I've spoken many times on my radio show about how fear is used to move us. Well, recently I spotted a great example. Just last week I wrote about how a mortgage “expert” was predicting a “death spiral” in the housing market. That was last week. This week, the National Association of Realtors is saying that the housing market in 2012 will be the strongest in five years. February was actually a 9.2 percent increase in home sales from last year.
For most people those two things wouldn't compute, especially since the “expert” I quoted last week was predicting a 6 percent reduction in housing prices in 2012. This just all goes to show you something I've said for a long time: don't believe the doom and gloom.
Look, these two predictions are one week apart. How can 2012 be the start of a death spiral and the strongest year in five years? The answer is it can't.
Another interesting thing about the two conflicting reports is that the one about the housing death spiral was published on CNNMoney (a large outlet that is the 63rd-ranked site on the internet) and the report about 2012 being the strongest year in five of home sales was published on Inman News (a much smaller outlet ranked 17,422). The report by the National Association of Realtors is nowhere to be found on CNNMoney.
Now don't jump to conclusions. I'm not accusing CNN or CNNMoney or anybody else of being evil or lying, necessarily. I just think it's interesting that a report with good news like this from the NAR would be ignored by a big outlet like CNNMoney.
According to the article, “The National Association of Realtors is predicting existing-home sales will jump 7 to 10 percent in 2012 to the highest level in five years, based on an ‘uneven but higher sales pattern' so far this year.”
Even though the housing market was up over 9 percent from where it was in February 2011, the market was actually down from January, according to the article.
“Pending home sales fell a seasonally adjusted 0.5 percent from January to February, which was up 9.2 percent from the same time a year ago, NAR said in releasing its latest Pending Home Sales Index.”
In their latest economic forecast, NAR predicts existing-home sales will total 4.65 million in 2012, up 9.1 percent from last year. That forecast assumes that the U.S. economy will grow at a 2.3 percent annual rate and add 2.7 million jobs this year.
One of the things about the CNNMoney “death spiral” article that I didn't agree with was making a prediction about what would happen five or six years from now. The country will go through two presidential elections by then and who knows what else. It's almost crazy to make a prediction about what will happen to the real estate market in that time because, like every other part of the economy, real estate is so dependent on political and outside economic factors.
What if we all of a sudden discover the world's largest oil reserve in Kansas? What if the stock market crashed again? What if it soars by 5,000 points? We can't possibly know all those things. With that in mind, it might not be a good idea to make too much of the NAR's forecast either.
What do you think the real estate market will be like in 5 years?
