Misleading Media on the real stats on house prices (Tacoma: for sale, foreclosure)

[LordBalfor]

Originally Posted by irrational exuberance

The housing market is on a serious decline. Its the media and real estate people who dont want people to think that

The media don't want people to think that?
What the heck kind of news have you been watching?
The housing slump has been plastered on the news for months now.

Ken

[Fallingwaters]

Originally Posted by LordBalfor

The media don't want people to think that?
What the heck kind of news have you been watching?
The housing slump has been plastered on the news for months now.

Ken

Dude, don't you know, according to the press, it's a RECESSION! We're all doomed.

Doomed, I tell you. Ain't been this bad since Reagan.

I think he meant the local media, though. In 2005, I couldn't open the Seattle Times without feeling like they were gloating over how hot the real estate market here was. Now, it seems like they're only begrudgingly starting to admit that something's amiss in the land of plenty.

[LordBalfor]

Originally Posted by Fallingwaters

Dude, don't you know, according to the press, it's a RECESSION! We're all doomed.

Doomed, I tell you. Ain't been this bad since Reagan.

I think he meant the local media, though. In 2005, I couldn't open the Seattle Times without feeling like they were gloating over how hot the real estate market here was.

Ah... yeah, the local news has been very muted.
Have to admit I'm still not exactly sure how exactly WE are fairing here in Seattle, so I get the point.

Good catch.

Ken

[berkeleyres]

I think that while median prices may have increased slightly, it's misleading because the sales volume are so low. If you have 100 transactions, a median or mean number is significant, much more so than if you only have 25 transactions, which is what is going on now. The number is less statistically significant, a fact that no realtor would ever mention because it's always a bull market in their eyes. On top of that, housing prices are sticky on the way down. Nobody wants to recognize that their house is worth less today than two years ago, so sellers don't move prices down, resulting in less transactions. If you had to have 100 transactions in this market, prices would come down much more. So while the numbers pushed by agents are correct, the are indeed statistically misleading.

Remember, how the incentive system is set up in the real estate business. Nobody gets paid until a transaction occurs, so brokers have no incentive to tell the truth. Do you know anybody in the industry who said to their clients.." no need to buy right now, the market is becoming soft." It's always.."better buy now while you have the chance."

[drewba]

Good point on being sticky going down. While some people sell due to job relocation or financial reasons, many sales are optional. The homeowner might want to move, but they don't have to.

In this circumstance, I would think that many of these optional sellers just won't list their home, which keeps supply under control. Selling a house for less than you paid turns a paper loss into a real loss, not something that many people will be willing to do (at least initially).

A key difference between housing and other assets is the fact that everyone needs somewhere to live. If the stock market starts tanking, investors may dump stock to cut their losses and sit on the cash. That isn't something that would be done with housing (other than those houses bought strictly as an investment). This would seem to result in supply and demand not getting too far out of whack, particularly when new home starts are kept low and Microsoft is still hiring like crazy.

While housing prices are WAY out of whack with salaries in the Seattle area market, I think these factors will keep the decline from being too steep.

I hope that I'm wrong though, as I'd like to move closer to work.

[irrational exuberance]

Originally Posted by berkeleyres

I think that while median prices may have increased slightly, it's misleading because the sales volume are so low. If you have 100 transactions, a median or mean number is significant, much more so than if you only have 25 transactions, which is what is going on now. The number is less statistically significant, a fact that no realtor would ever mention because it's always a bull market in their eyes. On top of that, housing prices are sticky on the way down. Nobody wants to recognize that their house is worth less today than two years ago, so sellers don't move prices down, resulting in less transactions. If you had to have 100 transactions in this market, prices would come down much more. So while the numbers pushed by agents are correct, the are indeed statistically misleading.

Remember, how the incentive system is set up in the real estate business. Nobody gets paid until a transaction occurs, so brokers have no incentive to tell the truth. Do you know anybody in the industry who said to their clients.." no need to buy right now, the market is becoming soft." It's always.."better buy now while you have the chance."

Agreed I was mentioning that same point......The stat of prices is more and more insignificant to the number of sales and transaction.I think one person on here told me that demand is increasing but with decreasing sales by 25%+ each quarter where is this demand coming from/at? Allen Greenspan and Robert Schiller said it best in 2004-5 Irrational exuberance....that got people thinking off feelings as their guiding and not statistics and economic theory......

[irrational exuberance]

Originally Posted by LordBalfor

The media don't want people to think that?
What the heck kind of news have you been watching?
The housing slump has been plastered on the news for months now.

Ken

I watch the local news that doesnt disclose that Tacoma is 10th on the list for most subprime loans at about 23% or more. The media that quotes prices month by month increase rather than the median price of a home Jan 1, 2007 then again on December 31st, 2007. The media points out the obvious of a mortgage meltdown and crisis but dont entirely elaborate on the extent of the damage and use economist from National Association of realtors to give housing outlooks although they have been wrong for the last 2 years. Dont get me wrong the media does put out helpful information but they dont give you the full extent of the crisis as they dont on several issues in this world

[irrational exuberance]

Originally Posted by Fallingwaters

Dude, don't you know, according to the press, it's a RECESSION! We're all doomed.

Doomed, I tell you. Ain't been this bad since Reagan.

I think he meant the local media, though. In 2005, I couldn't open the Seattle Times without feeling like they were gloating over how hot the real estate market here was. Now, it seems like they're only begrudgingly starting to admit that something's amiss in the land of plenty.

No No No, lowering interest rates in the midst of a serious debt crisis and giving my wife and I 1200 will bring stimulate the economy that Bush stated last week or the week before is doing good. Inflation at its highest in 17 years along with historical low interest should make a pretty interesting long term effect. I dont know about you but I am paying off debt with this loan the IRS is giving us for 2008 to take back in 2009 taxes

[Fallingwaters]

Originally Posted by irrational exuberance

No No No, lowering interest rates in the midst of a serious debt crisis and giving my wife and I 1200 will bring stimulate the economy that Bush stated last week or the week before is doing good. Inflation at its highest in 17 years along with historical low interest should make a pretty interesting long term effect. I dont know about you but I am paying off debt with this loan the IRS is giving us for 2008 to take back in 2009 taxes

Not sure if you're joking or if I've just gotten to the point in life that 1200 bucks isn't that exciting (and no, none of you are getting my $1200 just because I said that, sure, I'll take it, but I'll passive aggressively use it to go shopping in Canada, hehe). I'd rather have long term job stability and an affordable house than a "shot in the arm" that might pay down .3% of the principal on a home loan. I'm more interested in my tax rebate on interest paid as an itemized deduction.

Other than the house, I have no other debt -- however, it's not about me, is it?

The same problems you've noted were caused by deregulation and the sub-prime lending industry (that could have been kept under control had anyone in govt bothered). I seem to remember, in 2003, hearing that Bush had "this plan to help people who have the income (note that, with many lenders "income" got pencil-whipped and creatively computed a lot), but not the downpayment, more easily 'own their own homes'" (read, get a risky high interest loan with little to no money down) -- I'll have to look that one up, but it seemed like kindling to the current meltdown.

However, again, I'm not sure if you were kidding or not.

Added, here it is, from HUD's website, article early 2004:
Statement of John C. Weicher - HUD

[Condorll]

Originally Posted by Fallingwaters

Dude, don't you know, according to the press, it's a RECESSION! We're all doomed.

Doomed, I tell you. Ain't been this bad since Reagan.

I think he meant the local media, though. In 2005, I couldn't open the Seattle Times without feeling like they were gloating over how hot the real estate market here was. Now, it seems like they're only begrudgingly starting to admit that something's amiss in the land of plenty.

Fallingwaters, try not to mix your political affiliation with the current real estate situation in Puget Sound. They are not connected.

Real Estate in Puget Sound has been affected by a tightening of credit in the Jumbo Mortgage arena due to Sub Prime defaults, even though defaults in this region remain the lowest in the Country. So in effect, our Real Estate market is being affected by conditions elsewhere.

The employment market here is very strong and Washington State has a constant influx of people every month. This "real estate lull" won't last very long and I predict Seattle will be one of the first areas in the Country to "rebound" and see prices on the rise again.

It's a real good buyers market right now, get pre qualified and start shopping!