Why this is in the news again is beyond me, but apparently CNN/Money is really keen on some dude that uses a secret formula to determine which housing markets are overpriced. We talked about this same guy's babblings just three short months ago, and very little has changed since then.
After years of local home markets getting more and more overvalued, the trend has reversed, according to an analyis (sic) published this week.As I pointed out last time, this dude's "analysis" of the "Seattle/Tacoma" region covers so broad an area as to be completely and utterly useless. June median home prices (residential & condo) across the area in question were as "low" as $275,250 in Pierce County, and as high as $415,000 in Seattle. To take such a broad range of data and make a determination that it is all a "FairValue" is ludicrous.
Each quarter, Local Market Monitor, which provides research to the real estate industry, assesses 100 markets, comparing selling prices to "equilibrium" values. Company president Ingo Winzer bases those values on local economic and population growth, construction costs, vacancy rates, household income in the area and interest rates.
Winzer says that 56 of the 100 markets he covers are now fairly priced, up from 54 last quarter.
Furthermore, I'm calling BS on the numbers given in the report. Take a look at the first quarter report. The home price listed for Seattle-Tacoma is $311,000. Now notice that in the second quarter report, that number went down, to $308,700. Excuse me? Last I checked, median prices were still going up in King, Pierce, and Snohomish counties. This report has zero credibility. I wish I could say that I'm shocked (or even a little surprised) that it was unquestioningly parroted by CNN.
(Les Christie, CNN Money, 07.25.2006)