The report follows the Case-Shiller report, which said Tuesday that house sale price declines in the Twin Cities during June were among the worst in the nation, but prices had risen month-to-month for three months in a row. The Case provides a local and national assessment of the market based on a large data set and always gets a lot of attention, but the methodology has also been debated.
Scott Sambucci, the chief operating officer of Altos Research, said that because there's a significant lag between when the sales happened and when the data is gathered and reported, the Case-Shiller data isn't the completely up-to-date. Case tracks sale prices on repeat sales to determine changes in pricing, but only includes single-family houses; townhoues and condos are excluded. Prices each month are based on a rolling three-month average.
To get a more accurate look at the market Altos tracks home list prices, the rationale being that if sellers see values rising, they're more likely to feel emboldened to increase their list price. In July, for example, Sabucci said that home list prices in the Twin Cities metro increased every month from April through June. In fact, the Twin Cities ranked among the top five of the 20 areas studied. That showing, Sambucci, said is why he predicted that the Case-Shiller reports in the coming months would show a month-to-month increase in sale prices. Or at least some signs of stabilization. And that's exactly what's happened.
Herb Tousley, director of the housing program at the University of St. Thomas, offers another perspective. He says that using sale pairs that can include a short sale or foreclosure as one of the transactions isn't an accurate reflection of what's happening in the market because the motivation of the seller in both sales isn't the same and doesn't produce an accurate look at the market. That's why he's now producing a monthly index that factors in several metrics, including actual home sales as well as days on market. His index still shows weakness, but without the severity of the Case report.
Another confounding question in the Case report: How can the Twin Cities consistently have the deepest declines in sale prices on an annual basis while prices have been increasing on a month-to-month basis at a rate that's among the highest in the nation? The region's foreclosure rate isn't to blame, it's consistently below the national average in the Twin Cities area. One theory is that prices in the area peaked well ahead of the nation, accelerating the rate at which foreclosures have hit the market in the Twin Cities and causing a higher ratio of foreclosure sales, which in turn has put more downward pressure on prices ahead of comparable metro areas across the country.