In Seth Jayson’s Motley Fool column: Housing: Solid or Soft? [Motley Fool] he discusses signs of a housing correction. And with Fool.com’s thorough policies on disclosure, he indicates he is biased and he “remains a happy renter, because he knows there’s a difference between price and value.” He has been predicting a crash for some time now.
I am not advocating that there aren’t serious issues with the housing market at all, but its troublesome when articles like this are sensational and based on anecdotal indicators like a link to a few broker comments and list prices. We all know that examples can be pulled out of any data set that fit our argument.
The problem with predicting housing declines using list prices can be illustrated in my Three Cents Worth post on Curbed called Seller Reality Distortion. The drop in list prices in a cooling market can be exagerated when the property is significantly overpriced to begin with. Even though the market could be rising at a modest pace, the list price has to be cut significantly for the property to sell.
The link to the ForeclosuresMass stats is particularly interesting. It seems like they have been issuing a lot of press releases lately giving the impression that huge numbers of Massachusetts housing units are going to foreclosure. While there is certainly an uptick in foreclosures based on their data and it seems to be in lower income demographics, I got the impression that the article pulled out the towns at the high end of the range and ignored the lower end of the range. I’ll also bet that many of the towns at the high end of the range of foreclosure increases are based on relatively small data sets judging from the total number of statistics presented for the whole state.
This has been my beef with the media housing coverage over the past 9 months. Sensationalism in the guise of being informative has got everyone’s head spinning. Its simply the other end of the spectrum from the churn presented by housing advocates like NAR. Maybe there’s not a better way to cover the market, but this type of coverage is really starting to bug me.