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Wednesday, November 24, 2010

Real Estate sales figures and Double Talk

Real Estate sales dropped 2.2% for the month of October.  That is a statistical fact.  Its also a downer.  And heaven knows the media does not want to give downer information.  Yet they can't bury the story or outright lie either.  Instead they do other little tricks like rationalize, minimize and trivialize.

From National Association of Realtors (NAR) -- "Existing-home sales retreated in October on the heels of two strong monthly gains"

Understand that it is the job of the NAR, representing thousands of real estate agents across the country whose livelihood is dependent on people buying and selling, to convey optimism and hopefulness even when the statistics show a negative picture. In other words, it is the job of NAR to fib, fudge and distort.. just not Lie.   So in this example, the NAR's emphasis is on the 'two strong monthly gains' prior to October's numbers.

Let's continue... Lawrence Yun, NAR's chief economist said,  "The housing market is experiencing an uneven recovery, and a temporary foreclosure stoppage in some states is likely to have held back a number of completed sales.  He also said that sales activity appears to be "off the bottom and is attempting to settle into normal, sustainable levels. Based on current and improving job market conditions, and from attractive affordability conditions, sales should steadily improve to healthier levels of above 5 million by spring of next year."

First Yun rationalizes by blaming the real estate woes on the recent temporary foreclosure stoppage, as if to imply if not for that pesky 'stoppage', October's numbers would have been 'strong' as well.  Next Yun minimizes- that the drop in real estate prices is a natural progression as the market finds its bottom, then all will be well.  Of course, there's no mention of Freddie and Fannie Mae artificially keeping home prices elevated and there's another 15-20% fall to come before a real bottom is established.

Lastly, Yun trivializes- he basically states that jobs will be more plentiful in the coming months and this will cause a 5million homes sale increase.  An outright lie (I mean fib, fudging of truth and/or distortion).  Official unemployment is at 9.7% and all independent forecasts show unemployment staying above 9% by end of 2011 at minimum.  Where is this magical increase of 5million home sales going to come from?  And will anyone hold Yun's feet to the fire when it turns out that prediction is greatly exaggerated?

When facts are gloomy, the mainstream media and those with a vested interest rationalize, minimize and trivialize.

 So why should anyone care what the NAR or one of its representatives thinks or feels on anything?  Because the extremly LAZY mainstream media contacts them for a quote or two, then regurgitates it to thousands of other newspaper and media outlets across the country without any editorial fact finding on its own and the empty NAR opinions become 'Fact'.

This is from Associated Press-  "Sales of previously owned homes slipped slightly in October as the housing market continues to battle tough economic conditions including high unemployment and tight credit. The National Association of Realtors said Tuesday that sales of previously owned homes dipped 2.2 percent last month to a seasonally adjusted annual rate of 4.43 million units.  The Realtors group said that the moratorium that many big lenders imposed on foreclosures may have dampened sales in October by introducing more uncertainty in the sales market. But they said a bigger problem is the tight lending standards that banks have put in place in the wake of record foreclosures. “The dial has been tightened way too much” on lending standards, said Lawrence Yun, chief economist of the Realtors."

Do you see what happened?  A lazy, good-for-nothing AP writer is told by an editor to write 2000 words on the latest Real Estate numbers for October.  He/she contacts the National Assoc. of Realtors- asks a handful of questions- gets a lot of quotes, then pretty much prints word for word the opinions of the NAR as gospel.   The information is sent all over the world-  millions upon millions of people read or skim the article in their local papers and feel all is still right in the world.  And the lazy AP writer gets a paycheck for his/her lack of journalistic due diligence.

So-called 'experts' can give any rationalization but This is the simple reason why home sales declined--  Home prices are still too high especially with the excess of available and new homes, unemployment is still high, job insecurity is an even higher worry and banks are not lending unless credit scores are pristine and they are charging exorbinent fees and closing costs to acquire mortgages.  Until the housing fundamentals change, things will continue staying bad, and no NAR double-talk will change that.

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