Housing ‘Crisis’ a ‘Case’ of Exaggeration?
A recent study by three leading professors from Columbia and Wichita State universities has concluded that the housing crisis has been greatly overblown.
Charles W. Calomiris, a Henry Kaufman professor of financial institutions at Columbia University and a visiting research fellow at the American Enterprise Institute, Stanley D. Longhofer a director at the Center for Real Estate at Wichita State University’s business school in conjunction with William Miles an associate professor of economics and Barton fellow at Wichita State recently stated in a Washington Post article that projected losses in the housing market have been excessively inflated. The Professors also suggested that home owners across the country have NOT seen significant declines in home values and will NOT likely see significant losses in their home values.
“The Foreclosure House Price Nexus” compared data from the Office of Federal Housing Enterprise Oversight and The Case-Shiller Index. The study found the Case-Shiller Index to be a “poor measure of what is happening to the value of most homes.” Case-Shiller contains no data from 13 states, and offers only partial coverage of 29 others. It’s also very sensitive to high-priced homes in more expensive markets.
In comparison, the experts concluded the OFHEO index provided more balanced coverage of large and small markets and each home was weighted equally. Even in an extreme worst-case scenario of foreclosures, US house prices will not fall very much over the next two-year-period and the average accumulated decline would be around 5% the model forecasted.
In Florida the median sales price for existing homes in July was $193,600; a year ago, it was $238,900 for a 19 percent decrease. But, looking back to July 2003, the statewide median sales price for single-family homes has increased 18 percent over the five-year-period, according to FAR records – at that time, the statewide existing-home median price was $164,000. Thus making an investment into real estate safer than into the stock market.
For the second month in a row, several of Florida’s metropolitan statistical areas (MSAs) reported increased sales of both existing single-family homes and existing condos in August 2008, according to the latest housing statistics released by the Florida Association of Realtors® (FAR).
A total of 10,847 existing homes sold statewide last month while 11,282 homes sold in August 2007, a decrease of 4 percent in the year-to-year comparison, according to FAR.
More articles dealing with the Southeast Florida Real Estate market can be found at http://www.sunnyislesbeachbroker.com/blogs/katerina_brosda/default.aspx
Katerina Brosda, President & CEO of Brosda & Bentley Realtors can be reached at (786) 406-1757