – fell by 15.3 percent in April compared with April 2007. It was the largest drop since the index was created in 2000 and it was the first time all 20 metro areas — but not Oklahoma City or Tulsa — posted annual declines.
The narrower S&P/Case-Shiller 10-city index — which does not include Oklahoma City or Tulsa — declined 16.3 percent in April, its biggest drop in two-plus decades.
Neither index is worth a pitcher of warm spit to anyone tracing home prices in Oklahoma. It’s irresponsible reporting for any news outlet to take the data, which is limited to 20 cities, or 10 cities, and then try to say anything about “the national housing market.”
The Oklahoma Association of Realtors finally had enough of these statistics, which are irrelevant to the situation in Oklahoma but which usually generate scary headlines that simply do not apply here.
The Realtors shot out a release immediately when the S&P/Case-Shiller twaddle hit the wires. It bears repeating in full:
OKLAHOMA CITY — National headlines are once again announcing huge decreases in housing prices according to the latest S&P/Case-Shiller 20-city Home Price Index but it is not reflective of the Oklahoma market.
Housing prices increased 4.3 percent in Oklahoma during the same time period that S&P states the national housing prices have decreased 15.3 percent.
“Our housing market continues to see slow and steady growth in home values,” stated Lisa Yates, CEO of the Oklahoma Association of Realtors. “Real estate is local and here in
Oklahoma we are not seeing the huge drops that have occurred in some of the markets elsewhere.”
The S&P report released this week reported that in the top 20 markets in the nation, housing prices fell when looking at April 2008 to May 2007 in comparison to April 2007 to May 2006. When looking at the same time period,
Oklahoma housing showed a continued increase in the average price of a home sold.Here are some reasons to ignore the S&P/Case-Shiller indexes if you’re trying to gauge the housing market in Oklahoma.1. The S&P/
Case-
Shiller index uses only purchase prices. A better gauge is the Office of Federal Housing Enterprise Oversight’s (OFHEO) main index, which also uses refinance appraisals, although it does also produce a purchase-only index.
It’s debatable, but I think including refis in the data is important. If overinflated appraisals influence the index, fine. The market is what it is.
Plus: Having an idea of home values is important as an indication of what kind of price my home might fetch if put on the market. All homes have values. Only homes recently sold have prices. They are not the same.
2. The OFHEO index uses only data from conforming, conventional mortgages provided by Fannie Mae and Freddie Mac. The S&P/Case-Shiller index uses data from county assessor and recorder offices.
This is debatable, too, but since everyday people, at least in Oklahoma, live in a conforming, conventional world in conforming conventional houses bought with conforming, conventional loans, what happens in the high-end “jumbo loan” world doesn’t concern me that much.
Of course, changes in the prices of upscale homes affect the market as a whole — but I think they have more effect on aggregate statistics and averages than they do in my — and most people’s — humbler neighborhoods.
3. The S&P/Case-Shiller indexes are value-weighted. Trends for higher-priced homes have more influence on the index than other homes. The OFHEO index weights trends equally for all homes. See paragraph above.
The S&P/Case-Shiller index is not without value. But the truth behind one cliché can be used to get at the truth of another, in finding the proper way for Oklahomans to regard it:
Use the axiom that “location, location, location” means everything in real estate to separate meaningful information from the “lies, damned lies and statistics” flooding the housing news.
Richard Mize, Real Estate Editor