Making Sense Of Housing Reports
I sometimes find it difficult understanding housing reports that are published or reported by the national news media, and apparently I am not alone. You see, most of the national reports that appear on the television and in print are a synopsis of monthly reports by the National Association of REALTORS (NAR), so you have to recognize that "our lobby" is putting a positive spin on everything that is being reported.
Recently, a reader of the Tallahassee Real Estate Blog sent in the following question, showing that it is not always easy to understand housing reports that are being thrown at us without any analysis. "JW" wrote:
I was just watching Barbara Corcoran on NBC, she was saying that home sales in Dec. were up an amazing 12%. What is holding back the Tallahasseee area from seeing this rebound? I suspect overbuilding for the local demographic? -JW
Unfortunately, I am traveling and won't be able to access the national data to which this report refers, but I suspect I know JW's answer.
Understanding The Truth In Housing Reports
In Tallahassee, home sales from November to December rose 26%, which is a very nice gain. But historically, we see more sales in December than we do in November. This is just a result of the real estate seasonality effect that occurs every year in real estate.
More important to note is that year over year sales dropped 23%! This means that the number of sales in December 2010 was 23% lower than December 2009. I think a fair analysis of this information would include comments saying that home sales in December dropped! Again, without the national numbers, I suspect that the similar numbers were seen there. So, NBC just does not understand what they are reporting. They are supporting the optimism of a seasonal norm, rather than reporting the true movement of the housing market.
As far as overbuilding ... yes, this is true. But the real problem right now is on the demand side. We saw below 3,000 home sales last year in Tallahassee, and this is roughly 60% of what our "normal" amount of home sales would be. We need to see the lending markets loosen up and we have to figure out how to get upside-down homeowners who want to move out of their current homes.
So the real report should be stated as home sales were down, and the trend of falling sales continue as we fight to find a solution for people trapped in their homes with negative equity.