Gee, why am I not surprised by news that the National Association of Realtors (NAR) may have tweaked its figures?
The National Association of Realtors, which produces a widely watched monthly estimate of sales of previously owned homes, is examining the possibility that it over-counted U.S. home sales dating back as far as 2007.
"Examining"?
Isn't it funny how these "statistics" always are off in one direction? How jobless claims always seem to have "revisions" upward, how employment always seems to have revisions downward, and now how home sales that were "reported" didn't really take place?
But I thought the NAR's data came from the various MLS systems? If you remember, there was a bit of a controversy that I hammered on a while ago with regard to whether that data was true, complete and accurate.
The NAR "boosters," of course, all argued that it was and is.
But CoreLogic (CLGX) tracks property sales through filings in the local courthouses. You know, real honest-to-God public records, instead of a self-interested trade association's claims? And those statistics say that sales may be 20 percent less than were being reported. Worse, the mortgage bankers' index of purchases and refinances (mortgages) argues for overstatement by 10-15% -- at least -- as well.
How is this possible if the "SLD" flag in the MLS really means sold, transferred, and deeded?
Oh yeah, here we go:
To produce estimates of annual sales, it uses a model that is benchmarked to the figures reported in the decennial U.S. Census. The model requires making certain assumptions for population growth and other measures in between the census surveys.
Kind of like the Bureau of Lies and Scams (BLS) produces its "birth-death" model, in which it assumes that people start businesses even when there's no capital formation and no customers, right?
Here are the obvious questions that nobody in the mainstream media will ask:
- Does the NAR have a pecuniary interest in over-reporting sales, and thus showing that fewer homes are available for sale in the marketplace than is actually true? Would this tend to influence people to buy a house and pay more for that house?
- Who would benefit, individually, from such over-reporting? Are those people NAR "members"? Is there a percentage-commission scheme that has near-monopoly status when it comes to home sales -- a scheme which would, of course, cause higher prices to result in higher commissions to NAR members?
- If over-reporting happened, did it happen due to an accident, a statistical model error that was discovered years ago but intentionally buried and overlooked (as appeared to have occurred with the ratings agencies during the boom) ... or was it an intentional act?
- Is there a pattern of conduct related to home price appreciation prior to 2007 -- and then these sales being over-reported since 2007? Remember the advertising from the NAR -- "There's never been a better time to buy" in various forms -- all the way up, and now all the way down. One of the favored claims is that the "low interest rates" make for a great time to buy. But NAR "conveniently" forgets to mention that if and when rates rise, the amount of house you can buy with a given payment decreases -- and as a consequence the effect of increasing mortgage rates is to depreciate the market value of houses.
- Where are the subpoenas and Congressional hearings?
- How many consumers since 2007 have overpaid for a house? How many hundreds of billions of dollars did they spend in excess of what they should have spent, had the supply numbers been accurately reported?
- Who's going to take financial responsibility for the financial losses that accrued to consumers since 2007 as a consequence of the bad data published by the NAR's holding itself forth as a subject matter expert and professional association -- data that was relied upon by those consumers to their detriment?
As for anything that comes out of these NAR folks in the future?
My recommendation is that you ignore it.
