Is the National Media being too Harsh?

Posted by: Chris Palmeri on May 6, 2008

I came upon this little summary of recent housing data from Realty Times columnist Kenneth R. Harney yesterday. He argues that although recent the data still shows declining sales nationwide, sales and prices are rising again in many markets. Too early to call a rebound, he concludes, but worth noting.

If you only focused on the big headlines in the past week, you probably noticed that home resales were down by two percent nationwide during March. That didn’t sound good — certainly not for the start of the spring selling season.
But when you take a closer look at last week’s numbers, you find that resales were actually UP in large parts of the country — sales in the Northeast states, for example, jumped by 2.3 percent, and in the Western states they were up by 2.2 percent. The national numbers that dominated the press were dragged down by a 6.5 percent drop in resales mainly in one part of the country — the Midwestern states, where economic and employment problems continue to be tough.
Another market niche that did surprisingly well but got little attention: Condominiums, which saw a 3.6 percent jump in sales. That was on top of a 3.7 percent increase the month before.
Then there was the surprise of all surprises — again, with little public attention: Home prices. The Office of Federal Housing Enterprise Oversight — the government agency that tracks price movements in a giant portfolio of millions of homes financed and refinanced by Fannie Mae and Freddie Mac — reported a six tenths of a percent GAIN in average home values.
On top of that, the National Association of Realtors reported the median price of home sales in March rose to $200,700 — that was up from a revised $195,600 in February. There were significant increases in median prices in a number of metropolitan areas, including Austin, Texas, Des Moines, Iowa, and Durham, North Carolina.
Mortgage money at affordable rates clearly helped power some of those sales and modest gains in prices. Thirty-year fixed-rate mortgages averaged 6.04 percent last week, according to the Mortgage Bankers Association of America, and 15-year money averaged 5.6 percent.
What’s the takeaway here? Have we turned the corner and seen the end of the correction phase of the cycle? No, we’re not making that call quite yet.
The 10-month unsold inventory is still a leaden weight — and there are still some downward price adjustments ahead in the local markets that were driven by speculators during the boom years.
But the fact is: In many areas, and in some product niches like condominiums, the national headlines do not describe the local or regional realities. Thanks to lower prices and affordable mortgage rates, sales in those areas are up, not down.
Buyers see real opportunities and are writing contracts. And smart sellers are closing sales.
Source: Realty Times

Reader Comments

Rational Expectations

May 6, 2008 3:46 PM


"the fact is: In many areas, and in some product niches like condominiums, the national headlines do not describe the local or regional realities"

Oh, come on! Lets look at these "facts".

Many areas: No, most areas are down, and will continue to decline for some time. These, by the way, are the areas where the VAST MAJORITY OF AMERICANS LIVE. If 4% are up and 96% are down, which figure should national media use? I gather any good news is all good, everywhere.

LOCAL REALITIES: Why do people (Realtors) persist in the myth that, because national averages are averages, somebody else's local averages are better for everyone? The national headlines describe local realities almost everywhere. Mr. Palmeri seems to desire that we shift this to mis-represent most everywhere. Strange.

PRICES UP: The figures used for the claim that condos and average prices are up is misleading. As we learned last year, distress in the housing and mortgage markets can bias average price statistics. As anyone paying attention should have learned long ago, there is significant seasonal variation in sales (some in prices). Here in California, the normal Spring boost in sales is about 40%, according to CAR. This year fell far short, but even in the worst of years, there are more sales in March than in January. Compare year-on-year and the numbers don't look good.

Oh, and the continued tightness in jumbo mortgages is probably skewing sales toward condos and other purchases that can often be made in high price markets without jumbo mortgages (or confirming jumbos).


The post is amateurish and misleading. But then there are still Realtors out there, aren't there?

Rational Expectations

CriticalThinker

May 7, 2008 2:01 PM

It's not that the media is being too harsh, it's that they are demonstrating their inability to critically analyze the data and 'statistics' that they are being spoon-fed. Additionally, the media is addicted to making stories more extreme than they actually are in order to ensure readership. Unfortunately, these two factors guarantee a misinformed populace that is making poor decisions based upon inappropriate beliefs. Just as the media fawned over the rise in real-estate, they are now doing their best to destroy the economy through dire pronouncements about the same market. The reality is always much more sublime than the media (including BusinessWeek) would have you believe. It's just too bad that the media can not be held accountable for their negligence in these matters. In fact, they're incented to act poorly and it's a crying shame.

Wes

May 8, 2008 8:21 AM

This is another example of someone taking the data and cherry picking it to fit their message.

Do any real estate 'professionals' ever think it's not a good time to buy?

Nick

May 12, 2008 7:53 PM

Realestate has always been regional. It is going to improve in some areas before others. Some of the entry level Sacramento stuff is moving. Go to http://www.golyon.com/CustomContent.aspx?fp=485&county=SAC&report=SLD for some FACTS!

property bulgaria

May 15, 2008 7:09 AM

I don't think so.

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About

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.

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