There is absolutely no lack of folks out there with a viewpoint to be espoused about what’s going to happen in the real estate market in the next 12 months or so. Need I add my opinion to the heap? Need to, maybe not, but it’s hard to resist and, who knows, it just might provide refreshing and new insights for those of you who have not already had their fill of blogs, tweets, and buzzes on the subject.
The news, however you acquire it, is chock full of confusing information. It’s not that it’s contradictory so much as inconsistent. New home sales are up and then they are down. Housing starts pick up but then falter. Existing home sales are happening, but perhaps it’s due to foreclosures and REOs. FHA wants to keep the market fluid, but finds the need to tighten lending requirements. If a clear direction has been set, if the economy has truly righted itself, it’s pretty hard to discern and few are willing to certify it just yet.
The interpretations of what this all means, and the predictions about where it’s heading are all over the map. Those that are constantly sought out by the media for quotable prognostications would have us believe that what they say is based on complex models that take into account hundreds or thousands of variables. We hear the pundits talking doom and gloom. However, it seems that as soon as one notable variable, say last month’s housing starts, changes for the better, everyone quoted seems to trending in the same upward direction. Sophisticated multivariate models are unlikely to change on a dime because of one component. It seems to the outside observer that they are not doing much more than straight lining the latest statistics for lack of better information. If that is indeed what is happening, no one is well served.
Maybe they really do have good models and it’s the fault of the media’s nature to report only surface level quotable information. It’s unlikely that the local paper or even the Wall Street Journal is going to provide an in-depth analysis of someone’s economic model on a regular basis, but one would think you’d see such a discussion once in a while. I haven’t.
Something else that would be interesting would be to go back a couple of years and see what these folks were saying, individually and collectively and compare that to what has actually transpired. We do occasionally get a prediction from someone who is identified as the person who “called it right” two or three years ago as a contrarian, but then why do they keep quoting all those other folks who got it wrong? Why are we to believe that they are now any better at this than they were just a short time ago?