Is The Housing Market Really That Hot?
b'On today\\u2019s show we\\u2019re trying to make sense of some of the latest statistics that are being reported in terms of national home sales.\\nA new report yesterday in the Wall Street Journal reported that home sales rose to a new 14-year high in September, bolstered by robust demand and a shortage of homes for sale that is making the housing market one of the brightest spots for the U.S. economy.\\nExisting-home sales are up 9.4% in September from August to a seasonally adjusted annual rate of 6.54 million, the highest rate since May 2006, according to the National Association of Realtors. The September sales represent a 20.9% increase from a year earlier.\\nThe numbers of August sales were similarly glowing. The August existing home sales were up 9.1% compared with 2019.\\nAll of this points to a booming housing market, one of the brightest spots in the economy.\\nBut here\\u2019s the problem. Depending on how you slice and dice the data you can construct a different narrative, a different explanation of what it happening.\\nWe all know that we went through an artificial downturn in housing sales in the Spring. This was the result of widespread shutdowns of the economy and the shelter in place orders that were in effect for close to 90 days across major parts of the nation.\\nIf you compare sales in the first 9 months of 2019, to the first 9 months of 2020, we have not yet matched the sales volume of 2020. In fact, in the year to date we have only sold 97.9% as many houses compared with 2019, a reduction of 2.1% compared with this time last year.\\nAre we having a booming market?\\nAre we just catching up from the shutdown in the spring?\\nThe number of home sales in 2018 were higher, 2017 were higher, 2016 were higher. You would have to go back to 2015 to find a rate of home sales that are on par with the year to date numbers for 2020.\\nYes, we\\u2019ve had a strong recovery in home sales. But comparing the September 2020 statistics to the same period last year makes no sense. It\\u2019s not a reasonable comparison.\\nIt\\u2019s a little bit like putting a dam in a river that flows continuously. You then open the dam and say \\u201cWow look at how much water there is.\\u201d\\nNo kidding Sherlock. It may be amazing how much water is flowing, but not surprising.\\nThe pundits that are used to reporting statistics a certain way, are continuing to do so. Why? Because that\\u2019s how they\\u2019ve always done it.\\nThere\\u2019s nothing normal about 2020 in any way. So if you\\u2019re going to quote statistics, you need to look at the big picture.\\nI\\u2019m tired of seeing the weekly unemployment numbers being reported by the bureau of labor and statistics. Fewer people filed for unemployment this week, so they conclude the economy is on the mend.\\nThese types of reports are ridiculous to be quite frank.\\nIt\\u2019s not just the National Association of Realtors who do this. Virtually every real estate board is quoting statistics the same way. Why? Because that\\u2019s how they\\u2019ve always done it. Even in my home city of Ottawa Canada, the same thing is happening. Last week, the September numbers were published for my home town. The numbers are amazing. Sales volumes are up 35.1% compared with the same month in 2019. Hurray.\\nBut if you zoom out and look at the big picture, sales volume is down 4.9% compared with the comparable first 9 months of 2019.\\nLook folks, I have no problem with taking a look at statistics. They can be very helpful in determining what is happening in the market. But when statistics are published, I urge you to apply your own thinking and analysis to what the numbers mean. Don\\u2019t get me wrong, I don\\u2019t think anyone is out to mislead you about what is happening in the market.\\nDon\\u2019t just accept a journalists interpretation as the truth because it may not be the entire picture.'