Weiss Analytics is creating lots of buzz around the value of micro-market analysis.
It does have a place in the industry — and in reviewing the most recent Weiss Analytics report on home prices, I don’t mean to be impolite. Lots of hard-working people in the private sector and government grapple with home prices, trying to provide accurate and entertaining pictures of what’s taking place.
But the problem is big. The Fed estimated as of mid-summer 2015 that the aggregate value of American homes had risen from $24.1 trillion in late winter to $24.6 trillion. That’s a lot of money and a lot of houses.
The public doesn’t care about the aggregate, though — civilians and Realtors care about that house. My house, or the one I’d like to buy, or the town I’d like to buy in. If I want to buy on Cape Cod, events in Boston might as well be on Mars.
Weiss Analytics is on a more useful track by trying to localize data. Even more helpful, Weiss avoids the hubris of Zillow, which pretends to know the value of individual homes, and instead estimates local-market “lean” toward buy-side or sell-side.
However, the mass of numbers and percentages is a factoid that gives the appearance of micro-accurate analysis — but it’s not particularly useful to individuals making decisions or the fate of any individual home.
[Tweet “If I want to buy on Cape Cod, events in Boston might as well be on Mars.”]
You can drive into any town in America to a supermarket and ask five people walking in or out, “How is your housing market?” You’ll get an accurate view of its activity without fooling around with numbers.
I am biased, of course. I was first licensed as a real estate broker in 1978 (escaped to finance in 1983), and have enormous respect for brokers and appraisers.
Missing from these hyper-analyses: the micro-market — as in, how many similar houses sold in the last year, and how many are on the market now?
Technologists try to jam heterogeneous data into common buckets, but no two houses are the same, and to evaluate the monetary value of the differences between each home requires years of apprenticeship.
There are great deals in bad markets and bad deals in great markets.
Use reports like Weiss as you will, but they might be more an entertaining promotion of the analyst than useful in your part of town.
Lou Barnes is a mortgage broker based in Boulder, Colorado. He can be reached at lbarnes@pmglending.com.
