So I just saw on TV that Gwyneth Paltrow doubled her money on the sale of her Tribeca apartment in Manhattan. $14 mill!! She may not like the U.S. (she moved to London because, she has said, she prefers the European way of life), but she can't trash the NYC real estate market now, can she? Like I've been saying and saying and saying, all real estate is local.
That said, what's up with the numbers this week? Existing home sales plummet in March, prices fall and inventories rise, while new home sales inch up, prices inch up and inventories fall. If you're scratching your head… here's the deal: First of all, the numbers from the U.S. Commerce Department on New Home Sales are just plain not very good. The margin of error is well above 10%, and the number is only 2% this month. Their sampling is small, and they don't take into account factors like cancellations and builder incentives and/or financing.
Cancellations skew the sales numbers and incentives skew the pricing numbers. A big public homebuilder can keep prices high, so everything looks good on the balance sheets for all those pesky investors, but then they give away all kinds of add-ons either in the house or on the mortgage papers.
The other major thing to look at is the year over year figures. I get a lot of flack from you bloggers about reporting the month-to-month sales numbers, which I have to do because those are the headline numbers that move the markets. But the real big picture is in the year-over-year numbers, and if you look at it that way, new home sales are down 23.5% from March of '06 and existing home sales are down 11.3% from March of '06. In other words, new homes, despite the crazy way the numbers are reported, are actually faring worse than existing homes.
Of course, none of this matters to Gwyneth.
Questions? Comments? RealtyCheck@cnbc.com
