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Housing Information: The Geeks Lead The Way!

Housing Information: The Geeks Lead The Way!

August 3, 2008

Hugh Pavletich
Co – author
Demographia International Housing Affordability Survey
DEMOGRAPHIA

Within a July 31, 2008 article, “America’s Most overpriced zip codes” ( original Forbes version ) ( Yahoo reprint with hyperlinks ) Matt Woolsey of Forbes reports on recent innovations by the real estate map based websites hotpads.com and trulia.com .

These websites have bought the provision of real estate information to a new level – with superb graphics, making it significantly easier for purchasers and renters to access listings and information about the locations they are interested in. Some of the statistics from official sources (particularly individual and household incomes) are dated and need to be updated as soon as possible.

In having said that – the comprehensiveness of the information - and with respect to hotpads com – the standard of the graphics and navigability, can only be described as “simply superb”.

Mr Woolsey’s article focuses on a recent innovation by hotpads com – where p/e (price earnings) ratios information is provided to assist consumers in deciding whether it is more advantageous to rent or purchase in certain areas.

The price / earnings ratio expresses how many times of annual rental it would take to purchase properties in a particular area. This methodology needs to be kept in perspective – as Mr Woolsey outlines within his article.

It is to be hoped that web based real estate information services consider using the Median Multiple (median house price divided by gross annual median household income) as employed by Demographia and Harvard University and as recommended by the World Bank and United Nations.

Urban markets housing should not exceed three times household income as explained within “Getting performance urban planning in place

Mr Woolsey’s Forbes article ‘Americas most overpriced zip codes’ - commences by stating “In San Jose, Calif., home to Silicon Valley and some of the highest values in the country, a bumper sticker reads ‘Dear God, one more bubble before I die’.”

Faint hope.

The reality is – that once the costs in social and economic terms - become more obvious and are experienced by increasing numbers of people within “bubble markets”, policymakers will be forced to deal with the structural issues of land supply and infrastructure financing to ensure these unnecessary and hugely destructive urban housing bubbles do not get underway again.

This will be driven by the finance sector as well – which will increasingly differentiate between normal urban markets that maintain housing at or below three time’s household income and those that fail in this regard.

People and businesses also expose themselves to greater risks by locating in poorly governed markets with unstable bubble priced housing and increased living costs as illustrated within Professor Edward Glaeser of Harvard University recent article “Houston: New York has a problem.

ENDS

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