This from the Northern Nevada Business Weekly: "Third-quarter home prices in the Reno-Sparks market were 4.12 percent higher
than a year earlier, the Office of Federal Housing Enterprise Oversight reported
today. The third quarter prices fell by 0.73 percent from their level in the
second quarter. In the past five years, the feds said prices in Reno and Sparks
have risen by 100.08 percent." So if you’ve owned your Reno-Sparks home for more than five years, you’ve essentially doubled your money. Not bad…
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Reno Ignoramus
Does not this statistic from the Northern Nevada Business Weekly, quoting the OFHEO report seem very strange?
Two weeks ago the front page headline of the RGJ was “Housing Prices Fall 13%.”
Anybody who follows this blog on a regular basis knows Diane’s reported sales statistics have shown declining prices all year.
So what’s up with the OFHEO report?
The OFHEO bases its report only on Fanny and Freddy loans. The current maximum amount for such loans is about $420,000. Therefore, it only captures data at the lower end of the market. It completely misses everything above the Fanny and Freddy limits. And, it only includes houses that have been sold once and then sold again. It completely misses houses that have only been sold once. So the report gives us some data on houses that have sold once, and then sold again, and that are below the Fanny and Freddie limits. In other words, it is a very limited survey of a very limited segment of the market.
But you can be sure that the Northern Nevada Business weekly will not tell you that.
Perry
This data is interesting. There was an article in the WSJ today regarding it.
Today brings a chance to measure the size of the swells when the Office of Federal Housing Enterprise Oversight releases its third-quarter report on home prices. Its index has been better behaved than other measures of home prices. While the National Association of Realtors’ gauge of median home prices was down more than 3% in October from a year earlier, Ofheo’s measure hasn’t started falling.
Ofheo uses data from mortgage originations to track price changes. Many economists like its accuracy because it tracks price movements on individual homes over time, based on mortgage refinancing and new home purchases. The Realtors’ price gauge is a median plucked from a large pool of prices based on home sales. It can be skewed by changes in the composition of that pool. When fewer people buy homes in expensive areas, for example, the median price is skewed lower.
It’s probably just a matter of time before this index starts falling, too. It lags behind the Realtor numbers by a couple of months and can be skewed higher if assessors inflate home values during mortgage refinancing. Economists surveyed by WSJ.com this month looked for Ofheo’s index to fall 0.5% in 2007 from 2006 — the first year-over-year decline in the index’s 31 years.
Food for thought.
Lindie
So did wages and household income go up by 100.08% in the last 5 years?
Did I miss that press release?