Another Example of "Figures Don't Lie, Liars Figure"

Another Example of "Figures Don't Lie, Liars Figure"
by John Occhi, Hemet, REALTOR®
Hemet CA Real Estate

Earlier I wrote a blog article about the figures that are used in analyzing a market and explained a bit how they could be manipulated.  I used the figures I downloaded from my own local Hemet MLS and worked up an analysis of the Hemet Real Estate market for both the years 2005 and 2006.http://activerain.com/blogsview/31032/Figures-Don-t-Lie

Today, I would like to write about a practice that just came to my attention.  To me, it's an outrage and worthy of a good rant.

We all know how important the housing industry figures are to our US economy.  We know that the numbers reported by big housing builders are weighed very heavily by the FED and every other economist trying to figure out what is going on, in our country - on an economic level (which, for the most part, is beyond me -= I just like to look at figures and see if they are good, bad or indifferent compared to a similar period.)

So when I read that Economy.com reported that the housing industry misrepresents us by not factoring in the contracts that either cancel or get turned down by a lender, into the figures they report.  I'll bet they don't miss a step id deducting the commission from the people selling their homes, do they?)

What this means is that if a new construction home sells in November and then goes backwards in December - for whatever reason, it never adjusts the sales volume they report.

The inventory of available homes is built using these numbers.  The economists know how many homes start the construction process, based on the permits - no getting around that.  They then do their forecasts when homes are reported sold.  Unfortunately, the economists do not receive and offset numbers.  So, the guys with the sharp pencils are figuring we have a 6 month supply of new construction homes for sale in Hemet CA when the reality is we may have a 7 or even 8 month supply of homes under construction - it just depends on how many homes have cancelled.

Then what happens when the same homes sells again?  Oh boy, more inflated numbers.

If you want my opinion (probably not) these guys need to be brought up on charges of sabotage and National Security violations.  Are they really any better than say the ENRON executives?  I think NOT!

Now Have a Blessed Day,

John Occhi, Hemet REALTOR®
http://www.johnocchi.com/