Yesterday I attended the Greater Lansing Chamber of Commerce annual update on the state of the areas commercial real estate market. The speaker threw a bunch of statistics at the audience that all sounded like things are going pretty well for the economy. The problem was that whoever prepared this section of the presentation used a lot of government statistics. Just to give one example: one slide showed the US Census Bureau graph showing residential home sales nationwide that had a nice increase in January. The problem is that this Census Bureau report is not a report on residential home sales! It is a report on the number of accepted offers for people trying to buy homes. That makes a huge difference. Currently, about 25% of accepted offers fall through, mostly because the would-be buyer cannot arrange financing. An accurate residential home sales report would be one that only covers actual closings where the property changes hands. But that would result in horrible numbers being reported. Another example: another chart showing reported prices paid for homes that sold cited the Case-Shiller Home Price Index. This has at least two holes in it. The minor one is that this only covers the markets in 20 specific cities rather than the whole country. The major flaw is that it specifically excludes the prices of distressed and foreclosed property sales, which not make up may 1/4 to 1/3 of all residential property sales, as best I recall. If data from all home sales were reported, the numbers would look much worse. These are just two examples of the distorted data being fed to the public to deceive them into thinking that the US economy is in better shape than it really is.
Posted on: Fri, 07 Mar 2014 23:13:21 +0000
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