Timely, local real estate data trumps national reports

Perspective: A call for more useful real estate statistics

By David Charron, Tuesday, June 14, 2011.

Inman News™

Broad housing market reports are a dime a dozen these days, and if you ask me, that's a good approximation of their worth. Markets are sliced and diced and compared across the board, drawing multiple -- and often conflicting -- conclusions with shaky, obsolete data. The market's up, or maybe it's down. It's good, it's bad, and it's confusing.

For most people, even with access to all this information the results are more inconsistent than ever, often dated and out of context. But they don't have to be.

Timely and accurate information, provided on a local level with a real-world perspective, is the real estate market's most important commodity -- and the ability of the public, government, financial institutions, investors and real estate professionals to make informed decisions on local housing markets is the cornerstone of an eventual housing recovery.

Isn't it time we stop trying to drive by, looking in the rear-view mirror, and insist on seeing just the facts, clearly, as they unfold?

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Considering the critical role that real estate statistics play in just about every housing-related decision, it is time for our industry to rally around better data. We owe it to ourselves, our clients and our profession to insist on timeliness and clarity while delving into the motivations and methodologies of every metric we disseminate.

The most recent Case-Shiller Home Price Index of May 31 is a perfect example: It noted, of all the U.S. markets it tracks, the Washington, D.C., metro area as the only market to experience an increase in housing prices for the first quarter of 2011.

While this index may be useful for Wall Street, it hardly constitutes breaking news. Improving market conditions were reported three weeks earlier in an index produced by an MRIS subsidiary.

Metric discrepancies are about more than selling products or securing a reputation in the marketplace -- they go to the heart of how we think about information. The one real estate mantra that has remained unequivocally true through some of the most tumultuous years in the history of our profession is that all real estate is local.

By focusing on broad market-to-market comparisons instead of individual markets, we undercut our value as real estate professionals. Instead of chasing fleeting affirmations that change day in and day out, we should ensure that real estate professionals know how to read and apply local data.

Let's focus more on whether single-family homes or condos are more prevalent in a single area, the variance of seasonal market shifts, or the changes in sales activity that often precede major trends.

Let's talk about the facts as they stand today and refrain from basing decisions on reports that are already five to seven months behind the market when they hit newsstands.

We're never going to move forward as a profession by basing decisions on old data, and we'll never overcome paralysis if we compare our local markets to every other market in the country without considering the context of local driving forces.

Most people won't buy stocks today based solely on six-month-old research, nor will they decide what to wear today based on the average temperature in New York. Why don't the same principles apply to real estate?

David Charron is president and CEO of MRIS, the largest multiple listing service in the nation. MRIS facilitates more than $100 million a day in real estate transactions in the mid-Atlantic region.

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The data David is referring to is exactly what RAPB offers our members. We have monthly statistics on sales/listings/foreclosures and other information, broken down by city. RAPB publishes this information monthly and you can find an archive of this data on our website at www.rapb.com.

Jones Lang LaSalle’s latest study found global commercial real estate investment has more than doubled since the dark days of 2009, which makes for a nice headline.

But the real story was the disparity in investment activity from region to region. Asia, for example, saw investment volumes drop by 34 percent from the first quarter of 2010, despite increases in Hong Kong and Taiwan.

In the Americas, investments are up more than 400 percent from the second quarter of 2009, but that simply reflects the woeful state of the business a year ago. While demand in the U.S. remained steady from the first part of the year, Brazil and Canada posted substantial gains since the first quarter, far outpacing the U.S.

“Investor demand also continues to be strong for core assets in the United States, but the lack of product supply continues to hinder direct investment volumes,” the report concludes.

But more product is entering the U.S. market, which should push 2010 investment volumes up 80 percent over 2010, according to Jones Lang LaSalle’s Steve Collins, head of JLL’s international capital group in the Americas.

Meanwhile, in Europe, the Middle Eats and Africa (EMEA), saw a “modest” 15 percent increase in investments, even though the numbers were up 80 percent from a year ago. London and the U.K led the way, accounting for 40 percent of the volume.

Overall, the global investment numbers are “still less than half the pre-credit crisis levels of 2006 and 2007,” the report notes.

“But we must take into account the fact that those were heady years for commercial real estate investment, with unprecedented record trading volumes,” said Arthur de Haast, head of the international capital group.