The Central PA Multi-List (CPML) recently published year-end statistics for residential sales. As is often the case the statistics are somewhat contradictory. On the one hand there is good news: based on average sale price, housing appreciated 1.85% in 2010. The previous year it had depreciated 3.75%. On the other hand sales volume decreased about $132,000,000 (or 10%) and average days-on-market drifted steadily upwards to 102 days in the 4th quarter, the highest number since I started selling real estate in 1995.
From the 2nd quarter to the 3rd quarter the number of homes sold dropped 732 units. This represents a 30% change. Normally about the same number of units sell in the 2nd as the 3rd quarter. With a high degree of confidence we can attribute this abrupt slowdown to the end of the federal government’s homebuyer tax credit program on June 30th. This took away a big incentive for 1st-time buyers; much of the subsequent drop in housing sales occurred in the under-$200,000 market.
Based on the last half of the year about 485 homes are sold each month in the Harrisburg metro area. At year’s end there were 4,502 homes on the market, representing a 9-month supply of homes. A 6-month supply is generally considered a neutral market, i.e., not favoring buyers or sellers.
Already low at the start of 2010, mortgage rates trended lower throughout the year, bottoming out at 4.25% in November. Low rates help all homebuyers: arguably they provide a bigger incentive for high-end buyers than low-end buyers. This is borne out by the numbers. For the year the number of units sold above $300,000 increased 8.4%, while the number of units sold below $300,000 dropped 14%.
The 1.85% increase in the average sale price is somewhat illusory as all the other sales statistics suggest a weak, possibly declining, housing market. According to the Wall Street Journal (“Home Prices Sink Further,” January 31, 2011), citing market research by Zillow.com, declining markets are the norm in cities across the country. Home prices in Philadelphia reportedly fell 8.8% this past year.
In a declining market buyers and sellers often fail to come to terms. Homes just sit on the market or discouraged sellers pull them off the market. So rather than focus on average sale price in central PA, a better gauge is probably home inventory and days-on-market. When these numbers start to drop it likely signals a true change in market direction.
Bottom line: the Harrisburg housing market is still in the doldrums, where it has been since housing prices peaked in 2007.
Monday, January 31, 2011
Wednesday, January 5, 2011
Belated New Year's Welcome Plus Dire Warning
I recently acquired a smartphone. Apparently I am now among the roughly 28% of Americans who own such devices. These things are technologic wonders. However there’s a dark side. With the advent of smartphones and tablet PCs we now connect to the Internet any time & any place. At the same time these devices allow developers of web sites, games, apps, and anything else you connect to or download from the Internet, to track what you look at, purchase, and post online.
The Wall Street Journal published a series this past year, titled “What They Know,” that dissects the Internet tracking industry. Suffice it to say, there’s a technology war going on as tracking companies devise ever more sophisticated ways to gather personal information and sell it on the open market. If you’re an Internet user, there’s a good chance a tracking company has already created your virtual profile, to include age, gender, ethnicity, income, home ownership, politics, and parental status. The company may also have “scraped” and “mined” data that suggests your sexual preference, your smoking habits, whether you’re dieting, suffering from depression, or trying to get pregnant. From the GPS functionality on your smartphone it knows your physical location. In short, today’s tracking companies know more about you than your best friend.
What’s also clear is that all this information is anonymous in name only. Smartphones, for instance, transmit unique identifiers that tracking companies associate with your consumer profile. Online data can be combined with public offline data to effectively “de-anonymize” a profile. [Tracking companies generally insist that they either don’t do this or see no need to do this.]
It’s all driven by money. Businesses and search engines want to target ads to their most likely customers and they’re willing to pay top dollar for the information to do this. The more complete your online profile, the higher the selling price, so trackers are motivated to develop technology that is increasingly intrusive.
What’s more devious, and apparently common practice, is a business, say an insurance or credit card company, using online profiles to decide whether you’re the right kind of customer. Something “wrong” in your profile, maybe you never see the best credit card or life insurance offer. [This sounds suspiciously like "steering," a practice verboten in the real estate industry]
Jack Shafer, writing in online Slate magazine ("Want Web Privacy? Pay For It"), argues that we have entered into a devil’s bargain when we demand free Internet services and content: the cost of free Internet is loss of privacy. Given that I enjoy the (largely) free Pandora online radio, network via Facebook, use Google’s free Blogger blog hosting service, and employ Google or Bing to search the web every day, Shaffer suggests I better not get my knickers in a twist when ads targeting my particular demographic—white, male, 50-something, married, etc—magically show up on my web search pages.
OK, I’ll accept Shafer’s argument to a point; but many of the practices discussed in the Wall Street Journal articles would be called espionage in another context. What’s the solution? The first step is public awareness that these private Big Brothers are cataloging our daily lives. Then we need to draw a legal line between legitimate market research and spying.
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