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Something Doesn't Add Up Here


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2007 May 14, 3:25am   20,885 views  207 comments

by SQT15   ➕follow (0)   💰tip   ignore  

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John Burns Real Estate Consulting has put out in their monthly newsletter that housing if falling faster than is being reported.

The housing market has softened much more than is being reported. We have been advising our retainer clients for more than one year about misleading national sales information, both with the Existing Home Sales and New Home Sales data. We are now going public with our concerns because we are concerned that policy makers are relying on national data to conclude that the housing market correction has not been severe.

Here is our support:
Closing Data: We purchase and compile actual home closing data for approximately 181 counties across the country, which captures the counties where about 55% of the U.S. population lives and a significant percentage of all of the counties where the large home builders are active. This data shows that sales have fallen 22% if you compare sales over the last 12 months to the prior 12 months. On a straight year over year comparison, the decline is much more.
Mortgage Bankers Association (MBA) Data: The MBA Seasonally Adjusted Purchase Application Index, which is a measure of the number of people filling out loan applications to buy a home, is down 18% from its peak in September 2005.1 With presumably more applications being filled out by borrowers who now have to shop around for a loan, how could sales have fallen by less than 18%?
Builder Data: The nation's two largest homebuilders, D.R. Horton and Lennar, are reporting that orders have declined 27% to 37%, year-over-year. 2 3 D.R. Horton and Lennar have dropped prices significantly in many markets to generate sales, while the resale market has not. How could their sales have fallen more than the resale market, even if new home communities tend to be in fringe areas?
Realogy Corporation Data: Realogy, which is the parent company of Century 21, Coldwell Banker, and ERA, participated in roughly 1.9 million brokerage related transactions in 2006 compared to 2.3 million in 2005, representing a year-over-year decline of 18% nationwide.4
2005-2006 NAR State Data: The National Association of Realtors state data does show sharp year-over-year corrections in major states: 28% drop in Florida, 24% drop in California, and a 28% drop in Arizona. Our data, however, shows the sales have probably dropped by 34%, 27% and 38%, respectively. The national numbers include some large states where sales volumes have not corrected substantially, such as in Texas and Ohio, but we believe these markets are not very healthy for other reasons. Interestingly, our calculations were tracking very closely with NAR data through 2005, as illustrated above. We did investigate NAR methodology and have found absolutely no reason to believe that the NAR is intentionally misleading anyone, as some have suggested.
New Home Data: The Census Bureau calculation of new home data does not calculate sales net of cancellations, and cancellations are running much higher than normal right now, which is why the sales numbers overestimate actual sales.

The preponderance of evidence shows that the housing market in vibrant areas where home building is prevalent has corrected much more than some people believe it has.

In summary, we believe that the Fed should know that the housing market correction has been quite steep and is also not showing signs of bottoming out, as evidenced by all of the above information, as well as significant additional research we have conducted. While the Fed has far more to consider than housing, they should know that the housing market could sure use some lower interest rates to help achieve stability soon.

This is my favorite quote "We did investigate NAR methodology and have found absolutely no reason to believe that the NAR is intentionally misleading anyone, as some have suggested. "

Um, yeah.

Overall I love this article though. I think we'll see much more of these types of reports as time goes on. I really think that people don't realize the magnitude of the boom and bust cycle we're in. Most people I talk to are much more pessimistic about housing than they were just a year ago but there is still this feeling that the market will be on an upswing in the near future. Articles like this make that seem unlikely.

Here's the link to the full article

SQT

#housing

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153   astrid   2007 May 15, 9:59am  

GC,

More *medical advice*

Seek professional therapist to discuss your sporadic exhibitionism and unresolved issues about objectifying women.

* Not liable if so called professional therapist turns out to be an analrapist or is otherwise unqualified to provide professional therapeutic advice.

154   Peter P   2007 May 15, 10:05am  

We should replace objectification with objectivism.

155   Ozman   2007 May 15, 10:08am  

We agreed that the main missing piece from general education is basic understanding for statistics and logic, which is easy for even people of low math skills.

Statistics is not easy. Do not underestimate it. Even Einstein had problems accepting the Heisenberg principle. Hence why he later said God does not play dice :)

156   Peter P   2007 May 15, 10:17am  

One cannot adequately understand statistics without multivariate calculus. I once inspired to become a logician, now I am more practical.

157   Ozman   2007 May 15, 10:21am  

I had a professor that called the lottery a “tax on stupid people that don’t understand statistics”

We must have had the same professor.

But then again the stupid FB's must be laughing if the smart people get taxed to bail the stupid FB's.

158   Paul189   2007 May 15, 10:37am  

getting my MBA was the worst mistake of my life

159   HARM   2007 May 15, 10:50am  

Huh?

160   Ozman   2007 May 15, 10:57am  

getting my MBA was the worst mistake of my life

I have always thought Business schools were in the business of making easy money from the privileged few.

161   Ozman   2007 May 15, 11:04am  

My rational goes like this. If I need to borrow $150 K to get a decent MBA, why not use that money to start a real business in the real world. If it succeeds well and good, if not, then you have learned more than you could ever have from an MBA class.

162   Paul189   2007 May 15, 11:08am  

Harm,

I believe it prevented me from finding work in '02/'03 as I was percieved as too expensive. There was also no support from my school (intentially left nameless) while looking for employment. When I took the MBA off my resume I started getting calls and interviews. It could be coincidence but I don't think that's the case.

Also, I've had confirmation by a current coworker of the success via MBA deletion theory.

Paul

163   Ozman   2007 May 15, 11:10am  

GC, maybe HBS woman was frightened of you :)

164   Paul189   2007 May 15, 11:20am  

I think the networking thing is what Ivy league and MBAs are all about. My school probably is not the best for that and I am not a big networker. This is probably why when at a cocktail party in those lean years, I would tell people I couldn't get work and they looked at me like I had a third eyeball in the middle of my forehead!

165   Peter P   2007 May 15, 11:32am  

I thought business school is mostly about networking.

166   Ozman   2007 May 15, 11:51am  

Maybe I'm a little biased.
A decade ago, armed with a graduate degree I was told by my corporate colleagues that I needed an MBA to start a new business. Being a Geek then was not sexy. Anyways, quit my job and started a new business. It went under after 2 years. Started another one shortly after that and it has been the best thing ever. I was probably lucky the 2nd time round.

I think the value of MBA networking might be important to those looking for corporate jobs as senior managers and future CEO's. But for Entrepreneurs starting new business models and products, you need skills and brain power more than a network.

167   thenuttyneutron   2007 May 15, 1:06pm  

In my industry, Nuke Power, a MBA will help you get up through the ranks beyond a shift manager. It will not sub for an ABET engineering degree with a SRO license. You *gasp* actually have to have some skills to make the MBA worth something.

Shift managers are basically the top dog of the plant when the plant manager/VP is away. He is the ultimate guy in chanrge of the plant when it comes to license duties. In the end a MBA is just a little extra thing to tack on a resume to make you stand out against the others. Honestly a BS in engineering with a SRO license is a very good combo to have and is the catch all requirment to advance.

168   astrid   2007 May 15, 1:14pm  

GC,

LOL! How little you understand me. If my boyfriend would truly be happier as a janitor or a farmer or an theoretical mathematician, I would support him -- possibly even financially, if I thought he could be a brilliant scientist.

However, he is quite fond of managing money (he saved almost $150K in six years with a relatively modest salary) and likes good food and we agree he would thrive in a more challenging environment, so investigating financial engineering (so he could make up his mind before enrolling) makes more sense. Furthermore, he's not THAT brilliant or THAT lazy, so why bother waste a lifetime in academia.

169   astrid   2007 May 15, 1:19pm  

GC,

Also, might want to talk about unresolved regret about not taking that pre-IPO Google job...*

But really, I admire your life. You work very little and at a job you somewhat like. You make enough money to live comfortably and spend lavishly on food. You went to the university my father would likely have attended if he wasn't interrupted by the Cultural Revolution. You seem to have enough friends and associates and attention from relatively attractive women. You have a great life!

*not constitute therapeutic advice, blah blah blah.

170   astrid   2007 May 15, 1:26pm  

FAB is an advocate of the top 5 biz school or you're out theory. I have no experience so I can't tell.

Depending on where you work, big law firms are a little more forgiving about law schools.

171   FormerAptBroker   2007 May 15, 1:33pm  

astrid Says:

> FAB is an advocate of the top 5 biz school or you’re
> out theory. I have no experience so I can’t tell.

I've always said to try for a top school (even top 20), but if an English major wants to go in to business I think they can learn something at any business school (even a JC at night paying $5 a unit)...

172   skibum   2007 May 15, 1:59pm  

Here's an interesting tidbit - a potential scam related to the housing bubble has hit the "fortress," including Palo Alto, Portola Valley, and Los Altos:

http://www.mercurynews.com/realestatenews/ci_5898867?nclick_check=1

173   HARM   2007 May 15, 6:07pm  

Harm,

I believe it prevented me from finding work in ‘02/’03 as I was percieved as too expensive. There was also no support from my school (intentially left nameless) while looking for employment. When I took the MBA off my resume I started getting calls and interviews. It could be coincidence but I don’t think that’s the case.

Also, I’ve had confirmation by a current coworker of the success via MBA deletion theory.

Paul,

Interesting. I had almost the exact same experience after I completed my MS in the early 90s. It seems to work against you when you are a fresh-out-of-college neophyte and not a member of the "Club" (you know, the families who tend to join Skull'n'Bones, get their names in the tabloids, etc.). I wasn't getting any callbacks at first, then got the same idea, took it off my resume and started getting called. I left it off for several years, until I started going for more senior positions.

Once you have significant real-world business experience under your belt, I think your MBA will come in handy, but probably not before then.

174   astrid   2007 May 15, 11:11pm  

GC,

I don't think you understand my boyfriend or me very well. That's all I have to say.

175   Peter P   2007 May 16, 2:28am  

lazy people are the most helpful ones in times of crisis.

If you can find a way to motivate smart but lazy people, they are your biggest asset.

176   astrid   2007 May 16, 2:43am  

On somedays, talking to my boyfriend is akin to banging my head against a wall repeatedly. I accumulate a headache and absolutely nothing happens.

177   astrid   2007 May 16, 2:48am  

Peter P,

Smart but lazy people are a pain in the ass to manage. Even if you get them momentarily motivated, they're liable go back to their lazy ways.

The bright side is that they're often too lazy to look for more renumerative work.

I guess stupid but lazy people are even worse. Followed by stupid and hypercontrolling people. Followed by stupid, hypercontrolling, passive-aggressives -- maybe that how my boyfriend sees me (okay, so this might be a bad day for me).

178   astrid   2007 May 16, 2:49am  

Peter P,

Smart but lazy people are a pain in the ass to manage. Even if you get them momentarily motivated, they're liable go back to their lazy ways.

The bright side is that they're often too lazy to look for more renumerative work.

I guess stupid but lazy people are even worse. Worse than that are stupid and hypercontrolling people. Worse than that stupid, hypercontrolling, passive-aggressives -- maybe that how my boyfriend sees me (okay, so this might be a bad day for me).

179   Peter P   2007 May 16, 2:53am  

Worse than that stupid, hypercontrolling, passive-aggressives — maybe that how my boyfriend sees me (okay, so this might be a bad day for me).

You are not stupid. How are you hypercontrolling? Do you ban certain food in your boyfriend's diet?

180   Peter P   2007 May 16, 4:19am  

The post was visible for a while and then it got deleted???

Really? Can you post again?

181   astrid   2007 May 16, 5:37am  

Thanks... :)

I am exaggerating somewhat. He and I live on opposite coasts, after all.

He likes my cooking. If anything, I overfeed him

The problem is that we had basically agree in principle about what he'll do for the next couple months, but...I feel that he's squandering all his break-from-work time on his fantasy baseball leagues and analyzing network TV programming

Yesterday I asked him to set himself some firm goalposts for the goals we discussed and the phone call basically degraded into me asking him to call me when he's REALLY made up his mind.

182   Peter P   2007 May 16, 6:45am  

In the rest of the world, sports are more of a social thing, as opposed to an addiction in this country.

I heard that in Europe there is a mythical sport called "football" in which a spherical object is kicked around.

183   astrid   2007 May 16, 7:01am  

GC,

Thank you very much, but I think I'll pass on your relationship advice.

184   Peter P   2007 May 16, 7:12am  

How can I become a poliburo member of this board?

When the time is right you will know.

185   astrid   2007 May 16, 9:32am  

"He seems to make you feel bad about yourself."

Generally, it's because he's irritatingly well adjusted and rational.

186   HARM   2007 May 16, 10:50am  

How can I become a poliburo member of this board?

The Patrick.net Politburo just wrapped up one of our weekly world domination planning sessions, but the word is still "no membership for GC", very sorry :-( .

However, you are always welcome to register and request thread-starting rights from Patrick.

187   Peter P   2007 May 16, 3:35pm  

Now don’t go giving him any ideas.

Anyone can request. But Patrick has the absolute power here. ;)

188   astrid   2007 May 16, 9:57pm  

Harm, I'm coming around to your view on the other thread. GC is either playing out some parttime antisocial personality online or he really needs help. Generally, I prefer erasing offending posts over banning if the person has some valid things to say, but even I have my ceiling on online Borat impersonators.

189   Listening   2007 May 17, 5:33am  

The clique dominating this board that is, oh so cool, and oh so sophisticated, and oh so witty, has created a suffocating environment.

The result-

Oh so boring!

190   HARM   2007 May 17, 10:10am  

justapeon,

We at the Patrick.net Politburo have taken your critique under careful consideration and have expansively debated the ramifications thereof, in a specially convened joint session with the Trilateral Commission. After thoughtful deliberation, we have come to the unavoidable conclusion that you are a tool.

But we thank you for your contribution. :-)

191   Paul189   2007 May 17, 11:32am  

Harm,

Thanks for the note.

Paul

192   astrid   2007 May 18, 4:40am  

SQT,

I'm sorry that I sometimes give off a bad impression of my boyfriend as somehow highly critical or very flawed. Generally speaking, he is a great person be around and someone who stuck by me through lots of bad times.

Right now is one of the rare times when he's bringing conflict into our relationship. I'm a little worried about him and I feel powerless to help him make up his mind and move forward, so that's mostly what I'm venting here.

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