Archive for the ‘Newspapers’ tag
Ignore Annual Housing Data — It’s The MONTHLY Data That Matters To Home Buyers
For the third straight month, at least 15 of the nation’s 20 largest real estate markets showed relative monthly improvement in May 2008, according to the S&P/Case-Shiller Home Price Index.
I use "relative monthly improvement" as another way of saying that markets are "less worse than they were" and that’s good for the housing market (although you wouldn’t know it by looking at the headlines).
Instead of pulling the positives out from the data, newspapers are highlighting the year-over-year, cliff-diving-like decline in prices.
Now, it’s not wrong to look at annual trends in home prices, it’s just a little bit misleading. Remember: Active home buyers are probably seeing something completely different from what the papers are saying they should be seeoing.
See, year-over-year comparisons are fine for identifying long-term trends, but as it relates to an active home buyer, annual data don’t mean diddly. It’s the short-term trend that matters.
The obvious example: If you’ve been shopping for a home over the last 3 months, you’ve probably noticed the market slowly slipping away from you, and moving into the sellers’ favor.
When you see "all the good homes" go under contract, or sellers regaining their negotiation power, it’s your sign that the market is shifting.
In other words, if you’re buying a home now, the real estate market of 12 months ago is irrevelant. What you’re going to pay for a home is based on market activity today, not activity from 2007.
(Images courtesy: Standard & Poor’s, The Wall Street Journal)
Government Considering a Fannie Freddie Takeover
For the third day this week the stocks of Freddie Mac
and Fannie Mae took a hammerin’ on Wall Street and for
the second day major newspapers are speculating on their survival as
independent companies.
On Friday The New York Times and Barons both reported that the two
government sponsored enterprises (GSEs) are under mounting pressure to
raise additional capital and The Times saying that the Bush
administration is considering a plan to take over either or both
of the companies and place them in a conservatorship if their problems
continue.