Lawrence Yun is providing a counter-point to the press coverage – based on actual facts and context rather than sunshine and smoke.
A recent Wall Street Journal article points out that home price trends are divergent, depending upon the source.Â Housing economists are very cognizant of these differences, and I’d like to expand upon a few additional points not covered in the article.
Secondly, the Case-Shiller price index – which has been gaining more media coverage as of late – covers only 20 markets (ed note: none in Virginia, but surely Washington DC includes some of NoVa).Â Most of these 20 markets coincidentally tend to be located in California, Florida, and other down markets.Â As a result, the index shows that most of the 20 markets are experiencing price declines.Â The media, in turn, then puts up a headline like â€œHome Values Falling Severely in Most U.S. markets.â€Â For the average busy consumer, a headline like this will surely dampen their confidence about buying a home.Â This is total distortion of market conditions based on a small selection of falling local metro coverage.
(I have been told by few reporters off-the-record that they are interested in increasing their viewership even if it means putting things out of context.) ed note: I’m shocked. Shocked!
Another factor that rarely gets attention is that Dr. Shiller, a Yale professor, has a side business in Chicago.Â His index is used at the Chicago Mercantile Exchange for hedging housing futures values.Â The more hedging of bets that occur, the more profits go into Dr. Shiller’s bank account.Â And more hedging of the bets will take place if people believe there will be a crash in housing values.Â So naturally he has a financial incentive to â€œscareâ€ the market.
It’s a good start – It’s timely (the WSJ article was posted on the 14th, this article on the 15th) and accurate. Now – you’ve got RSS, let’s see some trackbacks and comments and we’ll be on our way.
Lawrence Yun responding to critics, Dale Stinton, CEO of NAR commenting on a blog … are are these baby steps something to get excited about? Or is the apocalypse nigh?
Instead, AP failed to report overall statistics in favor of reporting individual metro areas; ignored most of the legitimately good news; ignored an important piece of historical context; and, most importantly, and as has been the case for well over a year in the national business press, emphasized reductions in unit sales while de-emphasizing much smaller reductions in sale prices.
At some point, you have to consider the possibility that the reporting on the housing situation is as it is because the business press is determined to convey the impression that the mortgage lending and housing “crises” are nationwide phenomena that require comprehensive, national solutions, when the data show that this clearly isn’t the case.
H/T – BuzzTracker