S&P Case-Shiller: The Housing Price Index Hoax

Today I was driving in my car listening to Rush Limbaugh and he was talking about the housing market having taken a double dip. He was on a rant about what a terrible economy we are in. Of course his objective was to criticize the President, but the basis for his argument drove me to write this blog. Its time everyone understood just what Case-Shiller is.

His argument was fueled by the recent news released by the Case-Shiller index that housing prices have hit the double dip in this recession. But Case-Shiller is not an all encompassing housing index. And this is where it really gets my goat. He’s preaching fear and using an index that faulty, at best, to back him up. If you live in Louisiana and you heard his argument you might think that it would apply to you. After all, Case-Shiller is a S&P index and it’s a national housing price index… right? Well sort of.

Yes, it’s national. It takes data from 20 markets across the country. How many of the data sets used by Case-Shiller come from Louisana? NONE! Other than Dallas and Denver the other 18 markets are either on the east coast or the west coast, so the Case-Shiller index is representative of our coastal regions but I take issue with this being the end-all and be-all of housing price indexes. You cannot live in Louisiana and be concerned with Louisana’s economy and look at Case-Shiller for guidance. And if you are looking to Case-Shiller to tell you about the housing market in Baton Rouge, then your are spot out of luck.

So the next time you hear someone on the news preaching about the state of our economy look a little harder at what they really want you to hear and where they get their data. The housing market is like the weather. A bad storm in Las Vegas means nothing for the weather in Baton Rouge. It’s the same with housing. A down housing market in Las Vegas means nothing with regards to the housing market in Baton Rouge. And even if I were looking at the housing market in Las Vegas I wouldn’t suggest looking at Case-Shiller which pulls data from 19 other markets. Case-Shiller creates a false notion that the housing market is “national,” but instead housing markets are “local”. There’s a reason why the appraiser doesn’t use comparables from Denver to value your house in Baton Rouge.

Personally, I suggest taking that news article about the Case-Shiller index and tossing it in the trash. Get real data about your local housing market from your local REALTOR. To learn about the Baton Rouge market, call me. I keep a chart that tracks values from 2002 to present. Now that’s real data!

-Bridget Fredericks, REALTOR
Home After Home: 225-341-BRLA or 225-341-2752
Licensed in Louisiana, USA

Real Estate Transfer Taxes in Louisiana

Yesterday the Louisiana House of Representatives voted on HB 135 which is an important bill. First, let’s discuss what this bill does. Currently there are no areas of Lousiana that use transfer taxes. A transfer tax is a extra fee paid at the closing of any piece of real estate. Transfer taxes could be 2 or 3% of the value of the property. The problem with this tax is that the public generally does not receive any service in exchange for the payment of this tax. This tax is generally charged over and above the recording fees and other fees already invovled in the transaction. It’s also a form of double taxation. On any piece of property there are generally real estate property taxes which are paid by the owner of the property. So a transfer tax is an additional way for the municipality to squeeze more money out of the same property for which property taxes are being collected.

Transfer taxes could be harmful to real estate. It could force buyers out of the marketplace by making a piece of real estate unaffordable by having to deal with these extra costs. It is also an unsteady and unreliable form of taxation that doesn’t generally help the budget of the municipality. Usually the municpality trying to implement the transfer tax is trying to plug a hole in the budget or moving money into the general fund. Any way you look at it, it’s just not a helpful tax.

HB 135 is set to be a constitutional ammendment that would permanently prohibit any real estate transfer taxes in Louisiana. You can see how this would be a great thing! If this becomes law, then no municipality would be able to institute a transfer tax. What I really love about it is that our state legislators are taking a proactive approach to creating prosperity in Louisiana by prohibiting this form of useless taxation. Many areas across the country are implementing these transfer taxes and Louisiana lawmakers are taking a stand against it in advance of any local governments in Lousiana even trying it.

HB 135 passed in the House yesterday with 100 Yes votes and 0 No votes! It’s next step is to move to the Senate for approval. What you can do is write, email, or call your State Senator and ask them to support this bill. Finally, if the bill is passed in the Senate it will be on the ballot in November for the rest of us to approve it as a constitutional ammendment. Because these ammendments can be worded in weird and unusual ways, I’ll add another blog post later in the year advising on the voting for the ammendment.

If you want to keep up with the action here’s a link to the Louisiana State Legislature’s website.