College of Charleston Home Value Index
UPDATE: Dr. Allen was kind enough to stop by and provide the raw data for the home value index. See the comments below. Thanks so much!
In yesterday's post regarding short sale hardship letters, comments got a little off topic but for the better. Arty said that "based on the CofC Home Value Index, Tri-County (Charleston) area real estate value went up 300% for the last 8 years". My comment was that I didn't think home values increased that much but it was hard to tell because the raw data was not included. Thomas then said that "it is a much better methodology than using median prices".
And I couldn't agree more.
Back in November 2006 when I first began writing the Charleston real estate blog, I wrote a post about median price vs. average price. It probably is the most viewed post I've written with over 3000 views and continues to get over a dozen hits a week according to my website statistics. In that post, written when the housing market was just starting to show some declines, I commented on how the media used statistics to tell a story. As an example, with these numbers, 10, 15, 20, 25, 1000, 2000, 5000, the median is 25 while the average is 1153.
And I've written extensively that the recent declines in the median price reflected the mix of housing sold, with many more sales at lower price points to first time homebuyers buying starter homes and those interested in buying distressed properties including foreclosures and short sales with less sales activity in the mid priced and luxury markets (please note, there are also distressed properties in these price ranges).
The College of Charleston Home Value Index.
Professor Tim Allen, Ph.D., Director of the Carter Real Estate Center at the College of Charleston's School of Business and Economics writes:
“When median home prices are compared across time, the insight gained about general home values in the region may be biased because houses with different characteristics are sold in the different time periods.”
Thus, the methodology used for the CofC Home Value Index is a "constant quality" hedonic price index. Click here to learn more.
What I'd like to see is the raw data in addition to the charts.
Arty said that the index increased 300% in the past 8 years and I argued that I couldn't tell just by looking at the chart and comparing the data point to the left axis. To me, it appeared to have just about doubled or about a 100% gain. So in addition to the charts presented, I would like to see the raw data for the index or something like in this example just below:
If this data was published for the above example, if the CofC Home Value Index stood at 100.00 in 2000 and prices increased at 10% every year through 2006, was flat during 2007 and declined by 10% in 2008 and by 5% in 2009, we would know that home values today were now 51.47% higher than in 2000.
Saving the best for last.
Here is the College of Charleston Home Value Index for the Charleston area. Click here for more details. I'll try and see if I can get the actual index numbers from Dr. Allen.
