I guess it is fair to say, as you read this blog, you will find I am a different thinker. I do not believe the market is well served at all times by the typical data and typical jargon talk.
Price per square foot is a point in time indicator of pricing. It does not, however, accurately describe the volatility of real estate pricing. In addition, no one ever seems to say what seems to happen to pricing per square foot over time compared to an index. Case-Shiller real estate indexes were developed in a specific way to track the pricing of real estate as an indexed value over time.
In short, the method does not just look at average price per square foot and index that value to a percentage of change, it looks at repeat sales of the same property over time. By accumulating a significant number of sales of the same home overtime, the measure of the actual price change of actual sales can be indexed to show how real estate values are changing. The same method can be applied to repeat sales of raw land. This then is an unbiased view of the change of DIRECTLY COMPARABLE properties - a property to itself.
The start year of the study is indexed to 100%, and its increases in value are shown as percentages. So if in 2000 a home sold for the first time, that sale is indexed at 100%. If in 2001 it sold at a price 120% higher, the index value for 2001 is 120%. When enough homes are in the sample, the average of the index values year by year computes the real estate index for that market.
Here on 30-A it is not super easy to duplicate that data. In some cases the more recent years are hard to find from the standard data sources.
To give you an idea of how things went from 2000 to 2013 in Seaside, I include this data. This is a reflection of the price index for Seaside from the start of the boom to the end of 2013 when the recovery finally started. This includes all sections of Seaside. It could be broken down by section or the index could start at another year changing the sample of homes.
This index was computed in a manner consistent with the Case-Shiller methods. It is more than interesting to look at it this way. In time you will see that I will post comparisons of area to area like Seaside to Rosemary to objectively state which market performs better. In addition, in those comparisons I will publish to the current date. Clearly Seaside has had a large increase in the index in 2014 and 2015. It is another study unto itself to find that value since the homes presently selling in Seaside cannot be traced back to an original first sale in 2000. Care to understand how this index is really computed and what it means? Do you want to know how it computes for other areas? Do you want to know objectively, not emotionally, how an area compares to other areas? You will be surprised if you dig in with your thinking cap on.
You know the S & P 500 index values and you know how that trades and changes over time. Why not expect to know the same thing about the real estate market into which you invest or in which you live? There are many that will try to create a sense of unnecessary urgency by describing a "Hot" market or a "Sellers" market. Me, I prefer to think of it as a market like any other. If you need to or want to transact business in that market, you should know it perfectly before you do so, and if you do not need to transact business in that market then you need to stay generally informed.
In my world, for those that want to be here in time and just cannot figure it out, this index compared to the city index for where you live will likely give you reasons to think about SELLING WHERE YOU ARE and Renting there while deploying faster growing equity along 30-A.
Get in Touch!
Price per square foot is a point in time indicator of pricing. It does not, however, accurately describe the volatility of real estate pricing. In addition, no one ever seems to say what seems to happen to pricing per square foot over time compared to an index. Case-Shiller real estate indexes were developed in a specific way to track the pricing of real estate as an indexed value over time.
In short, the method does not just look at average price per square foot and index that value to a percentage of change, it looks at repeat sales of the same property over time. By accumulating a significant number of sales of the same home overtime, the measure of the actual price change of actual sales can be indexed to show how real estate values are changing. The same method can be applied to repeat sales of raw land. This then is an unbiased view of the change of DIRECTLY COMPARABLE properties - a property to itself.
The start year of the study is indexed to 100%, and its increases in value are shown as percentages. So if in 2000 a home sold for the first time, that sale is indexed at 100%. If in 2001 it sold at a price 120% higher, the index value for 2001 is 120%. When enough homes are in the sample, the average of the index values year by year computes the real estate index for that market.
Here on 30-A it is not super easy to duplicate that data. In some cases the more recent years are hard to find from the standard data sources.
To give you an idea of how things went from 2000 to 2013 in Seaside, I include this data. This is a reflection of the price index for Seaside from the start of the boom to the end of 2013 when the recovery finally started. This includes all sections of Seaside. It could be broken down by section or the index could start at another year changing the sample of homes.
This index was computed in a manner consistent with the Case-Shiller methods. It is more than interesting to look at it this way. In time you will see that I will post comparisons of area to area like Seaside to Rosemary to objectively state which market performs better. In addition, in those comparisons I will publish to the current date. Clearly Seaside has had a large increase in the index in 2014 and 2015. It is another study unto itself to find that value since the homes presently selling in Seaside cannot be traced back to an original first sale in 2000. Care to understand how this index is really computed and what it means? Do you want to know how it computes for other areas? Do you want to know objectively, not emotionally, how an area compares to other areas? You will be surprised if you dig in with your thinking cap on.
You know the S & P 500 index values and you know how that trades and changes over time. Why not expect to know the same thing about the real estate market into which you invest or in which you live? There are many that will try to create a sense of unnecessary urgency by describing a "Hot" market or a "Sellers" market. Me, I prefer to think of it as a market like any other. If you need to or want to transact business in that market, you should know it perfectly before you do so, and if you do not need to transact business in that market then you need to stay generally informed.
In my world, for those that want to be here in time and just cannot figure it out, this index compared to the city index for where you live will likely give you reasons to think about SELLING WHERE YOU ARE and Renting there while deploying faster growing equity along 30-A.
Get in Touch!
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