CA Association of Realtors Needs a Math Class…Perhaps Ethics as Well

Posted on September 29th, 2008 in Daily Mortgage/Housing News - The Real Story, Mr Mortgage's Personal Opinions/Research

In their latest attempt to paint a picture of the glass totally full of Cristal Champagne, CAR released a August home sales report on Thursday that made it seem as though the state had no housing-related issues whatsoever.  This is exactly why I always scream ‘YOU CAN’T BELIEVE THE HEADLINES!

“Sales are now 85 percent above the monthly trough for this cycle, which occurred in October 2007, and for the first time this year are ahead of 2007 in year-to-date terms,” said C.A.R. President William E. Brown”.

I think CAR either needs a math class or should not be allowed to ever put out another press release. I have no idea what they are even saying here…

“The statewide sales figure represents what the total number of homes sold during 2008 would be if sales maintained the August pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales”

“Closed escrow sales of existing, single-family detached homes in California totaled 490,850 in August at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity increased 56.7 percent from the revised 313,310 sales pace recorded in August 2007. Sales in August 2008 increased 1.8 percent compared with the previous month.”

This would not bother me so much if three days before I didn’t put out a very well-researched August CA Home Sales Report saying:

“August was not good for the CA real estate market. Just one month after pom-pom’s were flying over how well the market did in July and bottoms were again being called across the board yet again, August, a peak sales month, delivered another blow.  Total sales were off, organic sales were off, foreclosure-related sales rose, defaults rose and prices tumbled.”

The facts are that in August 2008 37,988 new and resale properties sold according to DataQuick. Last August, there were 33,429. There was an increase but nowhere near the 85% quoted above or the 56.7% quoted below. The sad part is in August 2005, 73,285 homes sold. Yes, there was an increase year over year from August 2007 to 2008, which could be viewed as encouraging. However, the number of ‘organic’ sales in August 2008 were only 21,172, as foreclosure-related sales made up 46.9% of the total sales. In August 2007, foreclosure-related sales were negligible. Therefore, in my book real home sales fell sharply from August 2007 to August 2008, less inventory was absorbed, prices tubmled, which is the most destructive and the foreclosure market remains the real estate market at least for now. Nice try guys.

CAR Press Release Highlights

Link: For release: Thursday, Sept. 25, 2008

C.A.R. reports sales increased 56.7 percent; median home price fell 40.5 percent in August

LOS ANGELES (Sept. 25) – Home sales increased 56.7 percent in  August in California compared with the same period a year ago, while the median price of an existing home fell 40.5 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today

“Sales are now 85 percent above the monthly trough for this cycle, which occurred in October 2007, and for the first time this year are ahead of 2007 in year-to-date terms,” said C.A.R. President William E. Brown.

“While this is encouraging news, we don’t expect to see a housing market recovery until prices stabilize and the number of distressed properties on the market declines,” Brown said. “Sales gains continue to be driven by the large share of deeply-discounted distressed sales in many parts of the state”

Closed escrow sales of existing, single-family detached homes in California totaled 490,850 in August at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity increased 56.7 percent from the revised 313,310 sales pace recorded in August 2007. Sales in August 2008 increased 1.8 percent compared with the previous month.

The statewide sales figure represents what the total number of homes sold during 2008 would be if sales maintained the August pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during August 2008 was $350,140, a 40.5 percent decrease from the revised $588,670 median for August 2007, C.A.R. reported. The August 2008 median price fell 0.2 percent compared with July’s revised $350,890 median price.

“While sales appear to have turned the corner, the median will experience additional downward pressure as we move into the off-peak season in the coming months, and will continue to face pressure from distressed sales,” she said. “Sales are just one of the variables that must fall into place before we see real improvement in the market.”

Other Related Mr Mortgage Posts

August CA Home Sales & Foreclosure Report…Plus National ‘Existing Home Sales’ Preview (34)
Posted on September 22, 2008 9:42 PM 

Dear Washington – A Real Plan For You (34)
Posted on September 26, 2008 7:18 PM

Wachovia Finally Addressing Their Pay Option Portfolio (20)
Posted on September 26, 2008 11:26 AM

WaMu Fails – Bigger News Than You May Think (15)
Posted on September 25, 2008 10:46 PM

BofA CEO Says ‘Half the Banks Will be Gone’ in 5-Years (13)
Posted on September 24, 2008 3:07 PM

FedUpUSA.com Makes a Stand Against ‘Bank Bailout’ (11)
Posted on September 24, 2008 2:42 PM

Mortgage Defaults Already at $50bb Per Month…$700bb Won’t Go Too Far! (82)
Posted on September 23, 2008 2:43 PM

 

34 Responses to “CA Association of Realtors Needs a Math Class…Perhaps Ethics as Well”

  1. Nice work Mr. Mortgage. You front run the news on these guys every time.

    Didn’t really expect them to say the bottom is 2 years away, maybe. Cheerleading their own industry. Kinda like crack whores in leotards.

  2. That was sure a hefty bunch of spin. I think they were making a sales tool for Realtors to show that the bottom is in and now is the time to buy.

    In retrospect this is a great piece of humor on the sub-prime crisis (as bad as the reality is) but more importantly how uncannily accurate the end is. This was produced in the beginning of the year.

    http://www.break.com/index/how-we-got-into-the-subprime-mess.html

  3. MM, your analysis is par excellence, as usual. Thanks for the great work. I completely agree about NAR, except that it’s good for so many laughs I’d hate to see them change at this point.

  4. True Story: My San Diego Realtor told me she would not be able to correspond this weekend as she was to be out with lots of buyers “who wanted to jump in before short sales were banned.” – Is this a case of a realtor confusing Financial Shorting and RE short sales?

    JAllen

  5. MM, cool- great spot on CNBC for ‘the man’!

  6. MM, excellent comments on CNBC. You kept those bozos glued to your every word. I can’t believe they didn’t try and discredit your figures. Great job! I guess they won’t call you back since your too “gloom and doom.”

  7. Anybody got a link for “the man” on CNBC?

  8. Yes, Could you shoot out the link for this. I missed it. And I really like seeing those fools schooled!!

  9. Well with the bailout of the most corrupt group on earth I advise all to learn how to go organic ie grow your own food totaly abandon the shop till you drop game as the road is going to get really rough

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  11. MM, wait until September stats come out! September of 2007 was dismal due to the credit crisis which came to a head in August. September through Jaunary+/- of last year were severely depressed as nearly all lending was shut down. We can expect CAR, NAR et al to trump the likely year over year increase in sales for the next few months as “proof” that the market is recovering.

  12. Bailout fails on first vote in the House, 205 Yea, 228 Nay.

  13. Here’s the link:

    http://www.youtube.com/watch?v=xy4Vm2_rgEE

  14. Thanks again Mr Mortgage! You’ve really saved me and my family from making a huge financial blunder. A few months ago I was starting to believe the headlines and realtors, and I even started the process of making offers. Then I found your videos and blog and held off. I thank God you’re around!

  15. I love how the press is now crying bloody murder for the failure of the bailout passing. Wall street drops 700pts and the press goes mad. BTW, this may be the the most in POINTS the market has crashed, but IT IS NOT historic in PERCENTAGES.

    Now the press is trying to blame Republicans who actually LISTENED to the people of this country.

    Either way the market is going to crash. This bailout won’t do anything. 700 billion is not enough.

  16. Mr Mortgage-

    It was nice seeing you on CNBC today. They should give you your own spot.

    I want to see what you think about FED? The stock has been getting hit hard the past 2 trading sessions and Im starting to think that the regulators may be in the bank. Are they in danger based on the loans they hold? Something is going there?????

    Thanks in advance and Congrats!!!!

  17. What an absolutely WONDERFUL day today!!!

    This was the “BEST” thing for the American people by far!!! Why we EVER would have knowingly entered into this sad and sorry Bill is way beyond any logical thinking of any tax paying American. This bill was so filled with saving the wealth of the few and placing it on the backs of so many Americans. It was a robbing of the tax payer’s wallet and pocket book beyond belief. Not a way of life for a free democracy to be sure…

    This bill planned to do nothing other than buy bad and toxic paper for much more than it’s value will ever be in decades to come to save these obviously bad corporate leaders who allowed their companies to fail during their watch. They are the worst of the business on wall street and yet the democrats and some republicans actually want to “BAIL” them out!!! SHAME ON YOU!!!

    SHAME ON the house speaker and others to use the fear of peoples children not being able to get loans to go to college. Well you know what… take a year off and work 3 jobs like I had to and your parents had to so you can go back the following year and pay cash to get your degree. SHAME ON telling small businesses they may not meet payroll. IF that is the case then these are businesses that perhaps should not be. Can’t get HELOCS… well good again because it will deter spending!!! It is time to STOP THIS nonsense and start being accountable for our actions America!!!

    You can’t buy that house without 20% down and you don’t have that much… THEN RENT!!! You want that lexus but don’t have the 20% down… THEN BUY A USED ONE!!! You want to go to BC but you cant afford it… WELL THEN go to a state school!!!

    Time to take stock in WHO YOU ARE and not WHAT YOU SEEM TO BE…

    GOOD FOR YOU AMERICAN TAX PAYERS and I AM PROUD!!!

  18. Now comes the hard part folks… Paulson and his merry band of thieves will be coming back for this money. They will not end in their attempt at robbing the tax payers blind if they can get away with it. Scare tactics and fear will not IMO be enough because I think the American public is educated enough to see through it.

    So keep up the phone calls, emails, faxes and don’t let them wear you down folks!!! They are trying so very hard to head home on time for their break andleave us tax paters footing the bill for years of corruption. They will pull out all stops in order to accomplish this goal. Your children’s, children footing the bill is ok with them if you let them!!!

    SAY NO TO ANY BAIL OUT BILL!!!

    VOTE ALL INCUMBANTS OUT OF OFFICE!!!

    This is our time to shine people and shine we have, and hopefully will continue too as we move forward!!!

    Thanks to ALL of you who spoke up!!!

    Now let’s get a JOBS BILL on the table and discuss REAL CHANGE!!!

  19. Stu… YOU SUM IT UP !!!!! Thankyou

  20. You want truth…

    http://www.youtube.com/watch?v=_MGT_cSi7Rs

    Facts are facts people!!!

  21. I just saw this idiot Schiller (from the Case-Schiller index) talk about how mortgages should be designed to have workout flexibility in them (like say, when prices fall) for buyers – apparently he has no concept of how banks will raise interest rates to compensate for the ability for a borrower to do a pre-packaged workout at some point during the term and thus will have a much higher cost than mortgages in their current form.

    Similarly, when Pelosi throws the Black and Hispanic Caucus a lifeline to get the votes for bailout 2.0 to pass by giving bankruptcy judges the ability to rewrite mortgages, rates will be increased across the board.

  22. JJ, first of all you are a part of the problem, and secondly you are obviously standing in the way of a solution.

    Shiller is an economic scholar on a level far above the average man. His current and sure to be future body of work is without equal. Calling Frank and Pelosi idiots would be warranted, but you are WAY off base with Shiller in that mix!!!

    Do some homework on this man and then revise your post to be accurate on whom you chastise… His work may be the biggest contribution to home prices and an actual home index that works in the history of our country. That hardly makes him an idiot…

    In fact his (and Case) index is revealed tomorrow and I dare say it will be dismal in nature and rightly so. A huge market mover tomorrow after 10 to be sure… Hold on people because we are on an unprecedented and totally unknown ride at this point.

    PLEASE REMEMBER however that things will be OK in the end. It may take some time to get this ship righted, but the SOONER we start the better. The less damage we take on the better!!! We will be fine if we can keep the Government at bay from FUC^$%# things up with stupid A%$ bail outs and feel good legislation… STOP IT already and let things naturally correct… MY GOD!!!

  23. P.S. JJ, if we had what you mentioned in your post “designed to have workout flexibility in them” then perhaps I dare say we would not be in the very situation we are in today trying to FIND WAYS to work out these bad loans due to a swift market change that caught many off guard… right or wrong!

    Never look at a solution of prevention as an ill conceived notion…

  24. Hey Stu: how am I part of the problem? Is it because I pay my mortgage on time and didn’t overextend myself ?

    Shiller wants flexibility to do workouts – that’s a one-way street vs. the lender. Yes, the servicers are trapped with too little flexibility but building in workouts for a decline in values is only going to raise initial rates to guard against the loss from a workout. With any workout to make sense you would have to have some recourse against the buyer for the loss in principal value on the loan, which would make it untenable for most of these debtors.

    The current problem cannot be solved by workouts – the reality is that far too many people either a) own homes when they should just rent and should not have gotten any loan or b) bought over their head with too little down and now have no incentive to stay. Just like some countries/peoples can’t govern themselves and shouldn’t be a democracy, some folks shouldn’t own a home. The American Dream is now an underwater suburban tract home with an additional $25,000 of credit card debt.

    There is a reason why he is an economic scholar/academic – most of his ideas won’t work in the real world. It’s easier to write books and lecture in the Ivy League than invest for most of these guys.

    We need this swift 20-25% drop in the market, the quick uptick in unemployment and then we can get it over with quick instead of slow death bleeding by paper cuts for the next decade until the social security bomb detonates.

  25. On the Stu – JJ debate:

    one point for JJ for being against this bailout.

    Minus one point for Stu for calling JJ part of the problem. I add one point for Stu for being positive about the end result

    One point for JJ for paying his mortgage one time
    Minus one point for JJ for his sarcasm about paying his mortgage on time.

    Minus one point for JJ for criticizing Schiller

    Current Score: Stu: 0 JJ: 1

  26. JJ, you paying your mortgage on time and not over extending yourself has absolutely nothing to do with this. What Shiller proposes is a type of insurance written into the mortgage so if we have issues like we face today in the future we have a mechanism in place to assist the unwinding and NOT at “Tax Payers” expense. Think of it like insurance for travel. I take it out every time I plan a vacation just in case something goes awry. For 5% of the cost of my trip I am protected. I don’t think you pay more for your travel as a result of me protecting myself and if you do then shame on you.

    Rates will rise as a result of the risk and although I have not seen a concrete plan on paper as of yet, I will assume it removes some of that risk thereby actually reducing interest rates. Markets always use rates based on risk / reward models. Not that their models are always accurate, but that is the idea. Our mortgage paper is non recourse so unless or until that is changed we need more risk protection for the lenders and for ourselves as well.

    Off course the current problem overall cannot be fixed by workouts, although a small percentage can be. If we had an idea such as Shiller is tossing out then perhaps that percentage would be much, much higher to say 30%. Wouldn’t that be nice if we could have saved an additional 400,000 people from losing their homes this past year? Maybe we wouldn’t be in this mess if that were the case!!!

    Do we need a serious correction still in property values? Absolutely!! Would quicker be better? Absolutely!! Is that what is going to happen? Absolutely NOT and partially it is BECAUSE we have no workable solution built into the mortgage market today!!!

    Shiller is right on with this idea and his ideas most certainly can work in the real world. In fact many, many of them do today as models used each and every day by economist around the world.

  27. Stu, if we had such “insurance” written into the mortgage, right now wouldn’t there be millions of people “claiming” over a trillion dollars? It sounds like a credit default ‘thingie’, which is part of the reason for some of the current pain.

    Now, if these ‘mortgage’ insurance policies could be bundled up and securitized, then we might have something.

    (I lose two points for sarcasm, Stu loses one point, just because)

    JAllen

  28. JAllen, I fear that you think too much in the box and we need outside thinkers now… the business model of more of the same is dead! The shiller NY Times article is based on change in the way we write mortgages. Nothing FREE mind you like this $700 Billion “Bail Out” of Lenders, but real reform!!!

  29. The Senate is now attaching the bill to another bill to win favor over republicans… DON’T BUT INTO THE HYPE!!!

    Call your Senators PLEASE and tell them “NO BAIL OUT BILL”

  30. Stu, you are correct in opposing the bailout bill (plus 1 point for you), but I’m afraid that “outside thinking” – exotic mortgages, exotic finance instruments are part of why we got here (minus 5 points for you & plus one point for me)

    We need to get back to basics.

    Score: JJ 2, Stu -4, JAllen 2

    JAllen

  31. His thinking is a way NOT to get back here again… That is what you are missing.

    I couldn’t agree with you more on the other stuff they created to gain higher returns.

  32. So the “Bail Out” bill passes our incompetent Senate by a 74-25… how sad that it has come to this. With 90% of the “Tax Payers” in this country against this literal robbing of the “Tax Payers” and 160 leading economist petitioning against it, our so called Government for the people just screwed “We the People” How quaint is that one for you. Well if nothing else “Tax Payers” now know what 74 Senators to vote “OUT” of office in the next election. “Tax Payers” should vote them all out in my opinion, but 74 will be a good start. The gall of these folks whom work for the “Tax Payers” and are paid by the “Tax Payers” to represent the “Tax Payers” just slapped the American “Tax Payer” right across the face and said basically sit down and shut up!!! Well I for one will be sure to let them know exactly how I feel on Election Day and I hope all of you that read this will do the same. What a bunch of rich, egotistical, self absorbed, incompetent, useless, pompous and self serving fools these folks are to vote against the wishes of the “Tax Payers” of this country they are paid to represent. How blatantly they decide to take the “Tax Payers” money and “Bail Out” the financing industry, which caused this mess in the first place, with it!!! Are the “Tax Payers” in this country really that dumb to sit back and be controlled by the very people the “Tax Payers” pay to represent us? Are the “Sheeple” really foolish enough to let this happen without a huge uproar come Election Day? I have complete faith in the “Tax Payers” of this country that we will all stand up and take action and “vote each and every one of these 74 fools out of office” come November!!!

    While this bill will add an enormous debt burden to the American “Tax Payers” and their families for many, many years to come, I thought I would share some more of what this bill “Will NOT Do” to help and assist American “Tax Payers” and “Home Owners” in this country:

    Jobless Claims Report came out today and showed the largest number of “Out of Work” Americans in over 7 years (September 2001). The number of Americans filing claims for unemployment rose to 497,000 Americans!!! “THIS BILL WILL NOT CREATE ONE SINGLE JOB”

    Manufacturing Index Report came out yesterday and showed it has dropped to a 7 year low (October 2001). The index dropped to 43.5 and came ever closer to the bench mark 41 that represents a recession. The bench mark of 50 is the guide whereby any reading below that signals contraction in the economy. Over the last 12 months the index has averaged 49.6 or contraction over the last year. The new orders sector of this index showed an ominously sharp drop to 38.8 and marked the 10’th straight month of decline of that sector. That is a forward indicator of job growth as new orders forces employers to hire. “THIS BILL WILL NOT INCREASE NEW ORDERS OR ADD DEMAND FOR FURTHER MANUFACTURING”

    The Case-Shiller Index came out this week and showed an historical July year over year decline of 16.3%. This was the largest drop in home prices ever recorded for July. The 10-City index plunged to its largest decline in over 21 years. The decline of 17.5% in the 10-City index was also the largest ever since the index inception. “THIS BILL WILL NOT HELP HOME PRICES RISE OR ADD EQUITY TO PEOPLES HOMES”

    The monthly Automakers Report cam out this week and showed industry wide US auto sales dropped by the largest amount in 15 years. Truck sales declined by 31% while Car sales declined by 22%. Ford sales declined by 35%, GM sales were down 16%, Chrysler sales declined by 33%, Honda sales declined by 24%, Toyota sales declined by 32% and Nissan declined by 37%. These drops are huge and clearly represent trouble for this industry ahead. “THIS BILL DOES NOT MAKE PEOPLE GO OUT AND BUY CARS AND TRUCKS”

    Factory Orders Report came out today and showed the largest decline in nearly 2 years. Orders for non-defense capital goods excluding aircrafts, was the lowest in 19 months. We know the Government doesn’t have any money to be buying stuff moving forward, and especially after this bill is signed. This is a forward indicating sign of stress in the manufacturing base. They are slashing their investment plans and cutting back production as a result. Inventories have risen for over a year each and every month in companies and this is adding further stress to cut back building. “THIS BILL DOES NOT PLACE ORDERS INTO MANUFACTURING COMPANIES FOR CAPITAL GOODS”

    As stated earlier this bill also will not force lenders to lend, force change in the business as usual in the financial industry, put oil in you tank, put gasoline in your car, place food on your table, decrease the cost of healthcare, pay for sorely needed repairs in our countries infrastructure, etc…

    What this bill may due however is increase inflation, increase the cost of food and energy, decrease the value of the dollar, cause long term interest rates to rise, add to the American “Tax Payers” debt burden, reward the rich and wealthy lending boards, reward incompetence on wall street, prolong the recession we are already in further, increase the lack of transparency in the markets, reward corruption, etc…

  33. Stu:

    Thank you for that post. I agree and have been telling everyone I know to throw all of them out. Even the no votes. They are all part of it now. I keep being reminded of a scene in frankenstien……

  34. […] Association of Realtors Needs a Math Class…Perhaps Ethics as Well (33) Posted on September 29, 2008 1:46 […]

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