NAR Should Sponsor A "Lies Of Omission" Designation For REALTORS

By
Real Estate Agent with Joe Manausa Real Estate 8508880888
http://actvra.in/Hf9

Housing ReportI continue to shake my head in awe at the deceptive real estate report that is published each month by the marketing department of the National Association of Realtors.

If you are a long-time reader of the Tallahassee Real Estate Blog, then you know that I report on NAR's opinion reports each month. They continue to spiral down the path of marketing and promotion, rather than reporting the true state of the real estate market. And their biggest crime is not what they are saying, it is what they are implying.

In its most recent real estate report, NAR wrote:

The national median existing-home price for all real estate types was $187,300 in July, up 9.4 percent from a year ago. The last time there were five back-to-back monthly price increases from a year earlier was in January to May of 2006. The July gain was the strongest since January 2006 when the median price rose 10.2 percent from a year earlier.

Now, does that have you believing that homes are appreciating?

If it were me and I relied upon each NAR real estate report, I would think that home values are rising, and that the recovery is well on the way.

Unfortunately, we know better.

Why Does Tallahassee Produce A Different Real Estate Report

In NARs defense, Tallahassee could be moving contrary to the National market. A real estate report that only focuses on Tallahassee could be constrained by events that are not being observed nationally.

After all, there could be low inventory in most real estate markets (though I'm not seeing this being reported in very many locations).

And there could be no foreclosures hiding in the shadow inventory.

And maybe these other markets did not just set a record for the most lis pendens filed in a month.

But since I do not have that information, I will focus on the information that I do have.

The Truth About Home Values In A Realtor Real Estate Report

NAR is always quick to point out median home price movement when it is on the rise. But does the average (or median) price correlate to real estate appreciation (depreciation)? If the median price is rising, can we also say the values are rising?

No, we cannot. And it is wrong to report average price movements and imply in the message that homes are going up in value again. Because they are not.

My evidence comes from the Tallahassee MLS, and I suspect real estate professionals could find similar real estate report results in their own markets. But they will not get this from NAR.

What All Markets Can Learn From The Tallahassee Real Estate Report

If we look at year to date, arms length home sales in Tallahassee, we find that 2012 has recorded the highest average home size in the past 11 years. This means that people are buying bigger (more house) now than ever before.

Housing Report on home sizes

What NAR fails to reveal in their real estate report is that mortgage interest rates are 22% lower this year than they were at the same time last year (based upon Freddie Mac's report on 30 year fixed rate mortgages).

This additional buying power is allowing people to purchase "more home" for the same monthly mortgage payment, and they are choosing bigger homes.

This is the current dynamic that is allowing the median home price to rise, even as the median home value continues to decline. In fact, home values are 1.33% lower though August than they were last year.

What do you think will happen when mortgage interest rates begin to rise after the election? That will mean buyers will have diminished buying power ...

A Call For Accurate Real Estate Reports

I wish more Realtors would do these types of real estate reports. I suspect there are local markets well into recovery, and a real estate report from each of them showing price, value, and size would be quite revealing.

Personally, I only look at the raw data in any real estate report published by NAR, and I would encourage our readers to take anything opined by NAR with a grain of salt.

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Show All Comments
Rainmaker
192,306
Brian Kuhns
Coldwell Banker Roth Wehrly Graber - Fort Wayne, IN
Fort Wayne Real Estate by Brian Kuhns

My local market is so much different than any national markt report could ever relate to. People still ask me about all the doom and gloom in the market when in fact, locally, the story is quite different here. Unfortunately I don't quite have the voice or reach that the National has.

September 04, 2012 07:17 AM #23
Rainmaker
161,572
Karen Steed
Tallapoosa, Bremen, Waco, Buchanan, Temple, Carrollton - Tallapoosa, GA
Associate Broker Haralson Realty licensed in GA and AL

Mark Twain said it best, "There are lies, damn lies, and statistics..."    NAR is not doing us any favors by trying to make us believe that things are wonderful and looking up.  It only causes them to lose credibility with the membership.

September 04, 2012 07:44 AM #24
Rainmaker
289,312
Martin Kalisker
WEICHERT, REALTORS® - Synergy - Brookline, MA
Weichert, REALTORS - Synergy: MA Real Estate & Mor

You might very well be the only person that I know that reads anything put out by NAR regarding market trends.  Real estate is so local these days, that most people see past the graphs and the "national" focus and zoom into how the local market is trending through reports such as yours.  NAR's sole objective is to promote home ownership.  Our job as responsible agents (both Realtor® and non-Realtor®) is to identify homes that are affordable to purchase and for the lenders to only qualify people who have the financial stability for home ownership.  However, with FHA being the largest sub-prime lender out there, it is tough to say "no" to someone who feels that they are entitled to all the rights and benefits of home ownership with 3 or 3.5% down.

September 04, 2012 07:47 AM #25
Anonymous
Anonymous
Sue Rossi

What a fantastic post! We need to start speaking up, this has gotten rediculous. Don't contact the President of NAR, Board positions are volunteer Realtor held posts and there's zero chance they're going to make demands of NAR leadership and even if they did their year would be up before any action could be taken. Contact CEO Dale Stinton or Lawrence Yun himself, paid employees courtesy of our dues. Make sure to respond to the monthly confidence surveys you get in your email, and SPEAK UP in the comments section. I've said over & over to them that we are the ones who have to answer for their rhetoric at the kitchen table. This mess has gone on for seven years and they've yawned their way through it while collecting paychecks & benefits. They might be a marketing organization as stated above, but they have the only national voice. So what they say better be loud & better be accurate because we get the questions -- not them.

September 04, 2012 07:51 AM #26
Rainer
279,302
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Kimo's Lifestyle Solutions

Great analysis and perspective, however, NAR uses median prices while most agents use local community data and depending on your location, the data could be 2 or 3 hundred per cent more than the NAR report. It's all about marketing and motivating consumers to buy now, isn't it?

September 04, 2012 08:48 AM #27
Rainmaker
98,456
Marsha Cash
RE/MAX Advantage - Stockbridge, GA

National reports don't interest me too much.  Things vary so much from area to area.  Someone seems to always put a spin on things. 

September 04, 2012 09:18 AM #28
Rainmaker
519,417
Pat & Wayne Harriman
Harriman Real Estate, LLC (203) 672-4499 - Wallingford, CT
Broker/Owners, Wallingford CT Real Estate

Agreed, we don't put too much stock in national reports like NAR, Case-Schiller any more, the brush they paint with is far too broad to be of any use to local consumers. We don't even do a county report, we focus only on the individual towns we serve. That's the best way to get truly accurate, local info that our clients are drawn to.

September 04, 2012 09:50 AM #29
Rainmaker
41,701
Joe LaVallie
HomeStreet Bank - Mountlake Terrace, WA
111363

Good information. I agree with you.

 

 

September 04, 2012 10:41 AM #30
Ambassador
785,847
Charlie Ragonesi
AllMountainRealty.com - Big Canoe, GA
Homes - Big Canoe, Jasper, North Georgia Pros

I think that your reporting is amazing Joe. NAR is often Pollyanna about how they report numbers. but I have to say in my piece of the turnip patch we do see multiple bid situations prices rising and homes selling a bit quicker. Now factoring in Low interest rates as you point out may be part of it .

September 04, 2012 11:05 AM #31
Rainer
16,183
Jay Yutzy
Harrisonburg, VA

Like the weather real estate is local.  What is happening in one area is rarely an indicator of what is happening else where in the country.

September 04, 2012 11:23 AM #32
Rainer
19,755
Tina Beasley
Virginia Capital Realty - Richmond, VA

Great post and wonderful points you are making here.  I have had clients ask me if the prices of homes are going up and I tell them that we are seeing a "stabilization" in the market in the Richmond area.  I also tell them that I feel that market will take years to recover fully before we start to see considerable gains in housing sale prices.  You are dead on with your info and I agree, NAR could take a lesson from your report.

September 04, 2012 11:46 AM #33
Rainer
194,839
Dörte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton

Dear Joe,

Some of the more rural counties in our state have wild price swings from month to month because their volume can be under 100 houses, whereas other counties have thousands to pull from. With a couple of big or small houses, their stats can be way up or down.

September 04, 2012 01:10 PM #34
Rainmaker
321,900
Jon Quist
LONG REALTY - Tucson, AZ
Tucson's BUYERS ONLY Realtor since 1996

I don't put much stock in national reports. Real estate is VERY local, down to which side of a particular street the house is on. I know how to find the info I need to disseminate.

September 04, 2012 08:36 PM #35
Rainmaker
633,206
Stephanie/Bob The Ruiz/Miller Team
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Hi Joe, we also look critically at NAR reports.  However, if you look at same home sales at the low end we are seeing some price appreciation.

September 05, 2012 10:27 AM #36
Rainmaker
1,255,730
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I understand what you are saying.  We do need to try and deliver truth to our clients.  However, I will say in this area prices are sky rocketing. 

September 05, 2012 04:48 PM #37
Rainmaker
622,149
Richard & Beth Witt
RE/MAX Wittney Estates 516-795-6900 www.longislandrealestatesearch.com - Massapequa, NY
Broker/Owner RE/MAX Wittney Estates Long Island NY

Great report... I often notice these optomistic reports and wonder why they don't apply to our area... 

September 06, 2012 08:19 AM #38
Rainmaker
650,960
Evelyn Kennedy
Gallagher & Lindsey, Alameda, California - Alameda, CA
Alameda, Real Estate, Alameda, CA

Joe:

I don't pay much attention to national statistics.  Our market is crazy now.  Low inventory, multiple offers prices in my city have increased 11% since June 2011.

September 07, 2012 01:51 PM #39
Rainer
66,629
Deborah Fox
Villager Realty Inc - Selinsgrove, PA

NAR lost me when the $25 million +  spent on a nationwide database of deeds and tax cards never happened.

September 20, 2012 08:27 AM #40
Rainmaker
321,143
John DL Arendsen
ON THE LEVEL General Contractor, Crest Homes Factory Built Housing Dealer & Developer & TAG Real Estate Sales & Inves... - Leucadia, CA
Contractor, RE Brk, Factory Built Home Dealer/Devl

No doubt about it RE is local. But you're spot on about NAR and even other entities i.e. Zillow who can't seen to get it right on appraisals. At least in my market.

October 02, 2012 09:14 AM #41
Rainmaker
277,216
Kasey & John Boles - Jon Gosche Real Estate
Jon Gosche Real Estate, Boise ID - Boise, ID
Boise, Meridian, Ada/Canyon/Gem/Boise Counties

Interesting blog - I'm going to subscribe to you because I think this is interesting information.  Stats are a tough one because it seems like you can manipulate much of anything to get the information you want and they are often sweeping and generalizations.  I don't even like to quote things like what percent are homes selling from asking price.  I had a client ask me that the other day and I said, "it depends."  What price range?  What area of town?  What was the original asking price?  How does this take into consideration homes that are overpriced and get a low ball offer that is accepted or homes that are underpriced and get bid wars?  Type of home?  Totally different. Anyway....-Kasey

January 05, 2013 02:02 PM #42
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Rainmaker
774,510

Joe Manausa

Tallahassee Real Estate
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