A new index launching in September could be the first of its kind in the nation
Florida is believed to be the first in the nation to get its own home sales price index, a labor of love for the state real estate group’s chief economist and a more accurate measure of property values in the recovering market.
The index, which is similar to the widely trusted nationwide Standard & Poor’s/Case-Shiller report, is scheduled to launch in September with regional and countywide information that takes into account every residential parcel in the state.
Realtors have long complained the current method of reporting monthly median homes sales prices doesn’t offer a true measure of increasing and decreasing values. The median, which means half of homes sold above the price and half below, can be greatly influenced if a large number of either distressed properties or luxury homes sell in one month.
Florida’s new index, created by the Florida Realtors, is considered a “repeat sales index” that will combine Florida Department of Revenue data with prices of individual properties sold over time. The index will be released quarterly with data going back to 1995.
“This is definitely the thing we’ve been waiting for and it will be much more reflective of what prices are doing,” said Bill Richardson, district sales manager at The Keyes Co. in Boca Raton and a past president of the Realtors Association of the Palm Beaches. “It’s truly something we’ve needed.”
National Association of Realtors spokesman Walter Moloney said he’s not aware of another state that has its own price index. California releases an “affordability index” that measures the percentage of all households that can afford to purchase a single-family home, but its sale prices are still reported as a median.
Similar to Case-Shiller, the Florida home price index will measure sales as compared with January 2000. But Case-Shiller’s Florida data only includes Tampa and South Florida, which combines Palm Beach, Broward and Miami-Dade counties.
“All of the measures have strengths and weaknesses, but a repeat sales index is probably better than a median price on an aggregate basis,” Moloney said. “We’re looking at developing one on a national level but it’s not quite ready for prime time yet.”
Finding better ways to measure Florida real estate sales has been a goal of Florida Realtors Chief Economist John Tuccillo since he was hired last year to lead the group’s new data and analysis department. Tuccillo is the former chief economist for the National Association of Realtors and has led his own Sarasota-based consultant’s firm.
In January, he oversaw a statewide change in how sales and prices are reported which allows Realtors and homebuyers easier access to statistics by ZIP code.
Tuccillo said he’s not ready to release details of the index, but that he’s generally found that for the past two years prices in Florida have “essentially bottomed out.”
“As a colleague said to me, we’re now moving along a cobblestone road, flat with bumps,” Tuccillo said.
While the general public may prefer a median sales price that reports an actual dollar figure to an index, which is a mathematical calculation designed to normalize time-series data, the index is considered more accurate.
“This is really the first of its kind in the nation,” Tuccillo said about the index. “We’re pretty proud of it.”
By Kimberly Miller, Palm Beach Post