I recently read an article about the overall condition of the market, and the fact that most National Association of Realtor statistics lean hard on the detached housing market for overall trend analyisis. However, many experts agree that the townhome market is a better indicator of where the consumers opinion is. (After all, the consumer really makes up the true value of home sales by there negotiations and acceptance of those terms in a home buy). The National Association of Realtors (NAR) tracks sales of both single-family homes and condos. In the third quarter of 2005, NAR stats for single-family homes show that prices fell 1.2 percent from a year earlier, with 30 percent of markets showing declines. Condo prices not only dropped more steeply, 2.1 percent, but 46 percent of markets showed declines. Which gives a truer picture? Adam Koval, a former investment banker who now runs SocketSite.com, which covers San Francisco's real estate market, insists condos are the way to go. "Look at the same building six or eight months after the first sales were made," he says. "The prices then will be a pretty good indicator of what's going on." The reason: It's an apples-to-apples comparison. With condos, there's, "no adding floor space or big improvements," says Koval. If you see a price change, it's usually pure appreciation - or depreciation. Contrast that with single-family house stats. NAR prices, for example, do not account for the differences - especially the improvements - in homes. New houses, for example, have grown much larger, to an average of about 2,400 square feet from 1,500 in 1970. To be more accurate, you'd have to see what the same houses sell for at different times. An index constructed by the Office of Federal Housing Enterprise Oversight (OFHEO) index does compare same-home sales, but it doesn't account for investment in that home, say a big remodeling project. Other shortcomings: The OFHEO data doesn't do a good job capturing luxury home sales, because they track only transactions with conforming mortgage loans, which are limited to $417,000 for most of the nation. And it does capture values listed in refinancings, which are based only on appraisals. If you would like more info on this trend let me know and I can pull up some more info, but I found this to be very useful in my market analysis and in watching price trends.
