Well here it is folks, the day that the Realtors finally tell us what really happened when the bubble burst. This isn’t a surprise, they were caught publishing all sorts of incorrect (dare I say intentionally misleading) data during the decline. Remember this oldie but goodie? VINDICATION – NJ Q1 Home Sales down 30%
Now we know that the recent housing crash was about 14 percent worse than previously thought. That is the conclusion of benchmark revisions by the National Association of Realtors, after they realized that their numbers were “drifting” from other industry calculations.
That drift was caused by a big shift away from For Sale By Owner (FSBO) sales to Realtor sales (which was a big factor in their methodology), an increase in the geographic size/range of many multiple listing services (MLS), and double counting due to Realtors listing properties in several different local MLS’s.
So what does this change? I’ve already expounded on what it doesn’t change, which is really anything happening today in the economy, current home sales and prices and already-accounted-for losses from the housing crash.
It does however, change perception and economic prediction as we go forward. The Commerce Department will have to revise the housing component of GDP lower, and, perhaps more importantly, we have to look at comparisons and the overall health of today’s housing market differently.
The National Association of Realtors revised its existing home sales downward 14.3% in the period from 2007 to 2010, after the group said its data diverged from actual market conditions.
The trade group announced the revisions Wednesday in its monthly existing-sales report. November sales rose 4% from last month and 12.2% from a year ago. Jed Smith, the head of quantitative research at NAR said in a conference call that numbers in reference to supply and demand in the market are unchanged.
Lawrence Yun, NAR chief economist, said about half of the revisions came from a decline in for-sale-by-owner transactions. NAR said those sales dropped from 16% of the market in 2000 to 9% in 2010.
Multiple listings, geographic population shifts and house flipping also contributed to the revisions, Yun said.
John Burns Consulting contends that for years, the mortgage market believed NAR’s numbers to be overstated. Zillow recently added it would not be changing any of its operations as a result.