If you are reading any statistics anywhere and hoping to see them for what they really are, you must pick up a copy of How to Lie with Statistics by Darrell Huff and if you read nothing else in the book, read Chapter Five.
The picture shows the two ways a graph can be shown (and created) for maximum impact. The two graphs show essentially the same information, so graph #2 isn't "lying" per se, just reorganizing truth. I'm seeing large instances of this kind of "lying" going on everywhere real estate is being talked about.
Look, no one is arguing that inventory is up, short sales and foreclosures abound and sales are down. What I have trouble with is how this information is being used to make you think the sky is falling when it's not.
Don't let the statistics and scary graphs out there force you into inaction. Pick up the book. I guarantee you'll think differently when you see numbers and graphs.
Monday, July 23, 2007
How Real are Sacramento Real Estate Statistics?
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9 comments:
You're throwing blanks, Purva. The SKY IS FALLING in Sacramento. If you believe the stats are misleading, PUBLISH THEM on your blog.
Here's another story (mainstream):
http://tinyurl.com/2abv8s
Excerpts:
Subprime lending is predatory
- Mortgage brokers steered borrowers to loans that they could not afford.
- Appraisers inflated their objectivity under lender pressure to drive real estate prices.
- Lenders relaxed underwriting standards and failed to uphold the consumer's ability to repay.
- Real estate agents drove up market prices because mortgage rates were at historic lows.
- Wall Street bought securities regardless of underwriting standards because of performance.
- Government regulators were driving toward unattainable homeownership levels.
- And consumers wanted loan amounts to feed their lifestyle and housing wants, disregarding prudence in favor of the bigger.
Tyrone,
I did not say the stats were misleading - I said their representation was misleading.
As for the rest of the story, I hate to nag and so won't repeat myself.
What do you mean that representation of statistics is misleading?
Could you provide the following data, so we make sure to get only correct statistics from a real realtor:
% of homes on MLS which are
a) vacant
b) short sales
c) foreclosures
Inventory
Sales for June
Then calculate months supply
Thanks so much.
If you can provide this data, then I can hook you up on my website. I am looking for a knowledgable realtor in Sacramento. Looking forward to this!
I'm not sure that I get you. Are you saying that Sacramento real estate is actually doing really well, and all the statistics are lying?
Can you tell us what lies are being told about the statistics surrounding real estate?
How are the statistics being represented in a misleading way?
Again, I am NOT saying the market is doing well, which is what makes it a great market for buyers. If it were doing well, most people wouldn't be watching it, they would be out there putting in multiple offers, sending prices through the roof. (Yes, Tyrone. CONSUMERS send values soaring, not Realtors.)
I'm only saying that the spikes and valleys we're being shown in all the "bubble" postings must be looked at within a larger time context.
Anyone looking at a spike (or valley) that goes from the bottom of a graph to the top is likely to be a little shocked. The impact of that graph is much different than say, a small spike (or valley) if the entire graph were shown to you, over 30 years or so.
If you're intrigued, I suggest you read the book and then go look at the loudest stats out there. It should clear all your questions.
Liers figure and figures lie....Who are you kidding?
Schahrzad Berkland,
By the way, I DID take a look at your website and I must commend you at having an honest graph of foreclosures and NODs up there.
But this is what I'm talking about - say you were to take the San Diego monthly NODs and foreclosure sales chart and begin the timeline in say January of 2005 and then stretch that out over the entire graph.
Wouldn't that have more of an impact on the reader? See how you could still be telling the truth, but reorganizing it in a way?
By the way, before anyone else brings it up, I DON'T think that YOU are misrepresenting the stats. I am simply giving an example of how it could be done and is being done in other places.
Purva,
You might be interested in seeing BMIT today. They posted a plot showing statewide foreclosures. The frightening thing about it is that it cannot be a one-time blip, or spike. I don't believe significant discontinuities in the real estate market can happen, based on its natural time constant. I think the result of subprime ARMs resetting is now taking hold, and we have 18 more months of this to come.
http://bubbletracking.blogspot.com/
Tyrone,
Again, that graph is exactly the trouble I have with representation of numbers. The inventory they are talking about is in Lee County, Florida - on a blog dedicated to providing excellent statistics to the West Coast! Now that's a huge disconnect, isn't it?
The problem is most people want their information bundled in neat little packages.
I have already put up the real numbers (straight off the MLS for Sacramento county) which is my market and the county I concern myself with.
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