Dallas home prices drop in one survey, rise in another

The latest research on Dallas-area home prices will cause a lot of head scratching.

One report released Tuesday says local home prices were down at the end of the year, while a second benchmark national survey found they were still rising.

"Which one do you believe?" asked Texas A&M University economist James Gaines. "We researchers are confused, too."

According to the monthly S&P/Case-Shiller home price index, Dallas-area home prices fell 2.4 percent in December from a year earlier – the biggest drop yet in this closely watched housing study.

The Dallas numbers were still much better than the almost 9 percent nationwide decline in Case-Shiller's report.

But another respected home-price survey came up with the exact opposite conclusion about the Dallas-area housing market.

The Office of Federal Housing Enterprise Oversight's numbers say that home prices here in the fourth quarter were 2.95 percent higher than a year earlier.

And nationwide, the federal agency estimates that prices inched up 0.84 percent.

Disagreement among analysts is nothing new, and most housing studies have subtle differences in their conclusions, depending upon how the research is done.

But rarely do two such important home price gauges released on the same day provide such dramatically different data.

"I track four or five of these things, and most of the time, they are not that far apart," said Dr. Gaines, who is in Texas A&M's Real Estate Center.

The volatility of many housing markets caused by falling sales and rising foreclosures is making it harder for analysts, he said.

"These indexes have trouble when things are changing," Dr. Gaines said. "When things are nice and smooth and steady, they are consistent.

"But when the market is going up or down, they can get the data off."

Case-Shiller and the federal housing office take different routes to formulate their home price indexes.

Case-Shiller says it tracks the prices of typical single-family homes in 20 metropolitan areas. The survey does not include condominiums and townhouses. It only covers pre-owned properties – no new construction.

The Case-Shiller researchers say they compare "arms-length sales" of specific single-family homes.

The agency's index, on the other hand, is a weighted, seasonally adjusted measure of home prices based on data received from Freddie Mac and Fannie Mae, the government-sponsored mortgage investors. It doesn't include any information on homes priced above $417,000. And it includes information from all home purchases and refinancings.

Another commonly quoted home price gauge – the National Association of Realtors' quarterly home price report – just looks at changes in median sales prices on the Realtors' multiple listing services.

That survey found that Dallas-Fort Worth home prices were up 0.5 percent in the fourth quarter and fell more than 5 percent nationwide.

"That doesn't mean every house in America just went down 5 percent," Dr. Gaines said.

But the broad conclusion should be that home prices are flat to declining in North Texas.

"I don't think there is any doubt that the market is slowing down."

But not every neighborhood is acting the same, Dr. Gaines said.

"Dallas is a huge market," he said. "Within Dallas there are some submarkets which are doing very well and some areas which are doing very poorly."

The best way to use home price studies is to look at the overall trends, said William B. Brueggeman, chairman of Southern Methodist University's Real Estate Department.

Getting the surveys to agree "has been a problem for some time," said Dr. Brueggeman.

"In a perfect world if you had a constant stream of information on every transaction you could do it.

"But reality is not that way."

He said that the Case-Shiller index is more mathematical and statistical while reports such as the Realtors' survey just combine all the sales data and pick a median.

Even though their numbers are different, both Case-Shiller and the federal housing office have more somber takes on nationwide housing.

"Home prices across the nation and in most metro areas are significantly lower than where they were a year ago," Robert J. Shiller, professor at Yale University and one of the developers of the index, said in a statement. "Wherever you look, things look bleak."

Office of Federal Housing Enterprise Oversight Director James B. Lockhart said in his report that "prices for home purchases in the quarter fell in every state except Maine."

"While the market weakness is most significant in areas that saw the greatest price run-ups during the boom, other states have clearly not been immune to recent declines," he said.

METRO-AREA HOME PRICES

Area	4Q Index Level	1-Year Change
Atlanta	129.43	-3.4%
Boston	164.59	-3.4%
Charlotte	131.90	2.3%
Chicago	160.03	-4.5%
Cleveland	112.07	-6.3%
Dallas	120.77	-2.4%
Denver	130.98	-4.5%
Detroit	103.30	-13.6%
Las Vegas	196.05	-15.3%
Los Angeles	233.03	-13.7%
Miami	231.71	-17.5%
Minneapolis	155.37	-8.0%
New York	201.80	-5.6%
Phoenix	187.67	-15.3%
Portland	182.47	1.2%
San Diego	202.45	-15.0%
San Francisco	189.23	-10.8%
Seattle	184.88	0.5%
Tampa	200.13	-13.3%
Washington	217.78	-9.4%
Composite-10	200.55	-9.8%
Composite-20	184.86	-9.1%
SOURCE: Standard & Poor's