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New: Housing: swimming in info, searching for the bottom

Posted on Jul 14, 2009


question maze

The US Housing market officially hit bottom on Tuesday, June 16, 2009, according to Mad Money’s Jim Cramer. Based on his analysis of better than expected housing starts, increasing sales, and decreasing inventory, Cramer argues that we’ve seen the worst of this housing debacle, and can begin the slow climb back to sanity.

And yet, a month later, we’re still seeing headlines that read like footnotes to the 4 horsemen’s sightseeing tour. So, how can we have this extreme swing in opinion? We’re all getting the same numbers, and existing on the same planet, correct? Yet I’d swear I’ve never seen more schizo info. There’s nothing consistent, no standards of reporting, no BIG HOUSING CHART that we’re all referring to- like the digital counter ticking up the national debt ( I think they ran out of slots on that one).

Shouldn’t there be some agency (job security!), or body of standards keepers (bureaucrats) who sift through all the info and disseminate it into neat little bite-sized, easily digestible (And Accurate) chunks so those of us with lives to lead can get our (Useful) news and still have a life? I’m sure this was the original thinking behind the current crop of infotainment/news magazine formatted shows that we now channel surf through in search of actual information (had enough of MJ yet?).

As a Realtor, I spend a lot of time every week, reviewing current data on our local market, viewing current inventory, looking for trends, and hunting for the useful bits of info that can help my clients make good financial decsions. It’s up to me to filter out the noise, hone in on the facts, and extract the  hidden nuggets of truth. The pieces of data that don’t fit the trend line are commonly referred to as ‘froth’.

What I’ve been finding lately is that there’s frequently more froth than trend. With foreclosures, pre-foreclosures, short-sales, reluctant homesellers, hesitant home buyers, underwater builders, fearful banks, newly revised appraisal systems and lending standards all exerting pressure on prices, the resolute, able, focused homebuyer or seller has become a rare bird.

Providing clear, concise answers to pricing questions has become a black art; in a large black cauldron, blend 1/2 cup of recession (the cup is always 1/2 empty), 2 pinches of foreclosure, add 1 minced jobs forecast, a sprig of stock market turmoil, 1 new bailout, 1 eye of newt. Stir for as long as it takes one short sale to close (or for Countrywide to respond to an offer-60 days to 6 months), then bring to a boil over an open flame for 18 months. Serve cold. Leftovers are even more flavorful!

In spite of the fact that unemployment rates for Washington are still below 10%, and foreclosures make up less than 2% of the market, psychologically, their impact is much greater. When headlines trumpet endless destruction, it takes a strong will to keep marching to your own drum. Which is why steely-nerved investors are the first ones out of the trenches, snapping up everything that looks mildly tasty.  Just ask Warren Buffet- he’s the one who said, “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

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