I seriously question the Tacoma News Tribune for its misleading front page headline yesterday: “Local Home Values Plummet” or if you read the online version, “Pierce County Home Values Plummet“.
When I saw this headline, without reading I knew it was false, based on what I see happening in the real world. I consulted the most recent MLS figures (May 2012) for the average price of a pending sale in Pierce county and guess what? It’s up 2.7% year-over-year. The average closed sale is roughly unchanged. So what the heck is our local paper talking about?
The article does go on to explain that the “values” they are referring to are in fact Pierce County assessments. Why did the headline omit that relevant fact? Here is a new headline for you: “ASSESSED VALUE DOES NOT EQUAL MARKET VALUE”. The assessor doesn’t have X-ray vision to see through your roof at how nicely you have maintained the home, or that you just replaced carpet, paint and bought all new top-of-the line appliances. They operate on limited information. More importantly, recent assessments are adjusted in part based on last year’s sales activity. So this breaking news that merits a breathless front page headline is based on 6-18 month old information? In fairness, the article does mention this if you bother to read the whole thing, and a fellow broker quoted in the text correctly points out that things have gotten better since then. But I had a number of people approach me yesterday and today to lament how awful it is that things are still sliding. They remember the headline.
Well, things aren’t sliding. This past month we have sold a few homes within 24 hours of listing, some with multiple offers and even escalation clauses. The reality is that correctly priced homes are selling fast and values stopped plummeting half a year ago, at least for the time being. The main hurdle we are facing is that the appraisers, like the TNT, are looking at the past. Appraisers must look 90 days back, or in some cases as far as 6 months. So we are seeing appraisals falling short of market established values. It’s like driving by looking in the rear view mirror. I understand appraisers must do this. I’m not sure I understand the TNT’s motive. Perhaps the word “Plummet” stirs emotions more than “prices have stabilized”.