Posted: 24 Feb 2011 02:29 AM PST
The National Association of realtors, in a deliberate attempt to deceive buyers, exaggerated home sales data during the housing bust.
Irvine Home Address ... 5042 GREENCAP Ave Irvine, CA 92604
Will realtors ever stop lying to us? Apparently, they thought it best to show a market with robust sales even though the reality was low sales. Starting in 2007, just as sales volumes were plummeting because prices were high and qualifying buyers were scarce, the National Association of realtors revised their methodology in a way that overstated sales significantly over the last 4 years. In others words, if you thought sales rates were tolerably low, you were deceived by as much as 20% by the NAr.
This lie was completely self serving. The NAr wanted to dupe buyers into thinking the market was stable to induce transactions that never would have gone through if buyers had known the truth. Many of those buyers in 2007 and 2008 are now underwater, and with the double dip, the 2009 and 2010 buyers may join them.
What those buyers deserved was to be educated to the reality of the housing market. What they got instead was reassuring lies.
Realtor Group May Have Overstated Number of Existing Houses Sold Since 2007
By NICK TIMIRAOS
This is the core of the deception. The actual sales numbers are a jumble of numbers the NAr can spin however they like; however, the months of supply calculation is a widely known market gauge with an accepted interpretation: more than 6 months of inventory is bad and less than 6 months is good. In order to manipulate this statistic, the denominator (home sales) needs to be as large as possible. Anything which overstates home sales directly impacts the months of supply.
In early 2007, months of supply had been above 6 months for about a year. Is anyone surprised they found a way to change their sales numbers to bring the months of supply down? This summer, existing-home sales sunk to lowest level ever recorded. I wonder how bad it really was? And how large did the months of supply get? And how many months of supply do we currently have?
Manipulating sales numbers for the months of supply calculation is very important to those who believe it is always a good time to buy. Steve Thomas of the now defunct Altera Real Estate used escrows rather than closed sales because it had the same effect.
So CoreLogic actually counts them and the NAr uses some statistical voodoo to estimate them? Hmmm... I wonder whose methodology will prevail?
So the NAr's methodology is rooted in a ten-year old piece of data that is no longer being collected? I think they have some significant revising to do.
Here's what I don't get. If every major retailer can operate a national database of their store inventory, why can't the NAr. Why can't the NAr simply query their database and tell us exactly how many homes sold, where they sold, and for how much? They try to make themselves valuable by being the purveyors of vital information, but they operate arcane systems and produce unreliable reports.
Really, most rational people already knows the NAr is duplicitous. That's why realtors in used house sales are held in the same regard as slimeballs in used car sales.
Barry Ritholtz at the Big Picture had this to say to the realtors before this latest scandal:
By Barry Ritholtz - September 1st, 2010, 9:15AM
Perhaps the NAr will implode or new blood within the organization will see the organizations role differently. What they need is a commitment to accuracy rather than a commitment to spinning. What should they do if it really isn't a good time to buy? Is a listing agent duty bound to lie for a client to convince a buyer the property is a good investment? Is a buyer's agent who pushes their clients into a sale serving or harming them?
The National Association of realtors has a belief pathology. A core belief is eating away like a cancer -- buyers can-should-must be manipulated into purchasing a house. This core belief guides many of their programs, advertising campaigns, and general attitude toward both buyers and sellers. Based on their advertising, I would say they think buyers are stupid sheeple.
The not very assuring truth
Buying can still be a good choice even in a declining market. Buyers who are motivated to save on renting are the stabilizing force in any real estate market, and it is the activity of these buyers that ultimately turns the tide. Those who bought in 2008-2010 can still have positive outcomes, particularly if they hold for several years. Those who purchased knowing this reality made a conscious choice to buy even with the financial circumstances.
Not every real estate purchase need be motivated by obtaining appreciation. Some people bought knowing they were overpaying in a declining market because it was the right time for them and their family. They examined the financial implications of their decisions and did it anyway. That made the decision right for them whatever those of us on the outside might think.
Clear decision making made with real data almost always produces a good outcome. What every buyers deserves the opportunity to decide for themselves based on good information. Unfortunately, it isn't what buyers get from realtors.
(BTW, if you haven't seen it, Keith at Housing Panic made a new post after two years. It said to buy real estate.)
A Master HELOC Abuser
I was greatly impressed by the reliability and the amount of the housing ATM withdrawals by this owner. This house is a piece of crap. The guy who bought this in 2001 obviously didn't do much to it, so most of the HELOC booty was likely pissed away.
The bank bought this at auction for $519,000 on 12/29/2010. Hard to say how bad their loss is on that Option ARM, but they will be lucky to recover half after all the fees have been paid off. And Irvine is one of the better recovery areas. Option ARM investors are getting wiped out.
Irvine Home Address ... 5042 GREENCAP Ave Irvine, CA 92604
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