I shouldn’t be, but I am speechless:
Data on sales of previously owned U.S. homes from 2007 through October this year will be revised down next week because of double counting, indicating a much weaker housing market than previously thought.
The National Association of Realtors said a benchmarking exercise had revealed that some properties were listed more than once, and in some instances, new home sales were also captured.
“All the sales and inventory data that have been reported since January 2007 are being downwardly revised. Sales were weaker than people thought,” NAR spokesman Walter Malony told Reuters.
“We’re capturing some new home data that should have been filtered out and we also discovered that some properties were being listed in more than one list.”
Is everyone in this industry innumerate? I know this shouldn’t surprise me, given that these are the same people who thought people making 14k a year could handle a 400k loan.
chopper
someone must have had a bad case of gastritis.
protected static
Maybe not innumerate per se, but perhaps data-illiterate. It’s gotta be an amazingly messy data set.
deep cap
this is obviously a sign that we need to have our student loans forgive.
srv
Hey, Mark-to-Market means whatever the fck they want it to, counting accurately is just quaint.
First cliff, and we’re going to notice those wheels fell off a ways back.
Jerzy Russian
I am sure the free market will correct this oversight.
Comrade Javamanphil
Let’s not be too rough. As I understand it, there has never been a better time to buy real estate!
brettvk
Somebody tell me why we should believe anything that any industry says about itself, if a lie could advantage the industry in some way.
Violet
Since 2007? WTF?
amk
Why would you trust a buncha realtors ? They beat out a buncha of scummy lawyers and used car salesmen most of the time.
gaz
This.
This is what happens when someone takes 6 years of “business math”, and gets put in charge of shit.
We need some social programs to rehabilitate MBA holders – we might even be able to turn a few into productive members of society.
For those of you that don’t know “Business Math” is the lowest common denominator. I’m pretty sure “Business Math” is a euphemism for “Math for people with special needs”.
Calouste
I’d also go with data-illiterate. People just don’t have an idea what the numbers mean or what the values should be.
It reminds me of when I was in university and one of the professors told us before an exam that he would subtract a few points if you did a calculation wrong (easy to miss a minus sign or so if you have to do 10 calculations for one answer), came up with the wrong answer, and noted that it was wrong. He would basically evaluate if you used the right formulas in the right way. If however you came up with a fairly obviously wrong answer and you didn’t notice that, you would not get any points at all, didn’t matter if you got all the formulas right or not.
Belafon (formerly anonevent)
Well, you know, Obama made them overcount when he was president in 2007.
J. A. Baker
Pfft. Probably had their database designed by the MBA-endowed marketing criminals.
El Cid
There would have to have been strong incentives to get the data right. Obviously, the opposing incentives were stronger.
Rommie
Well…no one could have foreseen the housing crash, so they couldn’t believe things were really that bad. And they can’t recall people telling them there was a problem until now.
But hey, now it’s easier to have growth in 2012 with lower numbers. The invisible hand will guide the way.
Thoughtcrime
Funny how these errors are always in the direction that is advantageous to the group that’s reporting them.
Must be coincidence!
Violet
This started in 2007? Clearly Obama’s fault.
cathyx
I really truly believe they think that we can rise out of the recession/depression if we all just think that everything is improving. Even if it isn’t actually improving. Fake the numbers, people will be more confident in the market and start buying.
gaz
@Rommie: I predicted the housing crash on my own in early 2007.
In fact, it’s the reason I’m renting at the moment.
cmorenc
Even those among us who are amply solvent and well-along toward paying off the balance on our home mortgages within a single-digit handful of years should be plenty worried about the near-certain probability that the bank originally holding the mortgage on our property split off and resold the debt into one of those troublesome derivatives. The legal problem we may face upon making the final payment is whether whomever technically is the mortgagee at that moment is legally capable of delivering back clean title to us, given that the legal geniuses in banks who SHOULD have known better permitted the debt on the mortgage to be assigned apart from state real estate law recording requirements, while meanwhile the task of “managing” our monthly payments to whomever supposedly now owns the “debt” has also been assigned to yet a different entity than the mortgage-holder?
The mess these willfully legal-illiterate and innumerate greedy clowns created isn’t limited to the impact on parties (such as pension funds and financial houses) left holding the bag from problematic risky derivative instruments, and the drag the innocent financially prudent among us have suffered from the impact on the national economy. They may possibly inflict further collateral harm on our ability to hold clear title to our own houses, especially if someday we go to sell the property.
jo6pac
Enron lives on.
R Johnston
“Is everyone in this industry innumerate?”
Emphatically, yes.
I worked for NYC doing real property tax work for a while, which involved, among other things, reading a whole lot of professionally done real estate appraisals. Appraisals coming from high profile, professional accounting and real estate organizations. Anyone who took and understood an introductory statistics class would have been competent to realize that these appraisals, by ostensible professionals, were complete bunk. Maybe the people writing appraisals understand the numbers and are just telling their clients what the clients want to hear, but they definitely presume that the clients and the people negotiating with the clients are completely innumerate clods who can’t see through their utterly-contemptuous-of-numbers “appraisals.”
gaz
@R Johnston: see MBA.
An MBA is a degree that emphatically states “see, I can count to 10! 20 if I’m wearing sandals!”
CaptainFwiffo
I work in web development, and while we do web sites for many industries, a big chunk is real estate. I can tell you, realtors are truly a special brand.
Shinobi
It was probably just easier for them to use the inaccurate data set than to go to all the trouble of cleaning it up.
Also when you are publishing numbers like this there is a lot of pressure not to rock the boat, so it is possible that someone said something years ago, but they didn’t want to mess up the trend and have to deal with the fall out. I
(I used to release similar industry numbers for a living, and there is a lot of pressure to be both newsworthy and not that exciting, which can be hard to balance with any robust analysis. Fortunately I suck at caving to pressure.)
gaz
@J. A. Baker: No self respecting DBA would let an MBA (or anyone who wears a tie) anywhere near a database. Or a computer, for that matter (unless it’s not networked, running win95, and stocked with solitaire and golf)
Brandon
They are only figuring it out now that their own realtors are re-listing homes to ‘green’ the listings in the regional listing services? I find that hard to believe.
In any event, anyone taking NAR data or claims seriously needs to have their head examined.
Case-Shiller FTW!
J. A. Baker
@gaz: True. But the pointy-haired MBA-endowed morons probably drew up a list of demands and said: “Go build me something that does this or your job will be outsourced to Cambodia!”
Trinity
OT….bad lip reading with Newt Gingrich c/o Funny or Die.
wrb
More important is how the housing price figures are complete bullshit, because of the uniqueness of the items.
There has been huge deflation in housing, and there is now a self-fulfulling deflationary expectation, but this isn’t adequately reflected in the CPI, and so economists seem largely blind to it, with potentially ugly consequences.
Shinobi
@Trinity: I feel like every one of these is funnier than the last one.
BO_Bill
This happened because the invisible hand wanted more money. They shorted some housing stocks and then released the revised data.
Duh.
DanielX
@protected static: Taking a wild guess, it’s an amazingly sloppy data set. It’s aggregated from local boards of realtors all over the country, and I can tell you from experience that they don’t all record data in the same way. Nor do they have the same standards of data integrity and verification, or training of data recording personnel, or…you get the idea. Boards of realtors are generally very independent – realtors are, when all is said and done, independent business people. Trying to get them to record everything the same way, assuming NAR would try to do that, would be a large scale exercise in futility.
That doesn’t even get into the ‘for sale by owner’ sales they may be missing, or any of a host of other data integrity issues. So no, the idea that they had a massive fuckup like this doesn’t surprise me. The only surprise to me is that they admitted it…remember, the National Association of Realtors was cheerleading the real estate market and pooh-poohing the existence of a bubble right up to 2008. Much like bond traders, realtors as a body are, um, short term optimizers, as in ‘I’m getting paid now, who cares what happens next month?’.
Comrade Javamanphil
@gaz: Only if you choose it to be. There are plenty of MBA programs built around ethics and sustainability models.
David in NY
Aha! I think people are being entirely too charitable in thinking “innumeracy” is at work here. In the contest between incompetence and malice for explanatory power, one must always consider “cui bono?”, who gains from the error? Here, it is never the favored view of realtors that the market is slow or that sales are down. And funny, their oversights just happen to support the opposite view, …
Brachiator
Yep, when they are not lying outright. I recall that a UCLA School of Business guy claimed in a public radio interview that the housing market was weaker than the consensus showed, but he was generally ignored. Too gloomy.
The Moar You Know
When a major bank’s valuation and credit rating depend on what their investments are worth – and the largest investment ANY bank has is real estate – you can expect them to lie repeatedly until the bitter end about what those investments are worth.
You can expect a lot more of this. I have some good reason to believe that the housing market isn’t even going to go truly flat – i.e all losses stopped – until 2014.
EDIT: Also realtors, too. I worked in real estate a long time ago. I have never met a more consistently dishonest – and I mean consciously, willfully, criminally dishonest – group of people before or since. Of course the realtors have been manipulating the numbers. THEY ALWAYS HAVE. They lie in good times and they lie even more in bad times. It’s a shitty industry and the saddest part is that it’s one that doesn’t even really need to exist.
Enhanced Voting Techniques
@cathyx:
Ironically games like this only prolong things. By refusing to admit a problem nothings fixed (like houses being priced out of site)
dmsilev
NAR doesn’t exactly have a glorious history of taking a skeptical and thorough look at their data. They tend to come from the Donald Rumsfeld “WMD north south east and west of here” school of making numbers say what they want them to say.
J. A. Baker
@BO_Bill:
Can you show us on the doll where the invisible hand touched you? :-P
Jay C
@gaz:
And of course, you have to remember the following formula:
“Business Math” is to “Math” as
“Calvinball” is to “Sports”
The BIG problem is that too many people in business can’t get this simple rubric though their heads….
BGinCHI
It’s not an error. Seriously? Anyone think the NRA would do what greatly benefits them accidentally? Ever met any realtors?
Cathy W
@cmorenc: I didn’t need to hear that. I’d already figured out that I shouldn’t buy a home that had been in foreclosure at any point in the past 5-10 years, because there might be lurking issues regarding the title. The prospect that even non-foreclosed homes might not have clean title because of the CDO mess is just frankly terrifying.
J. A. Baker
@dmsilev:
You go to war against the consumer with the Wall Street criminals you have, not the Wall Street criminals you might want or wish to have at a later time.
MikeJ
@Comrade Javamanphil:
Once you learn how to fake ethics people will let you get away with anything.
wrb
@BGinCHI:
Talking up the market may have helped realtors a little in the short term, but it has contributed to a failure to perceive just how bad the crisis is, and so a failure to take anything like the action needed.
If the CPI was showing the real deflation, even the dimmer economists might start calling for radical action.
chopper
@Trinity:
oh jesus, i’m crying.
CaptainFwiffo
I can echo this. I work with data from a couple different MLS boards that are close/overlapping and the quality of the data is hilarious.
Steeplejack
This is the free-market paradise at work. Statistics being compiled and reported by an industry group deeply invested in said statistics always being as positive as possible? What could possibly go wrong?
At least, thank God, there is no bloated government agency sticking its nose in and driving up the costs of data collection and analysis. Let’s keep politics out of real estate statistics.
Trinity
@Shinobi: Agreed!
@chopper: I almost peed myself.
srv
OK, I went to the Oracle on this, bubbleinfo guy:
http://www.bubbleinfo.com/2011/12/14/nar-circus/
ice weasel
Funny how the “oopsie” was working to their advantage.
Yeah, funny that.
Schlemizel
John – NOBODY thought someone making 14 could handle a 400k loan – ever. What they did know was that they could loan the shumck that money, bundle that disaster waiting to happen with a bunch of others & dump the whole mess onto investors. The money was made from writing the loan not from collecting the mortgage.
Karen in GA
@Trinity: Dammit! I tried watching at work, but it keeps freezing on me.
So there’s a Newt Gingrich Bad Lip Reading video, and I can’t watch it all the way through for another three hours. This sucks.
Dammit, dammit, dammit!
Schlemizel
@gaz:
21 if I am in the shower!
Trinity
@Karen in GA: it is well worth the wait. And I hope the rest of your work day goes by quickly. I can’t wait to escape my office.
SiubhanDuinne
@Trinity:
Oh, how I would love to watch that now! Have to wait until after hours when I can use a non-work computer.
David in NY
@Schlemizel:
Wasn’t there a part of the reform package requiring lenders to keep a sizable percentage of the loans they originated to protect against this? Or did “sizable” get shrunk to “nominal?”
BGinCHI
@wrb: Agreed. But that’s what I’m talking about. These are exactly the kind of short-term thinkers (and mostly GOP voters) who either don’t see or don’t care about consequences. Profit first, consequences later.
Cf.: environment, education, for-profit health care, fracking, etc.
ericblair
@CaptainFwiffo:
Oh god yes. Anybody who’s been through these kinds of data aggregation projects will tell you how long it took to clean up every different damn way people have coded similar data, not to mention real problems with, say, different addresses for the same property. Unless each different database was maintained with precise rules and Nazi-level ruthlessness since day one, you’ll get problems.
Lee
I’ll jump in here with an actual defense of one realtor. Back in the dark ages (’92) when my wife and I were shopping for our first house. Our realtor really gave us good insite into shopping for houses and getting the loan.
Flashforward a few years (2006) and I at a Xmas party and got corner by a in-law of sorts. He started as a car salesman and had just switched to working new home sales for a builder. He was pretty much everything bad you could wrap up into one package. Claimed that it was impossible for their to be a housing bubble and then admitted to cheating on his wife with his office manager.
The Moar You Know
@srv: Jim is literally right up the neighborhood from me. I have had some minor quibbles with him over the years, but fundamentally the man seems to have a severe allergy to bullshit – especially the bullshit that is the prevailing standards of his chosen industry. His expose of the new local practice of building small housing developments on top of hideously toxic land (toxins left behind by decades of greenhouse agriculture) is worth its weight in gold. Too bad the local media ran from it like the cowards that they always have been.
Mark K
Who was that piece of shit I just saw on MSNBC from West Va. who voted with the Republicans on the funding bill? When asked by the host how is this going to help the 53,000 unemployed in your state, he says:
“We don’t know yet. But, what I’m really concerned about is Social Security and…” I turned it off.
So sick of these lying scumbags.
jl
Calculated Risk real estate blog had a post on it yesterday.
Lawler on NAR Revisions for 2007 through 2011
http://www.calculatedriskblog.com/2011/12/lawler-on-nar-revisions-for-2007.html
According to the economist extensively quoted n the piece, the NAR was forced to change its benchmarking method because the Census changed is survey design for long form instrument (Edit: and data from the long form was needed for the benchmarking. So the change in methods seems to be forced onto the NAR, which is consistent with my experience with large organizations with vague accountability requirements, public, private, profit, nonprofit, who find problems with stats or data in a prominent product they put out: do nothing until forced to, and at all costs cover up the problem for as long as possible ).
Below is Calculated Risk’s warning about the NAR data problems from January earlier this year:
” The NAR is working on benchmarking existing home sales for previous years with other industry data. There is no planned release date for these possible revisions… The process is expected to be completed sometime after mid-year, and I expect this effort will lead to significant downward revisions to previously reported sales. ”
From link in Calculate Risk ref above.
DanielX
@Schlemizel: Goes right along with the short term thinking I mentioned…if banks actually had to keep mortgage loans on their books, at this point you’d have to go through a colonoscopy to buy a house. But since mortgage loans are/were virtually all offloaded into mortgage backed securities, back during the boom period the main criterion for getting a loan was having a pulse. Banks made their money up front on origination fees and from service fees on a continuing basis; what happened with a mortgage after it was off the bank’s books wasn’t their problem. As for the shitty loans that went into mortgage backed securities and the securities themselves, the most cogent explanation I’ve heard is in All The Devils Are Here, by Gretchen Morgenson and Joe Nocera.
One bond trader to another: “What’s the worst thing that can happen? We make $200 million and get fired?”
srv
@The Moar You Know: Started watching his videos during the bubble. It was always good to hear his “I’m a realtor, but these people are CRAZY!”-voice as he looked at one ridiculous price after another.
And then documenting all the scams his peers run (under the table foreclosure purchases, etc).
Villago Delenda Est
@cmorenc:
Just this.
Perhaps the most important reason why banksters need to all be burned at the stake, after they’ve been decapitated, hung, shot, flayed, and drawn and quartered.
They fucked with the elementary laws of the universe. There need to be severe consequences for that.
The Moar You Know
@srv: Jim, Bonddad from the GOS (he left), and the guy who runs Irvine Housing Blog – can’t remember his name right now – made the difference between me being where I am today and being in the poorhouse. I still read Bonddad’s site every day. Jim’s probably every week or so. They were way out in front of this catastrophe and I owe them a debt that I hope someday to repay.
Jim’s videos have gotten a lot better since the beginning, haven’t they?
Temporarily Max McGee (soon enough to be Andy K again)
Someone’s glancing in the rear view mirror of his Cadillac and laughing his ass off.
carpeduum
Clearly this is all the work of Democrats and George Soros. And since Obama is now Prez it’s all his fault and he should be impeached.
carpeduum
If only we had less regulations, this would have never happened. The free market never makes mistakes like this.
protected static
@DanielX: Yeah, I was being kind. I worked for a few years supporting a land acquisition team for a major airport/runway expansion. Messy data is an understatement.
gaz
@MikeJ: Well played.
gaz
@Schlemizel: LOL! that reminds me of a friend of mine, who – while about to get laid for his 21st, very drunkedly stood up proudly, and told his fuck-bud:
“I’m this many!”
Still gives me the lols.
DanielX
@ericblair:
Jawohl! That’s it exactly – if you’re not Teutonically anal-retentive about how the data is formatted, stored, maintained (and yep, that includes standardization of addresses per USPS), you’re going to have lots of duplication etc ad nauseum. Unfortunately…different local boards of realtors and their affiliated multiple listing services don’t do this. You couldn’t get those folks to whistle Dixie in unison, let alone cooperate on that level of detail. After all, the systems they’ve got work for them, so why change? And who’d pay for it if they did? And what about the historical data? And, and, and…ain’t gonna happen, which makes the latest NAR clusterfuck pretty predictable. The best they’ll ever do with a lot of data cleanup is approximation – they’d much rather spend money on lobbying than on solving data integrity problems, they get a lot better return.
Arclite
I make listing search software for a living, and see double listings all the time, so I don’t know why the good folks at NAR are clueless about this. Realtors put in listings twice or thrice, forget to pull old ones, put them into multiple listing boards, etc. etc. It’s very common.
JoeShabadoo
Why are people here thinking they screwed up the math?
They are all perfectly capable of crunching the numbers they just basically lie about it.
No one should expect anything different because the same guys who lied and cheated us into this mess are still calling the shots.
Did everyone expect them to suddenly start doing business in an upright manner when there were no negative consequences for them before?
gaz
@JoeShabadoo: of course.
market-freely-objectifying-humans-craft-silly-objectivist-nonesense-selling-ayn-rand-masturbating-with-her-invisible-hand-in-ron-pauls-faceless-corportations-are-people-named-jim-crow-can-be-solved-with-freemarket-principles-out-the-window.
Dontcha’ know.
Or at least that’s what the glibertarians tell me when I ask them how it all works…
DanielX
@protected static: Purely out of curiousity, it wasn’t the new airport outside Chicago?
mclaren
How does this happen?
Extend and pretend, John.
This is how the phony U.S. economy stays afloat nowadays — by creative accounting. By lying with statistics. By bogus numbers that ‘accidentally’ inflate the economic growth and employment and GDP numbers and must constantly be ‘revised downward’ quarter after quarter.
John, are you hopelessly naive?
If the true economic statistics were revealed plainly and simply, it would become immediately apparent that our entire financial system is insolvent and our government is pissing away a trillion and a half dollars a year on endless unwinnable wars no one can justify or explain, and that our GDP mostly consists of bogus bullshit like “financial profits” and “transfers from overseas divisions of our largest corporations” and “intellectual property,” all of which are nonexistant horseshit con games covering up smoke and mirrors in which nothing is actually produced and there are no real products manufactured and no genuine services provided to Americans and no actual prosperity for American workers.
At that point, foreign buyers of U.S. T-bill would blanch and balk and flee in droves, and our country would shut down like a gigantic fly-by-night snake oil sales operation.
gaz
@mclaren: I kinda doubt that.
For starters, macroeconomic wealth has been abstract (eg: pretend) since modern economies ditched the gold standard.
In what world would people flee US t-bills and dump them into something else.
The only way that’s even half plausible is in the face of an emerging economic superpower like China, who buys up all of our debt and then finally…
oh wait…
fuck.
;)