As many of you know, the Illinois Association of Realtors provides both sales volumes and the median Chicago single family home and the median condo sales prices every month.
Many regular readers of Crib Chatter know that there appeared to be some funny business with the Chicago monthly median sales prices cited by the Illinois Association of Realtors.
For several months, “G” has been posting in the comments that the data has been wrong. Not only was it too high- it was WAY too high.
Here were the May monthly median sales price numbers as provided by IAR:
Median price data over the last four years:
- May 2008: $319,500
- May 2009: $225,000
- May 2010: $230,000
- May 2011: $238,450
Here were the median condo prices over the prior two years:
- May 2010: $271,150
- May 2011: $299,000
Here was G’s response to those numbers:
“We’ve discussed this median price data before. It’s totally meaningless. All it means is that people are buying better condos than they did last year. It does NOT reflect price movement, which is still negative.”
I agree about the lack of usefulness of the median. However, the actual median for Chicago in May was $190,000. My pointing this out does not mean it is useful, just inaccurate based on the actual MLS sales. Gary, why don’t you check the median for yourself?
Chicago May MLS closed and median:
2008 2,174 $319,243
2009 1,579 $225,000
2010 2,111 $230,000
2011 1,702 $190,000
Condos only
2010 1,291 $270,000
2011 1,020 $249,762
Mary Ellen Podmolik, the Tribune’s Real Estate reporter, “acting on a tip” (has she been reading our monthly discussion of this discrepancy on Crib Chatter, perhaps?) now confirms with IAR that the data WAS wrong.
“It’s not just May,” said Mary Schaefer, a spokeswoman for the Illinois Association of Realtorsadding that the mistakes appear to go back at least through January. “We’re trying to figure out where the bug occurred. We should have caught it. We pride ourselves on having accurate data. We want to make sure there is 100 percent clean data.”
The size of the Realtors’ errors is statistically significant, at least based on the May median price for condo sales within the city. In its official report that has now been discredited, the trade group previously said that the median price of an existing condo sold in Chicago in May was $299,000, compared with $271,150 recorded in May 2010. In fact, the median price was $243,000, compared to a year-ago price of $265,000, according to data from Midwest Real Estate Data LLC, the multiple listing service for the Chicago area.
Does it matter what numbers the IAR put out in their press release?
Do buyers (and sellers) care about medians?
“Whatever they’re putting out should be correct,” said Eric Rojas, a Prudential Rubloff real estate agent in Chicago. “There’s no doubt about it. I know that people watch the news and read the papers and they’re confused by the data. When we talk to buyers and sellers, they really don’t know what’s going on.”
Still, agents say they themselves pay little attention to the numbers that are issued by real estate trade groups, whether they are local, state or national.
“Median price in the market does not matter at all,” said Stacy Karel, an @Properties agent. “It’s building or block specific. It’s a micromarket. You can’t compare east of Western (Avenue) with west of Western.” When Rojas has pulled data directly from Midwest Real Estate Data, it shows that even the best city neighborhoods remain depressed.
For instance, the median price of two-bedroom, two-bathroom condos in Chicago’s Lakeview neighborhood during the first six months of the year was down 10.5 percent on a year-over-year basis, from $380,000 in the first half of 2010 to $340,000 this year, according to information Rojas pulled from Midwest Real Estate Data.
Was it a conspiracy by IAR to keep the median sales data elevated?
The IAR seems to be blaming the MRED and the MRED appears to be blaming IAR.
Remember, G (and other agents) apparently easily generate the data themselves directly off the system.
Why couldn’t IAR do the same?
Schaefer said the group does not think any fraud is being committed. “There’s no playing with the numbers, this is technical,” she said. “It’s how the system is reading the data.”
Local multiple listing services like Midwest Real Estate Data are continually updated, and data on listings, sales and prices are fed into it by agents as they do business. Midwest Real Estate Data gathers the month’s data, generally five to seven days after the end of a month, and generates data files for U.S. House Stats, which is owned by the national association. State associations like the Illinois group generate reports based on those numbers.
Midwest Real Estate Data doesn’t think the problem is on its end.
“MRED uses a regular procedure for sending statistics to the Illinois Association of Realtors,” according to an emailed statement from CEO Russ Bergeron. “That procedure has not changed. We are completely confident in the numbers we gave to (the Illinois Association of Realtors) and we’re working with them to help them identify how this discrepancy on their end occurred.”
Congrats to G who kept this issue alive for months when no one else seemed to care.
Statistics are only as good as the data.
Where does this leave the Chicago real estate market now? (and when will we get the revised numbers?)
The IAR’s press release on this “technical error” also seems to indicate there could be inaccurate data regarding sales volumes as well. Stay tuned.
Realty trade group overreported Chicago real estate prices [Chicago Tribune, Mary Ellen Podmolik, July 11, 2011]
Illinois Association of Realtors Statement Regarding City of Chicago Housing Data [Press Release, July 11, 2011]
See our prior discussion of the May 2011 Monthly Housing data here.
