Real Estate Outlook for 2007 - Part 1: A Look at the Media
by John Occhi, Hemet CA REALTOR®
Hemet CA Real Estate
I wrote an article recently about how numbers can be manipulated to serve a point or particular agenda. It was appropriately titled, "Figures Don't Lie...Liars Figure". The truth is anyone can spin anything anyway they like and sooner or later enough people will start to believe it and when enough people believe it, it must be true.
Sounds like politics to me.
Forget about what you heard in the ‘doom & gloom' media, 2006 was a very good year for the entire real estate industry and 2007 will be better. The only thing that happened last year was the Hemet market slowed down, like the rest of the country, to catch it's breath after 2 years of a very wild party in real estate.
2006 saw the aftermath of some very nasty hurricanes, a steep increase in oil prices, the Federal Reserve continued to tighten credit and of course there was increased fighting in the Middle East.
On top of it all there was very negative spin by the media proving my point that "Figures Don't Lie...Liars Figure". The media once again managed to report facts with an inaccurate appraisal of the real estate market - just like they have on so many other occasions with so many other stories.
The problem with the main stream media is they are losing their grip on main stream America. By main stream, I am referring to both television and newspapers. The network news has lost a significant number of their viewers to the 24 hour news networks like CNN & FOX News and print newspaper is losing market share to the Internet on a daily basis.
For the main stream media to keep the audience they have, they have decided on a universal truth that requires generating fearful news which is necessary; so that they can continue to portray the fear of impending events and create anxiety in the public, making them continue to come back for more.
By creating this constant state of anxiety in their audiences the main stream media is banking that the raw emotion of the fear and anxiety will help to keep their audience tuning in and preserving their precious advertising revenue.
I mentioned earlier that the main stream news has misrepresented the facts in other situations, so I wanted to come back and visit this thought with some examples that I am sure everyone will remember.
Who could forget about the Y2K scare? We were all secretly ready for Armageddon, weren't we? Then there are the wild epidemics of rare and never heard of before diseases. So think about it and please let me know what impact the Killer Bees from South America has had on your life. I am certain that you must have lost several family members by now to the West Nile Virus and that you have turned into a vegetarian because of everyone you know that continues to suffer with Mad Cow Disease.
Of course we remember from last year one of the "worst flu seasons" ever and we blamed the President of the United States because of a serious shortness of the appropriate vaccines.
Have I made my point yet or should I ask where SARS and the Bird Flu fly to.
So now that we can agree that the media can be a bit over-reactionary, let's take a look at the recent real estate headlines designed to mess with our minds.
HOUSE PRICES CONTINUE TO DECLINE
Home prices are not declining - only the rate of appreciation. As a matter of FACT, home prices are continuing to rise. In the month of December, the medium profit earned on every home sold in Riverside County was $166,000. The medium home sold was owned for 3.4 years and saw an average yearly appreciation rate of 16.8%.
SUPPLY OF UNSOLD HOMES RISES TO 6 MONTHS!
So. The national average in the US has historically been around a 6 month supply. Granted in Hemet and the rest of Southern California, real estate has traditionally only held about a 3 or 4 months supply of homes on the market.
HOME SALES DECLINE BY 25%
If you exclude the party period of mid June 2003 to mid June 2005 our national home sales are only about a half million units higher than any other time in American history.
FORECLOSURE ACTIVITY RISES!
Does it not make sense that if there was a record low that the have to go back up. Believe it or not, but 98.5% of all loans in the US are NOT in foreclosure. Of the remaining 1.5% of foreclosed properties, 80% were considered to be professional thieves and turned over to the FBI for investigation and prosecution. Our prisons are not filling up with a new breed of bank robber.
The record low for foreclosures was 3rd quarter 2004 with only 12,145 recorded nationwide. The high was back in 1st quarter 1996 with 59,987 loans foreclosed on. The historical average is 32,762 and our current number for 4th quarter 2006 is 37,273.
AFFORDABILITY INDEX AT RECORD LOW - SO FEW CAN AFFORD TO BUY!
Then why is it that 70% of American Families own their own home and 80% of he Baby Boomer Generation owns. This index is archaic and does not reflect the world as we know it today and should either be dramatically revamped or just scrapped all together.
Come back for the second part of my report on the outlook for Real Estate for the year 2007 when I will look back and examine what events from 2006 had an impact on the Real Estate market.
Until then, Have a Blessed Day,
John Occhi, Hemet CA REALTOR
http://www.johnocchi.com/
This series of articles was researched with data from DataQuick, American Bankers Association, Mortgage Bankers Association, Freddie Mac, Fannie Mae, 2004/2005 Census, Federal Reserve, Internal Revenue Service, NAR, U.S. bureau of Labor, California Employment Development Department (EDD), Forbes, Southern California Governments, US Bureau of Labor Statistics & CAR. The information was originally presented to me by Gary Watts, Real Estate Economist. This work is my original interpretation of the available data.
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