Posts Tagged ‘real estate statistics’

Lies, damn lies and statistics

April 7, 2008

It’s been interesting to see how both sides of the housing bubble are putting their spin on the monthly real estate numbers. The same statistics can show a positive trend and a negative trend. You’d think that’s impossible, but it’s really pretty easy and underscores the adage of ‘lies, damn lies and statistics’.

Lies, damn lies, and statistics

One of the phrases I hear a lot lately is ‘pending sales’ are going up. Realtors grab hold of this and use it as evidence that the market is picking up. “It’s time to get off the sidelines before it turns into a seller’s market and/or loan rates go up.” Sure enough, in February, pending sales were up … from the month prior.

In Walnut Creek, it looks like pending sales in February 2008 were up a whopping 40% from January 2008. Hey, hey, the good times are back, right?! Wrong. Compare that to February 2007 and pending sales are actually down 10%!

The natural real estate cycle will make some of these months look good if they’re presented in the right context. But do the digging, compare them to last year and even the year before that. And don’t look at one statistic in isolation. Look at pending sales, actual sales, inventory, days on market and price all at once to get a sense of the market in your area.

Extra credit? Read up on the difference between median price and average price. Yes, it can be important.

Highest Consumer Delinquency Rate Since 1992

April 3, 2008

A quarterly study by the American Bankers Association found that Americans are falling further behind on consumer loans.

… the percentage of loans at least 30 days past due rose to 2.65 percent in the fourth quarter from 2.44 percent in the third quarter, and from 2.23 percent a year earlier.

Anyone who thinks about the housing crunch shouldn’t be surprised by this type of statistic. It’s not like you’re going to pay your car loan first and then short your mortgage! Many Americans are on ARMs that are adjusting or simply took on too much home during the housing frenzy. Now, they’re struggling to keep their houses, leaving them with less money for other loans. I’m guessing this is going to get worse before it gets better.

The Mortgage Monster

But take this one step farther and I think it becomes a bit scarier. If Americans are putting more of their income towards a home, and they’re still trying to keep up on other consumer loans (but faltering), how much is left for consumer spending which accounts for 2/3 of our GDP?

I know I sound a bit like chicken little but … higher ratio of income going to housing, increasing consumer debt, inflation and a soft job market. This isn’t a rousing mix of ingredients in my opinion. What say you?

Show For Backups

March 19, 2008

Last weekend, a glutton for punishment, I went out to see a few Walnut Creek open houses. One was a surprise since it had been removed from MLS. The realtor acknowledged that they were under contract but that if contingencies weren’t removed other offers would be entertained.

Think about that. How confident do you think they are that the offer will actually pan out if they’re holding an open house? For the state of the property I’m guessing that contingencies might not be removed.

Back On The Market

A number of recent properties are showing up as pending “show for backups”. I believe this is because there is more breakage as loans dry up or buyers simply get cold feet and use contingencies as their parachute. Sellers and agents are wise to the fact that offers, even with pre-approved buyers, may not come to fruition in the shrinking credit market.

The breakage on pending sales will cause some delay in showing the true sales activity in the market. In fact, I’m noting at least one pending property returning to the market after 30 days pending.

Do you believe the breakage on pending sales will increase in 2008?