I’ve heard a lot of people grumbling about the article in today’s Dallas Morning News with the headline “Mansion Market Meltdown”. I would agree with those people that it is another sensationalized headline intended to increase circulation of the newspaper – it a prime example of what David and I have started calling “Weapons of Mass Distortion”.
The stats they quote are actually true, or at least I believe them to be true. The high end of the market has not been immune to the slowdown, and the number of transactions year to date is down approximately 15% versus the first eight months of 2007, both in these price ranges and in the entire market. But while all that is true, what is missing is the context of these declines. The unit declines in the price ranges over $500k only appear dramatic because the first eight months of 2007 were ridiculously active by any historic measure.
The charts below demonstrate this point. The first chart shows the data presented in today’s newspaper article. The second chart shows the exact same data from the same period a year earlier. Note that the decline in the units sold in 2008 basically just offsets the gains in those same price ranges during the first 8 months of 2007. So in effect these price ranges are approximately back to 2006 sales volume levels.
But even more context is needed. If our present sales volumes are back to 2006 sales volume levels on these high end sales, is that a good thing or a bad thing? The following chart shows how rapidly the sales in these price ranges have grown in the 2 years leading up to 2006:
So let’s look specifically at the “$1,000,000+” price range. Yes, the number of MLS transactions in this price range is down 12% so far this year. But that 12% decline comes on the heels of a 21% increase in volume in this price range the year earlier. And that 21% increase last year was on top of volume increases of 18% and 24% in this price range for the 2 years before that. I think it’s pretty far fetched to call this a “mansion market meltdown”, We want you to understand this data and be able to explain it to your clients. If anyone has any questions about this info, you can contact me at my info below.
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