Housing: The good, the bad and the funny

Does a slight rise in sales compensate for a record price collapse? Don't ask the media for an answer.


Andrew Leonard
November 28, 2006 11:38PM (UTC)

The good news: Sales of existing homes ticked upward for the first time in eight months, by .5 percent over September.

The bad news: Sales are still down 11.5 percent year-over-year and the median home price plummeted by $8,000 over a year ago, the largest year-to-year drop on record. Inventory levels also continued to rise, which promises to put even more pressure on prices.

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The funny news: National Association of Realtors chief economist David Lereah said "market fundamentals are improving" and blamed "psychological factors" for continuing to inhibit buyers from snapping up all those great deals out there. (For an amusing look at Lereah's go-go presentation at the recent National Association of Realtors convention in New Orleans, check out DavidLereahWatch: In short, there's never been a better time to buy, buy, buy!

No doubt the analysts and experts will have a field day over the next 24 hours arguing about whether a slight uptick in sales balances out an unprecedented, historic price collapse. Personally, I'm more interested in these mysterious "psychological factors." Previously, Lereah has targeted the "media" for running "negative news stories" that contribute to buyer hesitancy. Now, the National Association of Home Builders is getting into the act. The group commissioned a study to find out whether press reports are influencing buyer behavior. Are nasty-minded reporters "interfering" with the workings of the housing market?

According to Blanche Evans, editor in chief at Realty Times:

Nearly one in five homebuyers (19 percent) said that they allowed the news media to influence their decision of when to buy a home. Nearly one in four (23 percent) said the news media had "some importance" on their decision; and 7 percent said it played a minor role. A full 48 percent said it had no influence whatsoever.

Evans quotes Thomas Riehle, "a partner in RT Strategies, which conducted the research for NAHB" as saying:

"While the majority of the households we polled indicated that they found the media a reliable source of information on the housing market, what they read in the newspaper, saw on television or heard on the radio was no substitute for actually going out and shopping the market."

So, if I may summarize the NAHB's message: Don't believe what you read, don't believe what you hear. The only sensible, prudent thing to do is call up a desperate real estate agent and let them fast-talk you into buying a home.

Evans appears to believe that the media has been bad-mouthing the housing market since 2002, and was unfairly calling it a bust earlier this year, "despite only losing 1.7 percent in median values nationally."

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But I'd like some better numbers. If the media affects home-buying tendencies on the way down, then it undoubtedly does the same on the way up. My recollection is that there was no shortage of cheerleaders during the great housing boom at the dawn of the 21st century. If you're going to slam us for kicking you when you're down (or worse, kicking you until you go down), then where's our props for helping launch you into orbit in the first place? Psychology doesn't just include depression -- it also covers good old irrational exuberance.


Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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