I have some “old school” buddies in the real estate business that don’t really do the “whole blog thing”, as they call it, but they always ask me about it. One thing that they’ve always asked me about is housing statistics. “Why don’t you do charts and provide statistics on the blog?”
Well, I do provide some statistics throughout the website with the neighborhood breakdowns and the combined area statistics, but when it comes down to year-over-year or quarter-to-quarter or month-to-month stats, I’ve simply chosen not to do them.
Why in the world not?
They Suck. That’s why.
I’m concerned with what happens from today forward. Statistics have absolutely no bearing on the future. While it’s true that they can indicate a particular direction, they’re absolutely worthless to me. Hell, statistics helped get us into the housing crisis. Why would someone pay $50,000 more than a house is really worth? Statistics. “Well, Mr. Parker, statistics show that homes in this neighborhood have been increasing in value for the past 12 years at an astounding rate. You’ll make a boatload of money in five years. Sign here and don’t forget to date it.” BOOM. A year later people start to get foreclosed on because they overpaid for the “perfect” house and the lender was all too happy to give them more than they could afford. Mortgage insured bonds start flopping because of the increase in foreclosures. Investors start to shy away from investing in the housing market, mortgages aren’t being bought and packaged into major funds at the rate they’re used to, lending gets tight because they can’t sell the loans so easily any more, fewer buyers are willing and able to buy, and we get a full blown mortgage/housing crisis.
Not to mention, like the saying goes, 87% of statistics can be made to say whatever you want them to. Anyone can manipulate statistics to promote their agenda. That’s why you have 1/2 of the financial analysts on TV saying that the economy is recovering, and the other 1/2 saying that it’s not over. No one knows because statistics are worthless as a whole. If they had any merit, everyone would be right about when the economy will recover.
Another problem with statistics is that we have to take them into context. If we were to look up sales data of November of 2009, we’d see an increase in sales from the same time last year. That’s great! Is that a sign of market recovery? Not necessarily. Why not? Oh, that’s right, we have to take into account the ton of people that bought homes to get in before the initial tax credit deadline. Of course, the deadline was later extended, but the homes were already under contract.
Let’s move on to December, January, and February. If we pulled sales data from these months, we would probably notice a drop in sales from a year ago. That sucks! Is that a sign of us falling deeper into an economic meltdown? Not necessarily. A lot of first time home buyers that probably would have waited to buy a home until the first of the year simply bought before the tax credit deadline to get their $8,000. It would take some type of adjustment to sales numbers to figure out what the “real” statistics were when you take out the volatility of the first-time buyers and other external factors. If we do that, though, now guess what? We’ve manipulated data to come up with more “accurate” numbers, and how accurate is manipulated data?
Therein lies the entire statistical problem. There are, and will always be, external factors that dictate sales. How about this new Health Care Bill? New President? New majority in Congress? Scandals? Grants? Budget Cuts? Taxes? Credits? Wars? Terrorist attacks? New housing laws? New lending laws? The list goes on and on. No statistics will ever be able to predict those factors and their effects on sales. The cynic will say, “Seth, that’s why statistics DO work, because there are always external factors and they all average out.” I can see their point, I just don’t agree with it because an external factor like war supersedes something like a government grant.
OK, we get it already.
I don’t mean this to be a hate fest on housing statistics. They can be useful for determining lots of things like “What offer should I start with?” or “How much should I take off what I’ll pay because it doesn’t have a garage” or things of that nature for a particular home. I just really don’t like “overall” or “area” statistics because they can be very misleading.
So, I said all of that to say this: The reasons above are why I haven’t posted statistics previously. I’ve been running this website for a little over two years and during that time, with over 100,000 total visits, I’ve never been asked by anyone to publish housing statistics. I’ve never really brought it up before, so this is my open letter to all of you. If you want me to publish them, email me at seth@level10realty.com or comment on the blog with your preference. If I get at least 3 or 4 requests, I’ll publish them because this site is here for all of your benefit. If I haven’t maximized its worth to you guys, I haven’t been doing my job.
(steps off the soapbox…)
