BE WARY OF DRAWING INACCURATE CONCLUSIONS

An article in the May 26 Seattle Post Intelligencer heralded that Seattle home prices had declined to what they were in 2005 citing the S&P/Case-Shiller Home Price Indices.

This index surveys metropolitan areas of 20 cities across the U.S. As a result the analysis is in very broad stokes using very broad analysis.

Another article in the P.I. On May 27 compared the S&P index results with the Federal Housing Finance Agency figures which showed a discrepancy in price declines.

Well of COURSE there will be discrepancies, the index are calculated based on different geographic criteria.

Broad analysis and trends painted with too big a brush in this market, do not paint an accurate picture. Micro-markets are proving to very very wide apart in trends which average to figures that are not representative of either area. In just analyzing the median home prices for the areas of Seattle, Sammamish and Woodinville, you are faced with these figures:

Seattle: $480K in August 2008 declined $50K to $430K in February 2009 and now stabilizing in the $435-440K range for the past several weeks.

Sammamish was at $740K in December 2008, declined $81K to $659K and appears to be stabilizing in that range.

Woodinville shows $670K in November 2008 down $70K to $600K in mid February 2009 and recovering somewhat to $640K

As you can see, there is a steady decline in one area, a slight rebound from the low in the Seattle market and a more significant rebound in the Woodinville market.

This is typical for many areas where some neighborhoods such as Vallejo or Tracy in The San Francisco Bay Area has been hard hit on pricing and sales are now active, bundled in with San Francisco where declines were not as great and there has been more stability in sales volume. Yet the indexes have them bundled together canceling out the true picture of situation in both markets.

Take any conclusions drawn from these indexes with several grains of salt. They are gross averages and will not accurately reflect the market conditions on any specific community.