Widget Underprices for Third Straight Time
On the heels of yesterday’s discussion about the price widget prediction falling short for the second time, a reader sent us a third data point. Once again, the average appraisal fell far short of the selling price. After being listed for $899,000, 29 Maple Street received an average prediction of $727,425 from readers; the house…
On the heels of yesterday’s discussion about the price widget prediction falling short for the second time, a reader sent us a third data point. Once again, the average appraisal fell far short of the selling price. After being listed for $899,000, 29 Maple Street received an average prediction of $727,425 from readers; the house closed for $830,00 on July 6, 2009. Maybe the fact that the average prediction is, thus far, falling so far of the sales price makes perfect sense. After all, the seller only needs one good buyer, and anyone putting in a bid is probably going to like the house more than the average reader. In this case, it looks like somewhere around 20 to 25 percent of the votes cast were at or above the actual sales price. Maybe we should switch to using the median and noting the three quartile break-points. Could it be that the top quartile is really the predictive number? We’ll wait for a few more data points before overhauling but it’s certainly feeling like that may be the more useful way to parse the data.
House of the Day: 29 Maple Street [Brownstoner]
29 Maple Street [Brown Harris Stevens] GMAP P*Shark
Bearish Brownstoners Miss Mark on 2nd Street Sale [Brownstoner]
NYTIMES –
After a plunge lasting three years, houses have finally become cheap enough to lure buyers. That, in turn, is stabilizing prices, generating hope that the real estate market is beginning to recover.
Eight cities, including Chicago, Cleveland, Denver and San Francisco, showed price increases in May, up from four in April and one in March, according to data released Tuesday. Two other cities, Charlotte, N.C., AND NEW YORK, WERE FLAT.
For the first time since early 2007, a composite index of 20 major cities was virtually flat, instead of down.
A few points, folks:
1. Go back and read last week’s widget thread and yesterday’s biggest sales thread. We don’t have three data points. We have at least 7. Widget 10-25% below sale price in every case. So I guess we’ve got 7 stupid buyers and no smart ones. Eight, if you count Bob Marvin and the five figures he must have paid for a nice home in the Lefferts Manor 35 years ago. Poor Bob, he’s really stuck now.
2. Corner, what and BHO, you can take a chill pill on the widget question as your position is not threatened. The question of the widget’s accuracy as a price predictor has no bearing on the direction of the market in the future. The only question is whether the collective wisdom of the brownstoner widgetariat can predict a price at a single point in time. No need to fight this one to the death. It does suggest that some on this site have any itchy trigger finger for those price drops. But if you want to argue that someone overpaid for a house, argue from comps, not the widget. And make sure you know the buyer’s time frame — how long they plan to live in the house — before you question the investment wisdom of the purchase.
3. Widget may be low because the high bid, not the average, gets the house, but the widget shows an average valuation and therefore does not reflect the high bidder. Quartile discussion illuminates that point. That doesn’t mean the high bidder is stupid. Every house gets sold to the high bidder, whether market is rising or falling. A house is not worth the same to everyone who sees it. That’s who sets the comps and the market value — a willing buyer and seller.
AND WHAT’S IT WORTH NOW BOB?????
Posted by: jackassinbedstuy at July 29, 2009 10:32 AM
GAS WHAT’S IT WORTH NOW BOB?????
FOOD WHAT’S IT WORTH NOW BOB?????
CLOTHING WHAT’S IT WORTH NOW BOB?????
ENERGY COSTS WHAT’S IT WORTH NOW BOB?????
INFLATION WHAT’S IT WORTH NOW BOB?????
The What
Someday this war is gonna end…
“how is it [my “message”]supposed to aid people in deciding whether or not to buy?”
Sorry half off, it’s not.
I miss the “good old days” when no one wanted old city houses and they sold for an enormous discount compared to tacky suburban tract houses. I even sympathize with your desire for brownstone prices to drop substantially. However, at any given time houses, and everything else are “worth” what they actually sell for. I’m neither a bull nor a bear and lack a crystal ball. You’ll have to decide for yourself whether or not to buy. I personally couldn’t begin to afford today’s house prices, but that too is irrelevant.
People do not take the widget seriously.
If everyone who voted threw in a dollar and the voter who came closest to the final price won the pot then we would see “Average Reader Appraisals” very close to closing prices.
“AND WHAT’S IT WORTH NOW BOB?????”
A bit more than I paid Dave 🙂
As to whether it was “stupid” back then; I was relying on Everett Ortner’s “schoolteachers coup” whereby two schoolteachers (or,in our case, a civil servant and a schoolteacher) could buy an otherwise unwanted old city house and live “like millionaires” on very little money. This worked out, for us, to be true, in a subjective sense, from day one and to be literally true today. Hardly stupid.
“People thought I was stupid when I paid a 5 figure price for my house in 1974. ”
You was stupid relative to 1974. This funny thing is no one understands inflation and the psychology of asset prices.
Posted by: Return of The What at July 29, 2009 10:28 AM
AND WHAT’S IT WORTH NOW BOB?????
“Yeah, it’s not the market speaking, it’s just three stupid buyers.”
No, it IS the market speaking. The sucker’s market. Suckers are so because they’ve done something stupid. Overpaid.
“BHO- you got all your bases covered. if a low price comes in, you screech Hooray.”
I screech ‘reality’. More lower prices closing than high.
“if a price comes higher than expected, it’s off market. beautiful.”
Oh no, I didn’t say off market. It’s very much ON sucker’s market.
“People thought I was stupid when I paid a 5 figure price for my house in 1974. Such subjective judgments may, or may not, be true, but they’re irrelevant in terms of the market and actual worth [“value” is another matter, but that’s entirely subjective.”
Huh? What exactly is your message and how is it supposed to aid people in deciding whether or not to buy?
***Bid half off peak comps***
We only have 3 observations of widget pricing accuracy.
Since we have no idea how the population of widget pricing accuracy will be distributed, we can’t really say anything meaningful from these 3 observations. Once we get to a bigger sample size, we can say more about the distribution of sample means, and that will give us a way to test widget pricing accuracy.
But you might not need to go that far.
It’s pretty well established that online polls are full of sampling error. I think the biggest sampling error here is that lots of people have an agenda. People aren’t neutrally appraising these properties…