Silicon Valley Real Estate Investor

Part 3 – Looking beyond the trend

Once you as a data analyst have determined a trend (and I’m assuming for purposes of this article that this is a real trend and not wishful interpretation of “noise”), that’s when it really gets interesting.

It’s often not enough just to say that a key indicator is going up or down. Rather than use that as a conclusion, it is important to use that a starting point for a series of other questions that will help you understand better the matter at hand. Some of these questions might include: …

Part 2 – Understanding how to interpret Margin of Error

Different sampling choices and methods yield results with different margins of error. This is like saying that the actual answer could be higher or lower by a certain (also calculatable) amount.

For example …

Part 1 – Understanding Seasonally Adjusted Data

If you’ve ever read market reports, economic data, housing statistics, etc, you’ve probably experienced that strange sense of wondering whether the numbers in front of you are really all that meaningful or significant. Sure, they may seem impressive, but, is up really up, and is a trend really a trend? Are we really seeing what we think we’re seeing? Do our figures represent the whole picture, or are they distracting us from another truth? As one Aaron Levenstein once said, “Statistics are like bikinis. What they reveal is suggestive, but what they conceal is vital.”

Tim Owensby at the Investing Notes blog has put together a great list of top mistakes made by new real estate investors. This list makes for enjoyable reading because all of us have been there at some point or another.

Here is a brief summary of Tim’s top 10 list of no-no’s in reverse order …

ForeclosureRadar.com recently released its revamped California Foreclosure Report.

This is a must-read for the California real estate investor. The short report draws some interesting conclusions about foreclosure filing rates (123% over last year), inventory levels, discounting, and other statistics.

Over on his blog, Dr. Housing Bubble does a really interesting job in explaining exactly how the Home Affordable Modification Program (HAMP) is NOT working as expected. Here are some basic numbers:

About3 million homeowners would qualify
About 500,000 loans in the trial modification phase (about 1/6 of all eligible)
Of these only about 3% seem to have successfully converted to permanent modifications!

Responding to a crescendo of consumer advocate requests for greater regulation of the loan modification industry, Governor Schwarzenneger yesterday signed into a law a bill that prohibits loan modification firms from asking for cash up front. Not only that, it also does the same for attorneys who specialize in loan modifications. This bill takes effect immediately.

Over at InvestingNotes, Jan deSalvo writes a pretty interesting article detailing some horror stories she’s personally experienced over decades of working with property managers.

The stories aren’t pretty but do contain some classic elements; lack of accounting for repair & maintenance costs, poor paperwork when it comes to maintaining leases; suddenly not being able to get in touch with the property manager for long periods at a time, comingling of personal and business funds, etc; the list goes on.

Living here in Silicon Valley, we often have a perpetual sense of optimism. Being on the leading edge of technology, we follow beginnings of technology rather than their declines, and everything new is the Next Big Thing; we also tend to move on to latest products without always having a good understanding of how these technologies are maturing and being adopted by the population at large. For this reason , his visit to the California Realtor ® Expo 2009 in the San Jose Convention Center was a nice eye-opener to all the wonderful things going on with how the real estate industry is leveraging and applying maturing technology for its own purposes.

Browsing through real estate statistics, In a report released by the California Association of Realtors, two cities in Silicon Valley, Cupertino and Mountain View, made the list of the 10 cities with the highest median home prices in California during August. The top 10 were:

Saratoga, $1.33 million.
Palos Verdes, $1.17 million
Newport Beach, $1 million
Los Gatos, $900,000
Cupertino, $870,000
Danville, [...]