OfflineIt’s unfortunate that the National Association of Realtors’ existing home sales numbers are followed so closely by many, and decisions made from their reports. That’s because NAR has just reported that their numbers have been “in error” for the past 5 years. The association says that their next report due out in December will revise sales downward all the way back to 2007.
NAR hasn’t revealed the magnitude of the downward revision, but Lawrence Yun, their chief economist, has stated that the revision decrease will be “meaningful.” He says “For the real estate business, this means the housing market’s downturn was deeper than what was initially thought.” Several reasons were given for the over-inflation of home sales for the period, including:
• The MLS, Multiple Listing Service, that NAR uses to track and count sales is considered to be the major factor in the over-reporting of sales.
• The MLS only includes home sales of those homes listed by Realtors. It excludes homes sold by owners, thus providing a narrow view of the market.
• As the percentage of people listing with Realtors has increased in the last few years, this has contributed to an artificial inflation of home sale numbers.
• Because NAR has been using 2000 Census data, some of the assumptions used in the calculations have become outdated.
• A gradual expansion of the geographic coverage area of the MLS system resulted in new sales showing up that were related to the smaller area covered before expansion.
• Some homes may have been considered in multiple areas as a result of the geographic expansion, resulting in them being counted more than once.
• An example of double counting shows the possible extent of miscounting and over-reporting. Using Denver and Colorado Springs as an example, homes were frequently listed in both of the MLS systems. When sold, the sale would be reported in each, thus counted twice.
The problem revealed itself, according to Yun, in a re-benchmarking process this year. Taking all of the factors into account, NAR will issue revised numbers on December 21st at 10 AM. Yun says "There are multifaceted reasons why things were drifting upward in our database," said Yun. "We have tried to adjust for all these factors so that we have a better understanding of total home sales in America."
Maybe some of the other members can explain to me.
Point #2 "Narrow view of the market"
Does this mean there are more properties being sold by the owner rather than being sold through the MLS?
Since the revision will be "meaningful". What does that mean to us as investors? Does that mean the real estate market is going to go back down? Prices are going to drop?
RENinja
"Remember, success is a journey, not a destination.
Have faith in your ability."
Bruce Lee
You inspire me, young blood. I wish I had started then!
Point #2 Yes. That's exactly right. Since most houses sold in America are listed in the MLS, there may be very little affect on us. But I'm pretty sure the answer to your last two questions will either be stupefied silence and a shoulder shrug or my straightforward "your guess is as good as mine, pal.".
I love seeing your posts here, friend.
peace,
Dana w/ Crossroads Solutions LLC
http://www.DanaLeigh209.com
http://www.DanaLeigh209.net
http://www.ULostThis.com
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I am direct to the VP of a $100 million dollar open-ended debt and equity fund which actively writes checks to fund businesses with an EBITDA of at least $1 million a year. We fund also have access to up to $500,000,000 for the purchase of distressed real estate, specially commercial $7,500,000 and up.
left off their list is that they were trying to skew the numbers favorably to create a false sense of security in buying a home. You can never trust an organization to present accurate numbers when their livelihood depends on the results. It is akin to stockbrokers telling you that the stock market is the place to be. It is called "talking their own book" and it always ends poorly for the investor because the negatives are always minimized.
Always Looking to Acquire Houses | Always Looking to Amaze Investors
Sales ticked up for existing homes and new-homes, several real estate market indicators revealed last week, pointing to a housing market that may finally be entering recovery mode.
In the most recent report, the Census Bureau reported that the new-home market continued its rebound, with sales of new homes once again inching up last month. New-home sales rose 1.6 percent from October to November to an annualized rate of 315,000, and sales were up nearly 10 percent compared to November 2010.
NAR stats have always been a point of controversy but remember the only ones that pay attention to them are their Realtors. For the rest of us we still look at what the market is doing in our area.NAR is always centered on properties that are on MLS and take nothing else into consideration.
Randy Bailiff
Official Dean Graziosi Success Coach