Saturday, September 08, 2007

Yearly YOY for Marin, 2003-2006 Using DataQuick's "Revised" Data

I was thinking I should get back to data mining and so I was looking at DataQuick's data and could not help but notice that their "revised" data for Marin (and probably elsewhere too) is often very different from the monthly data they report. DataQuick seems to frequently err on the side of over-estimating appreciation rates in their monthly data and then revise them downward months later when they publish their revised data (to which they do not draw attention to the extent they do for their monthly data). I've known this for a while and it is one reason why I don't like to use their data so much anymore. Another reason why I don't use their data much, at least for this year, is the fact that DataQuick has changed the way they calculate the median sales price which has a significant effect for smaller counties like Marin; as a result year-over-year (YOY) comparisons using their data won't be valid until next year.

So I used the internet archive Wayback machine to go find all of DataQuick's revised yearly YOY data for Marin. Here is the result:

(Click on graph for larger view)

Unfortunately, it appears that DataQuick started doing the yearly YOY reports in 2003 so there is no prior data that I could find.

18 Comments:

Blogger Lisa said...

Oh my. A picture is worth a thousand words.

Anyone who bought recently has the pleasure of a big, fat mortgage with little financial gain to show for it. But I'm sure the FBs don't mind....after all, it is so special living here.

Sep 8, 2007, 3:21:00 PM  
Blogger Matthew said...

Marinite,

I'm sure the local RE machine would like the masses to believe that there is still a small YoY price appreciation going on in the market.. NOT !!!!!!! Yea.. right.. I don't think so and I don't think it's even that close..

I'd wager that over 70% of the people who purchased a home between the fall of 2005 and say this summer already regret their decision.. The last 30% will regret their decision by the spring of next year as the next wave of ARM resets hits and foreclosures continue to spike.

We've had at least a 10% price reductions already this past year alone and will see another 10-15% next year and so on and so fourth until there is balance back in the market and homes are priced per historic standards..

Sep 9, 2007, 7:59:00 AM  
Blogger Marinite said...

Heat Index at 0.37 today.

http://www.marinheatindex.com/

A new all-time low.

Remember, everyone wants to live here.

Sep 9, 2007, 4:35:00 PM  
Blogger realtornow! said...

"Heat Index at 0.37 today."

It's beautiful, isn't it. You should have a contest to predict the ultimate low: I'm in for 0.14 on October 28th, 2009.


I don't want to jinx this moment, but it looks like the tipping point has arrived.

Wh

Sep 9, 2007, 4:53:00 PM  
Blogger mountainwatcher said...

I think this new paradigm makes Marin RE much less attractive as a speculative investment.

I'm hopeful that this will help bring prices to a more rational level.

I just got an email from a realtor about a 1 bedroom cottage...... Price reduced to $849,000.....
from $939,000!

I'm thinking there are changes afoot.

Sep 10, 2007, 1:12:00 AM  
Blogger Lisa said...

"I think this new paradigm makes Marin RE much less attractive as a speculative investment."

And forget about buying something, renting it out and being cash flow positive. Not at these prices.

I've said this before on this blog, but once you take guaranteed 15% or 20% annual appreciation off the table, there's not much incentive to buy in at these prices.

I sold my house in 2004, and it's not even tempting to buy again anywhere yet.

Sep 10, 2007, 8:46:00 AM  
Blogger marinite2 said...

Anyone else see the sappy sob story in the Marin IJ about the blind old woman facing foreclosure?

http://www.marinij.com/ci_6849959

Sep 10, 2007, 9:58:00 AM  
Blogger marinite2 said...

I've said this before on this blog, but once you take guaranteed 15% or 20% annual appreciation off the table, there's not much incentive to buy in at these prices.

Very true IMO. Who in their right mind commits to $850,000 for a tiny 1 bedroom cottage in south Marin. That's insane and no amount of apologizing can change that fact.

Sep 10, 2007, 10:00:00 AM  
Blogger Lisa said...

Yes, I saw this IJ story...Good thing she's the only foreclosure here in Marin....we all know that everyone else is filthy rich and financially savvy and the envy of all their non-Marin friends.

Sep 10, 2007, 11:25:00 AM  
Blogger marin_explorer said...

Judging by that trend line, I'll guess that YoY for 2007 is in negative territory already.

"...sappy sob story"

That seems to be the IJ's modus operandi: push market psychology on the upside, and now it's time for FBs to feel sorry for themselves. When the wail of foreclosure echoes through Marin, will everyone have their excuses ready? I expect to hear the usual scapegoats for "bad investment" advice, etc. And, how exactly does one "unknowingly (wind) up with two mortgages"?! Look at me--"the victim"...this boggles the mind!

Ok, this is certainly a "sad story," tailored perhaps to make IJ readers feel ashamed to criticize homebuyer indiscretion? I've grown rather cynical of the IJ over the years; they always seem to have an ulterior motive.

Sep 10, 2007, 12:25:00 PM  
Blogger Jamie said...

That "blind old woman" is a real person, not some object for you to gloat over. Yes, foreclosures are way up. Yes prices are dropping in many areas. Yes, you've been predicting such for quite some time. But don't forget that there are human beings involved.

Sep 10, 2007, 12:31:00 PM  
Blogger marin_explorer said...

This comment has been removed by the author.

Sep 10, 2007, 1:13:00 PM  
Blogger Lisa said...

Marinite,

I do wonder why the IJ picked this particular foreclosure story, and this one alone. I agree, it's a very sad case when someone loses their home after 30 years. But to use this story as the only benchmark for what's happening with local foreclosures is missing the mark.

Maybe one of our incredibly wealthy, generous, financially savvy Marin residents will write her a check to cover what she needs to stay in her home.

Sep 10, 2007, 1:30:00 PM  
Blogger marinite2 said...

Judging by that trend line, I'll guess that YoY for 2007 is in negative territory already.

I bet is strongly positive because the change in the mix of houses (to the high side) that have been selling for the most part this year.

Sep 10, 2007, 1:31:00 PM  
Blogger mrlmv said...

Ahhh... crummy data from a source that is biased... imagine that...

When did a health dose of skepticism go out the window for most Americans? Are we that lazy that we don't realize that most every source of information has some axe to grind?

I am curious as to what the source of the overstatment is - is it consistent across market conditions? Is there a skew due to certain communities reporting late that might impact the data? Would be good to know.

Lisa - I smell sarcasm in your comment after all, it is so special living here.

If I remember correct, though, Marinite's data regarding historical income to data ratios v. national averages dating well back before the bubble (4-6x incomes v. 3-4x incomes for the rest of the country) would bear out that people do feel its special to live here.

That's not an argument for current prices... just that people are willing to pay more to live here than other places...

Sep 10, 2007, 1:52:00 PM  
Blogger mrlmv said...

Matthew - I think you wandered off into hyperbole land and its undermining the good points that you make.

I will take your wager - I will bet my entire net worth v. your monthly rent check that there is no way that more than 100% of buyers since fall of 2005 will regret their decision (more than 70% + the remaning 30% would equal 100%+) - leaving the concept of more than 100% aside, some have sold aready for instance, and some will never sell.

That check can be made out to..... ;-) Just kidding, I think you are right within certain segments of the market...

BTW, I still don't understand how you get your price data either - for instance upon what is the 10% price reduction based on? If its an opinion or estimate that should be reflected - as written it comes off as fact which might mislead someone.

BTW something you were writing the other day in response to our discussion on structural market change got me thinking (well that and the Countrywide layoffs)... What happens if part of the new market - the part that is reliant on origination for its survival disappears... then what.

I know I have argued that the doom scenario is overblown because securitization-based market, where investors and origination are separated, has resulted in a more efficient and liquid market for the distribution of capital - broadening the pool of capital chasing homes permanently by finding and pricing more risk than the old way of making mortgage loans used to do so (even if it screwed up and went overboard)... and that if you make a downside prediction based on old historical lending model where your local bank did both origination and investing in mortgage debt, that if you ignored that you will be wrong (at least when predicting the severity of the correction) because that systemic change doesn't go away because the nature of the lending market has changed - meaning part of the price run up is a one time event associated with the switch from the local bank to mega-lenders (orignators) and securitized loans sold to investors of all stripes, and not therefore part of the historical cycle.

Well, and this is the mindbender, is what happens if all of the originators fail because of a faulty business model that makes them reliant on fees from originating loans that are sold to investors. Worse, the operations of these firms are levered with bank debt to allow them to grow rapidly in a competitive market that has thin margins.

No selling of loans to investors means debt service for the debt underpinning those company's operations stops almost dead - equity is wiped out and operations are shut down... leaving consumers no place to go get loans - even when liquidity is restored by the investor side of the puzzle... this adds another dimension, or leg down, to the liquidity crunch.

This would be a MORE dire situation than one that was predicated on historical pricing trends of the old origination model because it would extend the period of no liquidity that the overall market has to face...

To make matters worse - the reason I said we can't go back to the old model wasn't completely related to the fact that its a better way to price and assign risk (for those that are good at it) - but also because most of the institutions that were lenders in the old model - local banks, small regionals, etc. are gone... gobbled up in the bank buying binge of late...

So I still say that using a historical pricing model is going to result in either wrong or a lucky prediction... just that now in addition to the argument that the new market might cushion any price contraction, I have a rational argument for why things might be even worse than what a historical look at the market might lead you to believe...

Sep 10, 2007, 2:27:00 PM  
Blogger Marinite said...

But don't forget that there are human beings involved.

Oh, please.

Sep 10, 2007, 8:26:00 PM  
Blogger Matthew said...

mrlmv,

Okay, I did a bit of exagerating on my prediction.. let me modify it so I can take your money..

70% of the home buyers between fall 2005 and summer of 2007 that did not purchase a distressed property or who are not indepedently wealthy or who did not put a large (> 50%) down payment already regret their decision.. The other 30% who do not fall in these categories will regret their decision by the summer/fall of next year..

Fully 95+% of the subprime and probably 85% of the ALT-A homebuyers who bought during this time who did not buy distressed properties probably already regret their decision..

Now, I'll take that bet because I know 4 families (of only 4 total) who bought in this timeframe who regret their decision (a lot)...

Sep 11, 2007, 4:39:00 PM  

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