I spend a lot of time analyzing data. A LOT. That’s because I spend a lot of time working. For many involved in the real estate industry, the economic events of 2008 presented serious challenges in providing for our families. Try relocating to a new state and rebuilding an appraisal business during such a time. :)
I thought Ranger School was tough.
For those of us with a dogged determination to persevere, it’s easy to begin seeing work, or money, as an end and not a means to an end. Perusing the news feed on my Facebook page this morning I noted a number of leaders in the Elizabethtown, KY, area who remember to give back. This blog post is my attempt to do the same.
As many area residents know, this region has been heavily influenced by the economic impact of the Base Realignment and Closure Act which affected troop levels at Ft. Knox in Radcliff. Troop levels at Ft. Knox peaked in 2010 with around 1,000 households moving into the area, straining the local housing supply and driving prices to an all new high. However, subsequent troop departures and overbuilding during the 2010 time period resulted in a surplus of single family homes and an agonizingly long-term trend of declining prices. While I don’t appraise single family homes, I’m no detached observer. I built my home here in 2012 so, as we like to say in the south, “I DO have a dog in this race.” Few of us relish the idea of watching poor decisions in Washington grind away at our hard-earned equity.
Evaluating real estate trends is not as easy as it may seem at first glance. Decisions must be made regarding which data to include in your study and which data is most reliable. For example, when considering how best to create a trend line, the following question arise:
“Should the price of foreclosed homes be included in a trend line analysis?”
“Should I use data from the assessor or from the MLS when evaluating a trend line?”.
“Should I use a median home price or a price per square foot to analyze trends?
Ultimately, you just have to try to be as honest as possible and rely on your judgment. This will be meaningless to most but for those curious about my methodology, here’s what I did: I downloaded over 3,100 home sales in Elizabethtown occurring between January 1, 2010, with fewer than 5 acres. Foreclosures are included. I calculated a price per square foot rounded to two decimal places based on the above ground square footage and created a scatter graph. A 6-order polynomial trend line equation was derived and used to plot a point for each day between January 1, 2010, and September 14, 2015, on a graph. Here are the results. I think they speak for themselves.
Wyatt Roberts says
Excellent article, as usual. Great analysis.