There’s a regular ritual that the mainstream press, news and policy makers engage in. Private companies release press releases that suggest DRAMATIC TRENDS IN REAL ESTATE IN…..(PICK YOUR MARKET)! It works like this:
FORECLOSURES IN TAMPA INCREASED 2139% IN JUNE 2012!
HOME PRICES SURGE 456% IN FIRST QUARTER 2012!
MARK ZANDI SAYS EVERYONE IN AMERICA SHOULD BUY REAL ESTATE NOW!
FORECLOSURE CRISIS IN AMERICA IS OVER!
FORECLOSURE CRISIS IN AMERICA IS GETTING MUCH WORSE!
These press releases are picked up by newspapers all across America where lazy reporters and sloppy editors fail to analyze the data and fail to cross check the assertions made in the press releases. No time anymore to engage in the difficult and time consuming process of actually taking all the data apart and understand exactly what it means….much less determine whether the data is accurate.
The problem is, the headlines do not accurately capture what is really happening out in neighborhoods all across America….but who cares…after all…
THERE’S HEADLINES TO WRITE, PUBLIC OPINION TO SHAPE, POLICY TO MAKE!
And while it’s frustrating enough to see bad reporting, it’s positively terrifying to see this data make its way into public policy and legislative debates. Laws made based flawed data produced by industry insiders….what could possibly be wrong with that?
Well, understand where this data comes from and understand, the data is what it is…the problem is how it is reported and used…..
While no piece of research is without even a minor flaw, the second part of the equation is where the foreclosure rate calculation may be problematic.
The total number of housing units in a certain area come from the U.S. Census Bureau, and Thursday’s report was based off of the agency’s 2010 estimates.
Other than the fact that the property count is two years old, the other issue is using the number of all standing homes.
If every single-family home in an area had a mortgage, then RealtyTrac’s calculations would be a very accurate depiction of foreclosure activity in an area.
But especially given the number of distressed homes that have been, and continue to be, snatched up by investors who generally pay in cash, the RealtyTrac report’s accuracy must be called into question.