The Housing Market Is Not Making a Comeback

BY PAT SUMMERS

Two days ago, I was having a casual conversation with a friend. We ended up somehow on the topic of housing.

'Housing is making a comeback,' he said confidently.

After snorting in amusement and choking a little bit on my drink, I said, 'No, it's not.'

'Yeah, it is. I heard it on the news this morning. They said the housing market is turning around.'

Of course, he couldn't remember exactly what they said, only that the message was positive. I couldn't help being curious about that. After following the housing market (and writing about it) for a few years, I have seen no evidence that housing is anywhere near the end of its downward spiral.

A few hours later, I hit the Internet to dig up the strange news report he had witnessed. Since he didn't give me very many details to go on, I had no way of knowing exactly which story he heard.

But I think I might have found the source: the NAR.

The National Association of Realtors (NAR) has been flirting with fraud for over two years now. The trade organization has repeatedly claimed that housing is poised to stabilize any minute now. They have called bottom no less than 10 times, knowingly and purposely misleading consumers and the media for self-serving reasons.

Even as it became obvious that we were in a housing bubble that was poised to explode and leave people sorry they ever considered buying homes, the NAR pumped out commercial after commercial saying 'now is a good time to buy.' NAR's chief economist --who recently resigned--put out two ridiculous books during this time that were filled with misrepresentations: Are You Missing the Real Estate Boom? and Why the Real Estate Boom Will Not Bust

Nevertheless, the media often takes NAR press releases, quotes and forecasts at face value. I find this irritating as the association has proved time and time again that they are not only terrible forecasters, but that they are willing to lie in order to keep up the flow of profits in their industry.

I am relatively sure that my friend's misguided statement stems from the most recent NAR press release, which states:

'Sales of existing homes increased in February and remain within a fairly stable range.'

Lawrence Yun, NAR chief economist, was quoted in this release as saying, 'We're not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing.'

The aforementioned statement and Yun's quote appear at the very top of the press release because the NAR is desperate to put a good spin on the real news:

Home sales were down 23.8 percent in a year-over-year comparison.

The year-over-year figure is the figure that matters. The other number, the one the NAR put the most focus on, is just a seasonal change. In other words, it's not an actual improvement in sales.

Unfortunately, some reporters were too lazy or not savvy enough to read all the way through the release and therefore missed the important number. (The only other option is that they're all trying to put a positive spin on this news too, which is almost too distasteful to consider.)

Respectable outlets like the Wall Street Journal, Forbes, and the Las Vegas Review Journal reported that home sales were getting better, never mentioning that sales have actually declined significantly in a year-over-year comparison.

I've got a feeling that these news reports, and others like them, are the reason my friend is so confident that 'the housing market is turning around.'