Hey, it’s Todd Miller here. And I wanted to give you an update to some numbers that just came out recently. As you’re probably aware, they published numbers for 2009 that said, “Aggregately across the nation, real estate prices were down 12 percent.” And there’s a lot of things that go into the numbers that I wanted to kind of go over because when you see that in whenever they report a number for the whole country, it’s always very misleading. And this is why.

First of all, depending on what region of the country you’re in, that number is going to be different. So for example, here in Las Vegas, specifically in Las Vegas, we were one of the hardest hits, we’re actually the second largest hit demographic, the second area with 23 percent. So our home values were 23 percent less than they were the year before. You have other parts of the country like Florida. It got hit really hard. And Michigan got hit really hard. So those areas are skewed too. But we also have some areas where values had gone up.

So anyway, the reason why I want to talk about that 12 percent is because the other reason that’s misleading is it only counts actual sales. For example, it doesn’t mean that a house that was worth $200,000 is now worth 12 percent less. So it’s worth $24,000 less. What it means is that the average value of all sold homes had declined by that amount. And you say, “Well, isn’t that what that means? If homes are selling for less, aren’t they worth less?” No. And this is why.

So I’ll give you a simple example. Let’s say, you’ve got a neighborhood with a hundred houses. Half of them are $100,000 houses. Half of them are $200,000 houses. And on average, half of the $200,000 houses sell and half of the $100,000 houses sell. So your average sell price is a $150,000, OK?

Now, let’s flash to the next year. Let’s say that the $200,000 houses are still worth $200,000, the $100,000 houses are still worth a $100,000. They haven’t changed in value. But let’s say that there’s foreclosures happening and that the $200,000 houses are not getting foreclosed because those people are getting loan mods and they’re reworking their loans and staying on the house but the $100,000 houses are being foreclosed.

So, let’s just say that none of the $200,000 houses sell in a year. But the $100,000 houses, ten of them sell. So all of a sudden, the average sell price is now a $100,000. So it’s going to appear that values are down 50 percent. They went from 150 to 100. And the truth of the matter is that’s not the case. What happened was that there happened to be more sales in the lower end than in the higher end.

So one of the things that I want to sort of point out here is that it’s not just the total value of houses, it’s the value of the houses that are actually sold. So what that means is that sometimes when you see prices increasing, it’s not really because prices increased, it’s because more people sold homes of higher value than of lower value.

Now, how specifically that applies to our market? We’re seeing right now more foreclosures on the low end. Meaning, that short sales and those types of sales which are fewer tend to happen on the higher end, in the low end are foreclosures. So – and the reason is because of percentages. Meaning, a million dollar house a couple of years ago may only be worth $500,000 today. But that $200,000 house a couple of years ago might be worth $50,000 today. So it’s worth a quarter of the value whereas the other one is only half of the value.

So the buyers are like calling like crazy trying to get all this information. I need to make sure they come out here and pay attention to this and not keep calling me on my phone. But – so what’s happening is that because there have been more foreclosures on the low end, it appears that values have dropped. When you look at track inventory of houses, it depends. Higher end houses are going down as much. The lower end house goes down more. Plus you have the imbalance of the two and then you get this crazy number. They throw all these numbers together.

What I’m saying is that 12 percent number in essence, doesn’t mean anything. To you individually buying a house, it doesn’t mean anything. What you have to look at is what’s going on in that market, what’s going on in that price range, and what’s going on in that neighborhood. Because of this, you will find hidden deals. You will find value and – so be careful when you see the aggregate numbers.

That’s really all I want to talk about as far as those – the numbers for 2009 because when I saw the 12 percent, I cringed. I said, ‘Oh my gosh.” And there are a lot of other things at play. There are certain foreclosures weren’t happening at the end of the year and a bunch of other stuff.

So anyway, that’s my update for today. Today is the 18th of February. If you ever have questions, you can just direct respond right in here and I usually get back pretty quick. But just go right in there and put a comment on the video. And that’s it. That’s the update for today. Thanks a lot.