If you’re a smart buyer, you are using the recent Case-Shiller report to gain leverage in negotiating with a home seller. And, if you’re an educated seller – you’re disputing that data to defend your asking price. Or better yet, your agent should be doing it for you.

The Case-Shiller Index came out and reflected the worst report for housing in 3 years. Out of the 20 markets they track only 2 showed improvements. Those were Seattle (rising 0.1%) and Washington DC (rising 1.1%).

Home Buyers

It’s pretty straight forward for you. If you are searching for a home in Alpharetta , Milton or the surrounding area; or you are in the process of negotiating or plan to be soon; there is nothing like a juicy piece of bad housing news that will help you hammer a seller into more concessions.

Like sharks are drawn to blood in the water, the news media loves to latch on a doom-and-gloom story and work it to death. It’s a sure way to keep confidence down in the market and, ultimately, it is a buyer’s best friend. Unless the home owner or their listing agent is educated.

Home Sellers

The biggest mistake we can make has home sellers, listing agents included, is listen to the news story and simply react. What we must do is analyze the information. What does it all mean? There are several "problems" with the Case-Shiller Report.

First, they only use homes that are repeat sales, in order to measure change in home price. It doesn’t capture new construction, condos, townhomes or multi-family. This may not be a big factor to us here in Alpharetta and Milton, but in NY City or Chicago it’s a big deal. But, the report comes out as the verdict for the entire country.

Which takes me to my second point. The data set is pretty small. They use 20 markets across the country. But these aren’t the top 20 markets. Why is Tampa included when it’s #55 but Houston, Philadelphia, San Antonio and San Jose not included. They are #’s 4, 5, 7 & 10 respectively.
Remember, if someone tells you the country is going to average 75 deg. tomorrow you probably won’t care if you live in Phoenix, or here for that matter. National averages are not important to local market values. Even the average sales price in Atlanta is meaningless if you’re buying a home in John’s Creek.

And the final reason this report is flawed is the delay in reporting. This recent report covers data through March, which is 60+ days old. How many homes have sold in your community in the past 60 days? Those are what you should be looking at to determine how much downward pressure there may be on sales prices in your community.

The Bottom Line

While the Case-Shiller Index is important to the media, politicians and economists; it’s far less meaningful to you and me. But, not every seller and listing agent is educated. Buyers – work it for what you can. Just don’t believe that Case-Shiller is the tool you should use for home values in your area.

{chart courtesy of calculatedriskblog.com }