Ambitious high school students routinely apply to 10 or more colleges these days, in part because applications are standardized so it’s not so much work to fire off lots of them.
The higher rate of applications creates the false impression that colleges are more selective than they used to be because they have more applicants for the same old number of slots.
Why am I talking about college and false impressions? Because a similar phenomenon is distorting the housing numbers. Some optimistic analysts keep saying that the bottom of the housing market must be near because so many people are applying for mortgages. But it’s a false signal. People are filing multiple mortgage applications because they’re worried about getting turned down as credit standards tighten.
Case in point: Today, the Census Bureau reported that sales of new one-family homes in June were down 22% from a year earlier. Yet the Mortgage Bankers Assn. reported this week that its index of mortgage applications (for refinance as well as purchase) was up more than 15% in mid-July from a year earlier. Something, obviously, is screwy here.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.