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Doug Holmes' Blog

Charleston Stats Man

By Doug Holmes - (843) 475-1722 | Agent in Charleston, SC

Same home sales

I have just completed some incredible research on the sale of homes this year that also changed hands back in the 2005-2008 time period.  Generally, our stats always compare sales of this year with those of last year.  While that is fine, they are not the same homes.  The research that I did shows how much value we have all lost since the peak of the market in 2006.  We are now selling homes that also sold back in the frothy period of 2005-2008.  It was shocking to look in the tax records and see what they had sold for back then compared to what they are selling for now.  Of the 617 single family homes sold in April of 2011, 485 of those were built prior to 2009 and thus had a chance of selling back in that 2005-2008 period.  Of those 485, about 215 of those changed hands back in 2005-2008.  The average home sold for 30% less this year than it did in the 2005-2008 time period.  I think that I'm the first person to ever look at sales of the exact same homes over a period of years.

Comments

By David P. Traywick,  Sat Jul 2 2011, 18:20
That's good stuff, but I don't think the actual data is particularly useful. The year over year convention is used because you can tease out all other numbers easily therefrom: For example, suppose you have 3 consecutive drops of 10% according to the year over year convention. Your beginning to end real percentage decrease is determined by: decrease = (((.9)*(.9)*(.9)) - 1) * 100 = 27.1%. The real decrease, therefore, is not determined by simply adding the consecutive decreases, but, rather, by multiplying the previous yearly decrease by the subsequent yearly decrease.

It is important to express the proper decimal. If a yearly drop is 7%, your first factor is .93. If your second year over year decrease is 11%, your second factor is .89. If your third year over year decrease is 8%, your third factor is .92: Resulting in the following: (((.93)(.89)(.92))-1)*100) = 23.85% year 1 to year 3 real percentage decrease.

So why bother actually figuring out from year 5 to year 1 drops when that information is baked into the year over year statistics already.
By Doug Holmes - (843) 475-1722,  Sun Jul 3 2011, 09:59
While year over year stats are important, they actually show more what buyers are focusing on rather than what is actually happening to the value of all of our homes. Just b/c sale prices one year are 5% lower than the previous year does not necessarily mean that we have all lost 5% value in our homes. It just means that the homes the buyers purchased this year were 5% less in value than the homes that buyers purchased last year. That is why my analysis of the same home sales is so important. It truely shows how much each home lost over that time period and gives us a good indication about how much value we all lost.

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