The dumbest report that I've seen...

Another agent in our local office shared with me a report that he found on-line somehow and it turned out to be the dumbest report on real estate that I’ve seen in a while. It’s called the Braun Report of Real Estate Sales for Oakland County. Apparently it is prepared by someone who belongs to the North Oakland County Association of Realtors®.

The report purports to show several things, the main one being what percentage of recent real estate sales are “distressed sales”. It also tracks the number of listings at the start of the following month and then calculates an Absorption Rate – the amount of time that it would take to sell off the beginning inventory at the rate at which things were selling last month.

As I looked at the report it was immediately obvious that something was very wrong with it. It showed almost every market as being between 90-something and 100% distressed sales. Milford, for instance was shown as 94% distressed sales and several townships – Beverly Hills, Bloomfield Hills, Clawson, Orchard Lake/Keego Harbor, Madison Heights, Southfield, Holly and others were all shown as 100% distressed sales. I thought that can’t be right and I was right. An explanation, or key, at the bottom of the page in a very tiny font said that the creator of this so-called real estate report has decided that any sale that is made for less than the 2008 published SEV value of the house is a “distressed sale.”

Well, DUH! Were has this guy been lately? Nearly every house in Oakland County now has a market value that is below its 2008 SEV level. I’ve opined here before about the political pressure on assessors to keep “assessed values” high. They are using excuses like “we assess at replacement value”, or any other reason that they can think of to keep the assessed values from dropping to reflect the current market prices. Even with that foot dragging on the assessors parts, values are coming down towards the real market prices. So, Braun, whoever he/she is decides to report that almost every sale is a distressed sale, because someone gets less than 2 times the SEV number. Phooey!

I report sales in the little five township area that I track on a weekly basis at my Move to Milford Web site. As I have shown, true distressed sales – those in which a Sheriff’s Sales has taken place or which are Short Sales – make up about ½ of all sales. Lately it has actually dropped below half. The only houses selling for 2 times their SEV values, or above, are a few lakefront homes and they almost always sell for more than SEV. I have consistently tracked and reported that homes are selling in this area for about 1.6 to 1.7 times the SEV. Truly “distressed” homes are actually selling for less than the SEV number (which is supposedly ½ of the value). Those are generally foreclosed homes that have fallen into disrepair and need lots of work.

So if you happen upon the Braun Report of Real Estate Sales in Oakland County, take it with a chuckle and a large grain of salt. It is meaningless for the most part. The absorption rate statistic has some value, although it might make more sense to express it as the number of months that it would take to sell a house, much as the Quarterly Market Reports do that I post on my Web sites. For a fairly comprehensive set of charts and statistics about my little piece of the market, go to either The Milford Team Web site or the Move To Milford site. You can get to them also from the MI Home Buyer site that focuses upon first-time buyers. I keep the current month's sales updated weekly and you can go back and look at over a year's worth of reports to confirm my findings on sales prices vs. SEV numbers.