Tuesday, January 1, 2008

What's Really Happening?

While listening to "Talk of the Nation" on National Public Radio yesterday, I was again reminded of the all to often poor insight given to issues by the media. One of the topics was the National Association of REALTORS® (NAR) report on the upsurge in home sales in November, about which the commentator could say only that NAR has "a reputation of being a cheer-leader for the industry."

Well maybe, but the fact is that November is the third busiest month of the year for the industry, and there is a good reason for this activity. Both corporate and military relocations are usually done at year end and during the summer, and upwardly mobile executives and others who switch employers time their moves similarly. They do so to accommodate the families of their personnel who are being transferred, or thei own families, as the case may be. This helps put their personnel or families at ease about the impact that the transfer would have on their children's education due to the disruption that could result from transferring in mid semester.

The activity in November is then no indicator of "a stabilization in housing in the wake of mortgage disruptions earlier this year," according to the NAR report. This not to say that it may not be indicator, but it is too early to say, and the activity in November is too skewed to be an indicator.

Several factors should help in the foreseeable future though. The signing of the Mortgage Forgiveness Debt Relief Act into law will certainly help both lenders and borrowers who plunged head-long into the sub-prime mortgage market. So too will the FHA Modernization Act, which recently passed in the Senate, if it goes on to become law.

As stated in the blog post that preceded this, A Self-Fulfilling Prophesy . . ." With the exception of a few markets, lenders and borrowers, current market conditions in general are due primarily to public perception which was misled by their understanding of media reporting, and a general lack of full responsibility and accurate reportage. To this, let's add that they too often rely on experts with questionable expertise.

No comments: