Last week was a doozy. For two days it rained a torrent of national real estate news. All of it packaged as “bad”, it was a headline blitzkrieg mixed with fact, assumption, projection, hyperbole and sensationalism.

Amid the barrage, there is good information, and a lot of exaggeration that does not apply to South Lake Tahoe. First here’s some of the headlines:

• "Home prices post first yearly drop in 16 years"
  Case-Shiller pegs decline at 8.9% for 2007.

• "New-home sales fall despite record price cuts"
  Pace of sales is lowest in 13 years after 2.8% drop in January

• "Lip out-of-synching"
  Commentary: Nobody 'talked' housing into its recession

• "U.S. Jan. new-home sales fall 2.8% to 588,000 pace"

• "Decline in Home Prices Accelerates"

• "New-home sales fall despite record price cuts"

Out of the seemingly perfect storm that it was, and there were many more reports and articles than the headlines here, there were basically two reports: a decline of 2007 prices and a decline in new home sales. But each was picked up across the television and online media, and after each outlet putting their headline, take, and then spin on essentially the same information, it all made it seem so much bigger than it was.

What’s in Each Article for South Lake Tahoe :

"Home prices post first yearly drop in 16 years"
Case-Shiller pegs decline at 8.9% for 2007 (read it here)

This was the source for most of the array of articles about declines in US home values. Here are its main points:

• US home values in 2007 posted the first yearly decline in 16 years.
• More price drops are still in the offing.
• The largest decline in the Case Schiller Index in 20 years.
• Home prices fell 5.4% in the 4th quarter alone.
• Where ever you look, things look bleak.
• Housing prices remain vastly overvalued.

The Case Schiller index tracks multiple sales of the same homes and is considered by many to be the best gauge of national and metropolitan real estate values. It focuses on 20 US major cities (South Lake Tahoe is not one of them) and it’s major flaw is a tendency to overemphasize the regions that had the biggest bubbles (California and Florida).

  South Lake Tahoe and this article:

• There was a decline in South Lake Tahoe home values in the early ‘80’s, and a decline on the NV side of the market in 2001.
• The South Lake Tahoe market decline 7.6% in value in 2007, somewhat less than what Case Schiller found nationally (about $5,525 less)
• Median Sold Prices in South Lake Tahoe by quarter in 2007 were (not including keys):
  
  • 1st: $474,000
  • 2nd: $435,000
  • 3rd: $390,000
  • 4th: $436,000

• Compared to Case Schillers report of a 5.4% decline in the 4th quarter alone, there was an 11% increase in South Lake Tahoe for the same time period.
• Compared to Case Schillers report that more price drops are still in the offing, sales in the last 90 days are identical to what they were in the last quarter of 2007: $436,500.
• We continue to believe, however, that South Lake Tahoe will continue to see slight declines in value as Sellers become more motivated to sell off our existing inventory.

"Lip out-of-synching"
Commentary: Nobody 'talked' housing into its recession (read it here)

This article came out of MarketWatch, and it was in defense of comments made by national home builder Toll Brothers that “ceaseless talk of a recession continues to dampen the mood of consumers in general.” Toll Brothers continues that “the drumbeat (of bad news) has kept pent-up demand on the sidelines. Here are the main points in the article:

• There is a recession in the housing industry, and it’s in “spades.”
• The data is doing the talking. (and therefore not the media)
• Housing starts are down 30% in 2007 nationally. (“Starts” = new construction)
• Existing home sales “are going to reach” a 20-year low in 2008.
• Home prices in 2007 showed the first decline “since statistics have been kept.”

The article closes with a comment directed toward Toll Brothers that greedy home builders souls talk to themselves, presumedly rather than question if the news media has any part in national consumer confidence.

South Lake Tahoe and this article:

• First of all, there are very few “housing starts” in South Lake Tahoe. Ever.
• Since 2003, there have been about 175 new homes sold out of some 3,000 sales.
• We have no more of an idea how many homes will sell in South Lake Tahoe in 2008 than MarketWatch does for the rest of the country.
• We have seen price declines at least twice before in South Lake Tahoe since we stated keeping statistics in 2001 If we counted the 1980’s, where we do not have complete data, there would be significantly more.

"U.S. Jan. new-home sales fall 2.8% to 588,000 pace" (read it here)

This is one of the articles about the US Department of Commerce report about national new home sales. Here are its main points:

• Sales of new homes fell by 2.8% in January.
• This decline marks a 13-year low.
• January’s sales pace in new home sales was off 33.9% compared to a year ago.
• New home sales in the Western US increased by 2.2% in January.

The report also comes with this disclaimer: “Government statisticians have low confidence in this monthly report.” It then cites the reasons why. We think it was responsible for Market Watch to include this in their article about it.

South Lake Tahoe and this article:

• We have had 2 new home sales in 2008, and had only 8 new home sales in 2007. Since 2003 there has been an average of 34 new home sales per year.
• Our new home sales pace is about the same as it was a year ago, insignificant.
• There were 15 exisiting home sales in South Lake Tahoe this January compared to 21 in January of 2006, a difference of 6 sales (28%).

"Decline in Home Prices Accelerates"  (read it here)

This is the Wall Street Journal’s take on the Case Schiller article above. We wanted to add it to the mix to show the difference from one media outlet to another. Here are it’s main points:

• US home prices accelerated in the 4th quarter.
• The information favors more FED interest rate cuts.
• The correction in the US housing market has further to go.
• The national average interest rates were 6.38%

South Lake Tahoe and this article:

• We have seen that sales in the 4th quarter actually increased here in South Lake Tahoe.
• We think more interest rate cuts will be helpful.
• National average interest rates today are 5.8% (see our right side bar)