Home sales in Tampa Bay are up 21% over this same time period last year and the inventory of homes available has fallen to under 20,000 properties in the Tri-County area. That’s almost half of what is was just 3 years ago, and 29% less than the available inventory of housing this same time last year.

Home sales in our area are the highest they have been in over 3 years.

So when I saw the story in the link at the bottom of this article on ABC Action News which indicated sales were slowing and there could be a double dip in real estate, I had to wonder what exactly they were looking at that would give them this impression.

The story said that a local real estate agent was “tracking what appeared to be a double dip in real estate prices” and showed a chart with the median sold price as an illustration. I was slightly amused but mostly frustrated.

This method of tracking the rise or fall of real estate value can be very misleading because a change in the median price doesn’t indicate how much appreciation or depreciation has taken place. It only indicates that there are more buyers purchasing less expensive homes than the previous period tracked. This causes the median price to fall. Conversely, when there are more buyers purchasing expensive homes in a given month, the median price rises. The median price indicates which price range is most active, not an increase or decrease in prices. Use of this number has become very common but it does not indicate in any way whether home prices going up, or coming down. It would be nice if the media would stop relying on information that does not portray an accurate depiction of the Tampa real estate market. It’s bad for everyone.

If the experts want to attempt to forecast a double dip, they should look at the “shadow inventory” and the affect it could have on values. That would be a valid argument for a circumstance that might create one. Standard & Poor’s recently reported that there is a 47 month supply of shadow inventory on the books. The shadow inventory is seriously delinquent or foreclosed real estate that has not yet been listed for sale. Imagine what could happen to prices if these homes flooded the market. Foreclosures in Tampa and surrounding cities are selling for approximately 45% less than the average non-distressed property.

You could also look at the number of Short Sale properties available in Tampa Bay and take the worst case scenario that they will end up as foreclosures. That scenario supports a possible drop in value because the market would be inundated with bank owned homes. Short Sales represent about a one third of the available homes in Tampa and the surrounding communities.

Using the “median” as a gauge for rising or falling home prices in Tampa Bay is misleading. It does not present a true picture of housing values in our area. Maybe the the experts will figure that out at some point and stop giving the impression that the real estate market is suffering. Things are much better than they have been in years.

local news story.