This project is incredibly labor intensive. My staff is working overtime to provide you with the necessary information (reports) to respond to the irresponsible bubble accusations made by your local media and local academics. Please be patient and you can expect to begin receiving the first batch of these reports just after Labor day.
The NAR did not allocate the necessary resources to properly write local housing reports. Instead, they presumably used a shoddy computer program to do a 'program and paste' job to 'write' these very similar reports. Some of the holes found in their research include:
- The conclusion for every market is the same. In the executive summary the reports conclude "With home prices rising strongly in most parts of the country, there has been widespread media coverage on the possibility of a housing market bust. A thorough analysis of the
metro market, as detailed below, reveals that there is very little danger of this." ( Thanks Felix who posted over at Calculated Risk)
- Even markets that are regarded as the most over-priced and are already experiencing contraction, such as Boston and San Diego, say "A thorough analysis of the Boston-Cambridge-Quincy metro market, as detailed below, reveals that there is very little danger of this." ( Thanks to poster Felix who posted over at Calculated Risk)
- So shameless is their cut-and-paste work that the data sometimes contradicts the text! For example, the Philadelphia analysis says "jobs are being created and ... suggest potential for further price gains.". However, the Philly numbers - right above this comment - contradict this statement and shows negative 3 year job growth (-0.2%, compared to 7.2% for the top 20 metros) and negative net migration of -4,800 over the past three years! The job situation is called "unfavorable". ( Thanks to poster Felix who posted over at Calculated Risk)
- One thing I noticed in looking at the anti-bubble report is that the price-income ratio seemed extremely low. Well, if you look at the table footnotes, the definition of income is "per capita income multiplied by the average number of people per home"!!! Logically, this means that a family with 4 kids is able to afford more house than a DINKY couple. Laughable at best.. ( Thanks to poster John Laws Ghost )
- In each market the NAR puts the housing market under a 'stress test.' In the Philadelphia market "The local housing market will experience a price decline of 5% only under extreme unlikely scenarios. For example, mortgage rates rising to 12.5% in combination with 114,000 job losses could lead to a price decline." If mortgage rates really hit 12.5%, and 114,000 jobs were lost a much greater decline would occur. What is NAR's formula for these stress tests?
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The media is watching these blogs and hopefully will be reporting on NAR's manipulating ways.
ReplyDelete"irresponsible bubble accusations made by your local media and local academics"
ReplyDeleteyah, what do those ivory-tower academics know? they just research this info all day for years....
We need more of my fellow housing bubble bloggers to pick up on these NAR reports.
ReplyDeleteIf my readers can help find more holes in these reports and then report in this comments section that would be super.
NAR needs to be confronted.
NAR claims LA rose 65 ONLY as three year appreciation in the first table,
ReplyDeletelocal fundamentals are negative(net out migration, -ve job growth)
in the next table listing median prices for 5 years 2000-2005 in one line, next line lists 66% as growth in 3 years! it is very obvious by looking at the table to see prices doubling in 5 years!
ofcourse . comparing 80s servicing cost to todays's is apples to oranges as there were NO Interest only, Option ARM financing available in 80s. down the line it mentions 43% ARMS in 2004
Finally while mentioning factors related to LA, why mention "no decline nationally"
it mentions several non quantifiable factors influencing pricing. but did any of these factors change for better in the last 5 years to influence 100% gain in 5 years? (may bae Disney's new concert hall did it, I Guess!)
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ReplyDeleteI agree with David - you should make this your 'Dan Rather' moment.
ReplyDeleteAll of the American bubble blogs should link to David's post here to draw attention to the absolutely shamefully shoddy research by the NAR.
If any stock market analyst pulled crap like this they would go to jail.
Even the 130 markets are cherrypicked. No Southern California except the generic Los Angeles which it turns out is Los Angeles-Long Beach-Santa Ana whateverinthehell that market might be.
ReplyDeleteAnyone who believes net population migration for Los Angeles-Long Beach-Santa Ana of -143,000 needs a reality check. Los Angeles-Long Beach-Santa Ana added three quarters of a million people 2001-2004.
LA has a much higher average occupancy so the NAR believes this magically transforms into a much higher household income. Not.
NAR calls mortgage to income rations twice the national average as "neutral." Not.
Overall the NAR better hope the world court doesn't prosecute for torturing statistics.
They're disgusting. All they do is put out crappy work intended to keep the party going for themselves, regardless of who it hurts in the long run. Good job picking up on this and keep up the good work.
ReplyDeleteThanks for all the feedback. I am hoping Ben Jones' blog will pick up on this story. I emailed him.
ReplyDeleteIt is time the NAR is called to task for their contradictory, deceitful and lousy reports.
Good work david!
ReplyDeleteGet these NAR people in front of Congress, along with Fannie Mae and the rest of the suspects.
In an August letter to Realtors, David Lereah writes of the upcoming anti bubble reports: "...My staff is working overtime to provide you with the necessary information (reports) to respond to the irresponsible bubble accusations ..."
ReplyDeleteI'm no expert on these things, but shouldn't data be gathered and analyzed first before the conclusions are drawn? It seems Mr. Lereah had the conclusions of his report made up before the data was even gathered, analyzed, and presented.
An unbiased approach would be to gather the data, analyze it, and then draw your conclusions from there; the latter approach, in my opinion, is what most people want and why most of these housing market blogs exist in the first place.
The market is becoming more "normal" and "leveling off". What the agent is referring to is that fact the cost of housing has been so inflated that more and more home owners are feeling like their homes are devaulating rather that adjusting to a normal and stable market value. The value should never had never been so high to begin with... it should be where it is today which is NORMAL!
ReplyDelete