Another way the NAr manipulates sales figures for positive spin
The NAr wants to overstate the current month’s readings and downward revise the previous month’s readings because it always makes the current month look like it’s increasing.
The National Association of realtors lies about market data; it doesn’t just exagerate or consistently repeat honest mistakes — it lies — knowingly and purposefully. Back in early 2011, I reported the National Association of realtors caught lying about home sales. Later, Reuter’s reported Existing home sales to be revised down from 2007, and ZeroHedge noted US Housing Market Was Artificially Inflated By 14% In 2007-2010 NAR Reports. The NAr would like everyone to believe these were “honest” mistakes and that this corrupt trade organization intended to provide accurate data, but they merely made a small mistake; however, that characterization misses a deeply pathological flaw in the organization itself that renders it incapable of telling the truth. I exposed that problem in The real reason the NAr affordability index is completely worthless.
realtors want to pass themselves off as experts on real estate whose advice can be relied upon by market participants. However, realtors have no interest in whether or not it truly is a good time to buy or sell because for them, it’s always a good time to generate a commission. This conflict of interest causes realtors to be self-serving liars who line their own pockets at the expense of the people they ostensibly serve.
I detailed this phenomenon in the 2010 post Urgency Versus Reality: realtors Win, Buyers Lose.
realtor Mind ®™
I recently attended a realtor marketing seminar, and it was fascinating to watch the realtor mind at work. The presentation included many “reasons to buy” realtors could use in their own
consultationsmanipulations with customers. There was little or no regard for the veracity of the claims, it only mattered that realtors have something, anything to create urgency in buyers.
Many realtors see their job as presenting buyers with reasons to buy, any reason, and hope the buyer is gullible enough to believe them. They feel no responsibility for buyer outcomes; whocouldanode, right? What other explanation is there?
realtor Mind is Everywhere
How widespread is realtor mind? Am I unfairly labeling a large group based on a few isolated incidents among unscrupulous practitioners?
Back at the peak of the housing bubble, the National Association of realtors produced the “Suzanne Researched This” commercial. The scene is set with a couple discussing a home purchase in their kitchen with a realtor voyeuristically listening on the phone. In stereotypical fashion the commercial shows women how to browbeat their spineless husbands into submission, and it shows men how to acquiesce gracefully and pretend you got something out of the deal.
In their defense, the NAR did not say prices are going to the moon, but it does show that manipulating people to buy — even in 2006 when it was disastrous to do so — it the primary goal of NAR advertising. It is easy to see this couple, and anyone who fell victim to the Suzannes of the NAR, going through the foreclosure process today. Is the NARs culpability for that? Are the Suzannes?
If there is a doubt that some realtors are simply clueless shills who will use the appreciation angle to their advantage, watch the video below:
This self-serving need bleeds into decisions both big and small at every level of their organization. Today, I want to expose a trend in their reporting data, and I’ll let you judge for yourself why this goes on.
Realtors: Strength hinges on job market
Brena Swanson, January 23, 2014 10:47AM
Existing-home sales experienced a slight increase, growing 1% to a seasonally adjusted rate of 4.87 million in December from a downwardly revised 4.82 million in November, according to the National Association of Realtors latest housing report.
Notice how they managed to report the national numbers increased? Did they really?
The NAr frequently downwardly revises the last month’s numbers
Why do they do that? Any real data analyst trying to ensure accuracy would notice their methodology repeatedly overstates the current month’s estimates and requires a downward revision later, and a good analyst would change the methodology so later revisions were both up and down, making the current month’s estimate more accurate and reliable; however, that isn’t what the NAr does, and it’s not what they want to do. The NAr wants to overstate the current month’s readings and downward revise the previous month’s readings because it always makes the current month look like it’s increasing.
Imagine if sales or prices were completely flat and unchanging month-to-month. If the NAr desired accuracy, they would report the market was stagnant, which it is if neither prices or sales are changing; however, if they overstate the current month and downwardly revise the previous month, the NAr could report each month was increasing over the last, the market would appear to have life and strength, buyers might act on this false signal and help generate a commission; thus realtors manipulate the numbers and knowingly lie — over and over again.
Home prices could eventually stabilize sparking new demand
California home sales dipped 5.9% from 2012 to 2013 as the market felt the pinch of tighter inventory levels and higher prices, the California Association of Realtors reported this past month. …
In December, sales were down 6.7% from a revised 387,860 in November and down 18.6% from 444,770 units a year prior.
Home prices finally reversed a three-month decline and edged higher in December.
The worst nightmare of the NAr, or CAr for that matter, is when market conditions are so bad that their downward revisions can’t make the current numbers positive. That’s when they start really grasping at straws and find plausible but bogus excuses for the market’s poor performance.
“However, the supply of foreclosures and short sales is the lowest it’s been since well before the financial crisis, greatly constraining the number of these transactions,” said Kevin Brown, C.A.R president.
“In addition, housing prices are improving across the board, even reaching pre-2007 levels in parts of the Bay Area. Higher prices and rising rates as the Fed slowly tapers are additional factors in the sales slowdown evidenced in the December numbers,” Brown explained.
But the transition period from December to the New Year is usually somewhat slow, according to market observers.
“This is something we encounter every year from around Thanksgiving and mid-January, which is not hugely significant by itself,” said Sophia Delacotte, a Realtor in Silicon Valley, Calif.
The NAr isn’t going to change its ways. They don’t question the ethics of what they do, and they benefit from the activity generated from the gullible people who believe these
experts charlatans. Although I don’t believe I can change them, I can expose them, and whenever I see an example of their duplicity, I feel duty-bound to point it out to help protect you.
$200,000 HELOC booty in 7 months, 15 months squatting
The former owners of today’s featured property lived the high life of an OC Ponzi. They purchased this property with no money down, and after owning it for only seven months, some dipshit lender refinanced them and allowed them to cash out with about $200,000. It’s not clear when they quit paying, but they were finally served an NOD in late 2011. The lender took the property back in early 2013, then sat on it for a full year while prices increased. They are bringing it to market know in hopes of recovering some portion of the huge second mortgage wiped out during the foreclosure.
10 BOWER Ln Ladera Ranch, CA 92694
$659,900 …….. Asking Price
$732,500 ………. Purchase Price
12/17/2004 ………. Purchase Date
($72,600) ………. Gross Gain (Loss)
($52,792) ………… Commissions and Costs at 8%
($125,392) ………. Net Gain (Loss)
-9.9% ………. Gross Percent Change
-17.1% ………. Net Percent Change
-1.1% ………… Annual Appreciation
Cost of Home Ownership
$659,900 …….. Asking Price
$131,980 ………… 20% Down Conventional
4.41% …………. Mortgage Interest Rate
30 ……………… Number of Years
$527,920 …….. Mortgage
$142,495 ………. Income Requirement
$2,647 ………… Monthly Mortgage Payment
$572 ………… Property Tax at 1.04%
$100 ………… Mello Roos & Special Taxes
$137 ………… Homeowners Insurance at 0.25%
$0 ………… Private Mortgage Insurance
$225 ………… Homeowners Association Fees
$3,681 ………. Monthly Cash Outlays
($548) ………. Tax Savings
($707) ………. Principal Amortization
$213 ………….. Opportunity Cost of Down Payment
$102 ………….. Maintenance and Replacement Reserves
$2,742 ………. Monthly Cost of Ownership
Cash Acquisition Demands
$8,099 ………… Furnishing and Move-In Costs at 1% + $1,500
$8,099 ………… Closing Costs at 1% + $1,500
$5,279 ………… Interest Points at 1%
$131,980 ………… Down Payment
$153,457 ………. Total Cash Costs
$42,000 ………. Emergency Cash Reserves
$195,457 ………. Total Savings Needed