GOOD OBSERVATION

Month to month trends are meaningless during the summer “I got to sell quick before the new school year to get to my new out of state job” period.

Another anomaly worth mentioning; do we also need a chart on current supply of unsold homes [but homes the sellers wanted to unload, but at unrealistically high prices] pulled off the supply/listing backlog, because the sellers could afford to just wait and see if the media’s YOY misinformation that “we’ve hit the bottom of the economic mess this year” will be true this time. I saw this as a rampant anomaly with Seattle sellers of existing homes in the mid-eighties bubble pop and the new homes crashed 25-30% in price simulatneously [these builders did not have the luxury or spare cash to wait it out and hope]. By 1990, even the existing home sellers started giving up hoping on false media promises [I bought in then]…LOL

The “Peter Crying Wolf” media trying to convince us all that the ruined economy is bottomed, have been totally wrong YOY, and most Americans don’t believe the “Peter Crying Phony Wolf” tripe anymore.

I’d also add a very critical “footnote”: comparing this current economic mess to the saving and loan bank crisis caused by an overpopulated baby boom housing market hitting an unprepared banking system in the 80s is like comparing that “anthill” overpopulation debt problem to today’s “Mt Everest” overpopulation debt problem. I predict that many in upside down loans will “wait it out” until the foreclosure papers are in the mail, they have to.

Making predictions on either SAAS or MOS can be dicey. A market that has decliing supply trends and increasing price trends can turn on a dime. Is this the last few months just “pent up” demand or a long term trend. Areas with great looking MOS or SAAS numbers which might predict increasing future values can go poof like East Bellevue if MicroSoft announces 10,000 lay offs tomorrow. I hope not. Hopefully the new windows launch will tbe the new age of prosperity.

I just want you to know that I am currently giving the SAAS a billion trillion quadrillion units of credence as an objective measure of the market, and will be using it as my sole guide to buying a house. Which I plan to do immediately.

I will of course blame you if this does not work out well.

Cheers.

:)

http://www.altosresearch.com/forums/viewtopic.php?f=7&t=10

The calculation of SAAS does not involve any subjective measures at all, but is a purely mathematical exercise. Obviously the importance (or lack thereof) placed on SAAS is a matter that is up to the individual. The same has always been true of MOS, as well.

All I know is that as you said, MOS has become meaningless, and SAAS is an attempt at finding a measure that can give us a longer-term picture of market activity.

So long as the manner in which the months of supply is calculated is uniform (and the data is accumulated uniformly), it remains a useful tool but only one of many tools that should be in the buyer’s or seller’s tool box. When the NWMLS changed the input, the output indisputably changed rendering apples to apples YOY comparisons between the two methods essentially meaningless. At this point we have to wait for sufficient time to pass in order for a sufficiently large amount of data points to be determined before the YOY comparisons of MOS are useful once again.

Obviously, your SAAS is meant to fill in this void and perhaps it’s better than nothing. My concern is that it not be given too much credence as an objective measure of the market. As should be clear by now, there is no truly objective measure as every attempt to gauge the market, from Ardell’s bottom call to Professor Shiller’s fancy report, is limited in scope and cannot accurately predict the future.

I recommend you indicate on future versions of this post that the conclusions drawn have a significant subjective component which is based on your personal analysis of the local real estate market.

To end on an up note, the fancy charts are nice.