Is The Real Estate Market Going up or Down?

Based on most items in the press these days, you could answer yes or no to that question and the article would confirm your postion. 

The following article was taken from the C.A.R. Newsline which is a weekly publication of the California Association of Realtors, which is the industry trade group.  I selected this piece because it is representative of so much reporting I see today.  It is technically accurate, but it is confusing to the point of being misleading to the reading public.

Home values post largest monthly gain since 2006
Home values nationwide increased 0.5 percent from February to March, according to Zillow's first quarter Real Estate Market Reports. This marks the largest monthly increase in the Zillow Home Value Index since May 2006, when home values also rose 0.5 percent.

The Index fell 3.1 percent year-over-year to $146,200.

Nineteen of the 30 metro areas covered by the Zillow Home Value Forecast will reach a bottom in 2012, or have already reached a bottom. Several of those are expected to see significant home value increases in the next 12 months, including the Phoenix (6.5 percent), Miami-Ft. Lauderdale (5.6 percent), and Tampa (2.5 percent) metros, according to the forecast.

Twelve of the markets covered by the Zillow Home Value Forecast will experience home value declines in the next 12 months, although some of those are likely to reach a bottom in late 2012. Some metros, however, are anticipated to experience significant home value declines in the next 12 months, including the Atlanta metro, with home values falling 4.1 percent, and the Chicago metro, where values are expected to decline 3.8 percent.

Nationally, the Zillow Home Value Forecast shows that home values will fall 0.4 percent over the next 12 months, with many months showing no change or slight appreciation late this year, suggesting that U.S. home values could reach a bottom in late 2012.

I have included the whole article for accuracy, but the headline and first two paragraphs and the last one are the ones we will discuss here. 

Lets have a look:

Home values post largest monthly gain since 2006
     This is what defines the message in the readers mind.  It is, in effect,          
     shouting, "Hey the problem is past, prices are headed up big time." 

Home values nationwide increased 0.5 percent from February to March, according to Zillow's first quarter Real Estate Market Reports.
     There are several elements here: 
          "values nationwide"- There are national trends that affect all real estate,
                                        but real estate markets are very much a result of
                                        local conditions.
          "increased 0.5 percent"- On an annualized basis, this is a 6%/ year gain.
                                              Something we havent seen for 6 years. (And, in
                                              the view of most experts, wont see for another
                                              5 years at best.)
          "from February to March" -  This is the critical piece of the puzzle.  The use
                                               of  month over month changes is meaningless. 
                                               It is commonly used in today's reporting to give
                                               the illusion of posivite change in the market.
                                               But in fact, there are many short term variables,
                                               and seasonal factors reflected in month to
                                               month changes.
          "The index fell 3.1% year over year.- This is what the real message in
                                                this article is.  The market lost another 3.1%
                                                of value last year.
          "Nationally, the Zillow Home Value Forecast shows that home values will fall
                                                 0.4 percent over the next 12 months,-The last
                                                 paragraph ties in with the second to compare
                                                 this years projected performance to last years
                                                 actual performance, for the real estate industry
                                                 as a whole.

Here then, is how I view  this article:
     Home values post largest monthly gain since 2006
     The index fell 3.1% year over year
     The index is expected to drop another .4% this year.

Translation:

While we would like you to believe the market has turned around and resumed its growth rates from the glory days, so you will go out and buy houses and drive prices up again, the truth is that the market fell another three percent last year, but we expect we may finally reach bottom this year.