Lies, Damn Lies, and Bend Real Estate Stats

On the previous Bend Bubble Blog, BEM & other commenters waited monthly for one of the only level-headed commentaries from the Realtor trenches, David Fosters RE commentary. Then there surfaced other sources of RE stats, from Doug Farmer on Realty Times. While Davids stats had a calming, monotonic ever rising quality that many times seemed impossible given anecdotal evidence to the contrary, Doug Farmer published stats that fluctuated wildly month-to-month, with prices rising & dropping in huge percentage terms every month.

For Nov 2006, David Foster quotes:
"in November it [Avg Sale Price] increased again from $406,241 [in Oct 2006] to $406,889 [Nov 2006]..."

While Doug Farmer states an avg Oct 2006 sale price of $469,592, dropping to $422,980 for November. What's the deal here?

While impossible to state categorically, it seems David Fosters data is smoothed significantly by looking at long-term averages, probably 12 months. There are good reasons for this: RE fluctuates wildly month-to-month, and is seasonal throughout the year. But using moving averages also makes trend spotting difficult. 11/12ths of the data points are unchanged each month. A dropping 12 month moving average only tells you one thing: That this months data point is lower than the data point of 13 months ago that dropped off.

I wanted to give people a more "instantaneous" view of the data points, and have published a spreadsheet. It's here:
http://spreadsheets.google.com/pub?key=pWE_FqZMoakiiXg-MDQMSeQ

Some explanation: The data is from Doug Farmer, and (hopefully) is raw MLS data, and that raw data is highlighted in yellow. Doug states these stats are all Bend residences & residential subtypes, whatever that means. Cumulative Value is a 3 month moving avg of Sold Prices X ("times") the number of active listings ("Actives"). "Total $ Sold" is simply the total dollar volume sold, and "Commissions" is just 6% of this. Then there is a 3-month moving avg of commissions, and the final column is the (Cumulative Value/3 mo. MA commissions). That last column is just a general indication of what Realtors are pulling out of the cumulative value of all residential listings. In Nov 2006, Realtors made $.15 for every $100 listed on MLS (per these possibly erroneous calculations). Think of a retailer, they want to turn their inventory as quickly as possible: Realtor inventory turn has fallen quite substantially just from this Summer (although this could be seasonal).

I've highlighted what I think is the most interesting stat, the total dollar volume sold from Nov of last year, till this year has almost dropped in half, as have commissions, obviously. This cannot bode well for Realtor and other RE-related professionals income. Per capita incomes have to be even worse, since Realtor numbers are swelling.

The True Bubble Peak seems to have been in June 2006, with $131 million in total sold volume at a nosebleed average of almost $500,000! July and August fell off dramatically, but were still historically strong. Sept - Nov were the 3 worst months of this sample, $ volume-wise, with very poor YoY comparisons (for Nov, at least). Realtors don't spend the Average Sale Price, they spend commissions, and commissions are down near 50% from last year, again with per-capita number almost certainly far lower. Realtors are in the throes of the Bend Bubble Bursting. It is only a matter of time when their plummeting incomes pertebate throughout the Central Oregon Economy. You'd be hard pressed to argue that reducing the total incomes of the most lucrative economic sector of our economy from $7 million/mo. to half that is "healthy". I would have some words for my Boss if he wanted to cut my pay in half, becasue he thought it would be "healthy" for me.