I write about real estate for a living and have for about a decade. If I have one take-away lesson from my time in the trenches, it's this: Numbers can be spun to prove any point you are trying to make, and on some days, the warring factions (Housing Bubblers, Doom and Gloomers, No Better Time to Buy or Sell-ers) beat their respective drums so loud that the only thing really spinning is my head.
Yesterday was such a day. The following three stories appeared in the news yesterday, Thursday, April 15. And each one presents a different view of the same set of numbers. Let's take a look, shall we?
** Foreclosure rates surge; biggest jump in 5 years.
This is a scary story, to think that a record number of U.S. homes were lost to foreclosure in the first three months of this year. The RealtyTrac report interpreted it as a sign that banks are starting to wade through the backlog of troubled home loans at a faster pace. Of all the homes in the country facing foreclosure, 23% of them are in California, where I live; one in every 62 California properties received a foreclosure filing in the first quarter. Are they coming for me next? Will this recession ever end? Why has the government's $75 billion foreclosure prevention program only been able to help a small fraction of troubled homeowners? Pure downer, this one.
** Bay Area median home prices surges off March 2009 low
Now wait a sec. Prices are jumping higher in one of the nation's most expensive market? This is a good thing, isn't it? Sure the prices were in the toilet a year ago, but up is the right direction. Hey, if the median price for a Bay Area home can surge 30% compared with the same time a year ago, this means it could happen in my neighborhood, doesn't it? I'm buoyed; I'm optimistic; the end is in sight! But get this: Part of the reason the median price was up is because there were fewer foreclosures in the mix, said the analysts. Fewer, not more? See top item.
** Signs seen of a housing rebound in Southern California
Reading a little deeper, it says this: "The median price paid for a home rose 14% in March to $285,000 from a year earlier, according to MDA DataQuick. Higher-priced coastal markets saw more activity, and fewer foreclosures were for sale." There's that pesky "fewer foreclosures" again. Which is it: a record high number of foreclosures or fewer of them? As for the median price numbers, 14% increases in Southern California and 30% in the Bay Area bring a smile to my face. I remember a time when homeowners hailed double-digit percentage increases in our year-over-year median prices and ran off to buy new cars, second homes, and take vacations. OK, perhaps we've learned a lesson.
So how do we explain the seemingly contradictory messages?
Rick Sharga, a RealtyTrac senior vice president, said in interviews that federal and state programs helped slow foreclosures last year when President Obama leaned on the banks to adjust home loans. An odd explanation, given how abysmally ineffective the loan modification program has been. And I wasn't aware that the White House pressure had drifted off. Maybe Sharga and I just watched different State of the Union addresses.
In part, I do believe that analysts spin numbers to prove their positions rather than take the numbers and translate them into something meaningful. But the discrepancy also comes from how you count foreclosures. The foreclosure process has multiple steps and while all properties that enter the foreclosure process may be counted, not all of them actually wind up being foreclosed upon. Then again, I'm one of those optimists.
A RealtyTrac spokesman could not be reached by WalletPop for comment. And it's probably just as well; I hate confrontation.
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