Why Some Housing Indicators Are Misleading

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Some of the indices used to “measure home prices are a little bit misleading,” Don Brownstein, CIO and CEO of Structured Portfolio Management, tells CNBC.

“I’m not suggesting that we are on the verge of having a major housing recovery or that new home sales are going to skyrocket or that builders should be out there building lots and lots of new houses. What I am suggesting is the use of indices needs to be taken a little bit more cautiously,” said Brownstein.

Structured Portfolio Management is the top-performing hedge fund of 2010 with over $1 billion under management.

“The housing market has actually sort of bifurcated into the distressed and normal sales segments, and what’s happened is that the price levels in the normal market actually recovered a little bit in the last couple of months,” he added.

Comparatively, Brownstein went on to say the distressed part of the market has fallen somewhat. “The mixture of distressed and non-distressed sales has changed so that now more distressed sales are a part of the total, and the prices of distressed sales are below those of normal sales.”

It looks like the indices are dropping when in fact what’s happening is simply housing prices are stable in the non-distressed sector, but somewhat down in the distressed sector, he added.

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