Wednesday, September 26, 2007
How do we compare?
There is a new way to invest in real estate that depends upon an interesting new real estate index for its pricing. The so-called RPX Index is offered by brokers (see http://www.radarlogic.com/ for details on it and the company that markets the index). The company - Radar Logic, Inc. - tracks the cost per square foot for home sales in 25 major metropolitan areas and then, using secret formulas, it produces a composite index, which it calls the MSA Composite (the MSA standing for Metropolitan Statistical Area).
Brokers across the U.S. are currently being solicited to sell shares in this index, which will float up and down with the composite of the real estate markets in those areas. It’s sort of like the Index Funds on Wall Street, except it doesn’t appear that this index is tied in any way to actually investing in the underlying real estate – it’s just a number that floats up and down and upon which you can bet by investing in this pool. There are many strange “investments” that hedge funds and others in the exotic world of high finance have created and this is just one of them. You’ve got to love the creativity of these people.
Anyway, I found it fascinating and decided to relay to you some of the information from a recent posting on their site concerning real estate pricing in some of the areas that they track. The data is for sold properties from July public records data that they collect, so it is a bit old, but the relative cost comparisons of the MSA’s that they track is still valid. I sort of had a gut feel for some of the differences that are shown I the data, but I had no idea that some of the gaps between areas were so wide. Below are some examples (note that I have rounded these off to shorten the entries) – All numbers are $/Sq Ft
DETROIT - $107……..Atlanta - $104……….Boston - $245
Chicago - $189…………Charlotte - $101…….Cleveland - $96
Columbus, OH - $101….Denver - $152 ……Jacksonville - $126
Los Angeles - $393…….Las Vegas - $173..…Miami - $195
Minneapolis - $159…….Milwaukee - $123…New York - $305
Philadelphia - $158..…..Phoenix - $159……Sacramento - $212
Seattle - $235…….San Francisco - $450.....San Diego - $312
San Jose - $468…….….St. Louis - $96……...Tampa - $137
Washington, DC - $236
Admittedly these numbers may not include all of the outlying suburbs, since they didn’t really define how wide of an area they include in an MSA. Our local numbers for the same period are as follows:
MILFORD - $137….Highland - $126….Commerce - $136
White Lake - $113..W. Bloomfield - $129..Brighton - $124
Waterford - $108….Lyon/S. Lyon - $136...Wixom - $120
So, Milford fits in above the Ohio crowd (but, then we all knew that, didn't we) and about even with Jacksonville and Tampa, Florida (don’t you wish we had their winter-time weather). Statistics like these are fun to look at, but, they’re basically meaningless. If you want a daily fix on these numbers, go to the Radar Logic site every day. If you want to keep track of what's hapening in the local, Milford-area market, go to my Web site - http://www.themilfordteam.com/ - and click on the Real Estate Statistics choice in the left hand menu bar.