I could write a book, but here's what's pertinent to real estate at the moment: we've all heard the constant reports in the media that the "median price" of real estate is down 36% or some other dire number, right? You might think that prices are headed south faster than Lee after Gettysburg, but it's not true. This stuff makes me crazy, but I'm sufficiently medicated to get thru this.
There has been an interesting dichotomy in the market for the last few months, of which the media is apparently totally unaware: properties with loans under $625,000 (meaning the sale price is probably under $800,000 or so) are hotter than Al Gore's worst global warming nightmare, whereas properties with loans over $729,750 (that would generally be homes with sale prices north of $1 million) are deader than bagged ice in Alaska. The reason is simply that interest rates for loans under $625,000 are basically being subsidized by the Feds down to around 5.5%, while the secondary market is scared shirtless of larger loans and is not buying them like they used to -- the going rate is in the mid 7%'s. The result is that the average and "median" price is skewed down simply due to large number of cheaper homes selling, making it look to someone who doesn't go below the surface (that would be some guy sitting in a cubicle running a real estate website or the media who gets their information from him) like prices overall are declining rapidly. At least in LA, on properties below $800,000 (and yes, they exist here) multiple offers are common, and with many bank-owned properties, all-cash is taken over significantly higher financed offers.
I think we've got to resign ourselves to the fact that news has become ratings-driven show business, with on-air talent hired overwhelmingly for how they look and sound on air, and clearly not for their brains. The fact that being first with the "scoop" easily trumps accuracy doesn't help either. See my post "The Basic Problem With the Media" on Dana's Non-Real Estate Blog.