There are so many individuals and organizations commenting, opining, and prognosticating about the “housing crisis” it can be a real challenge to simply sort out the information – one doesn’t have to look far to find opinions that are radically different on any given day. 

It’s logical to ask us why throw another set of data and opinion - the Homeowners’ Market Fundamentals Index - into the fray?  Our answer has multiple components –

1)  As we have continued to interact with home owners and real estate investors over the past several years as the housing “crisis” has unfolded, we become increasingly concerned that ongoing discussions in the media and by analysts were not addressing the needs of everyday homeowners, or those sitting on the sidelines waiting for the “magic signal” to purchase or sell a home in a given market. 

There has and continues to be a great deal of data being published by various sources carefully detailing the changes in value of single family home units across the country – most often crafted into index values which consider housing valuation as if the entire nation (or large chunks of it) could be pushed into a single huge “macro-market”.  There’s also a great deal of discussion tracking the numbers of foreclosures in various markets. 

These “macro-view” studies of housing unquestionably have some meritorious qualities and uses, and will continue to be utilized, quoted, debated, and argued for the foreseeable future.  However - making decisions about the housing market in a given, specific community requires a very different approach in terms of useful data. 

2)  Our detailed studies of real estate market cycles and hundreds of real estate markets over the past lustrum or so has proven in our minds once again a simple but oft overlooked fact that savvy homeowners, responsible real estate investors, and truly knowledgeable real estate professionals (a genuine minority) have known for decades – there is not a “national real estate market”.  Every market has unique features that make it perform a bit differently (maybe a lot differently) than the next community down the road.

We firmly believe in the real estate market cycle, have seen it proven time and time again through history, and also firmly believe that different markets progress through the real estate market cycle at different rates and on different “schedules” – Market A is out of synch with the cycle of Market B and so on.

Finally, and critically – it’s specious to try and make decisions about the purchase or management of a real estate asset in a unique market based on national level data.  

3)  Given the above, and the real estate market database we have at hand, we’ve created our Homeowners’ Market Fundamentals Index.  Our premise is simple – the health and vitality of a housing market (a given community) is far from being solely related to the changes in single family housing unit pricing.  The health and vitality of a housing market is related to a number of important areas – including key demographics, employment and job growth, economic development efforts by the community leadership, as well as a number of critical single family and multifamily real estate metrics in addition to just considering single family housing unit price changes. 

4)  Our Homeowners’ Market Fundamentals Index is designed to consider all these variables noted above – pertinent demographics, community employment and job growth, economic development efforts, incentives, and successes, as well as a variety of other key metrics pertaining to real estate issues.  We’re putting the finishing touches up on our methodology pages for the website, and will have the methodology data up by the 3rd when we post our first index data. 

5)  The Homeowners’ Market Fundamentals Index is not necessarily designed to be “forward looking”; we are not compiling data to predict “the bottom” in the housing market.  We’re trying to look at markets as they function today in terms of key fundamentals influencing the market.  It really is all about the fundamentals; it isn’t all about housing valuation alone. 

6)  Just an aside on “the bottom” in the national housing market; we’ve shared our opinion on more than one occasion regarding the problems in looking at the housing in the country as an aggregate market – there’s simply too much variance market to market to make discussion of a national market sensible when trying to make decisions at the level of a unique real estate market.   It’s our estimation that the worst markets in the country will be years in recovering (three to five, perhaps longer); some markets are exhibiting concrete evidence of recovery today.  We agree that for many markets, things will get worse before they get better. 

7)  Critically – housing market recovery cannot be measured in terms of single family home valuation alone.  We continue to feel that affordability must be restored (read prices must continue to fall) in most markets before inventory constriction to balanced levels occurs; until that happens, particularly taking into consideration the impact of the constipated credit markets, single family housing’s woes will continue. 

In addition – healthy housing markets occur in healthy communities – communities that are growing, demographically diverse, with strong employment options and job growth, led by visionary leaders.  Our goal is to take a broader look at what drives a healthy community with our Homeowners’ Market Fundamentals Index data. 

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