“Data” From Trade & Industry Groups Is NOT To Be Trusted, Part 74,301

18 Feb

I don’t care whether the data if from the National Retail Federation, the Mortgage Bankers Association, the National Association of Home Builders or, my personal favorite, the National Association of Realtors or any other industry group.  It’s ALL garbage!  DO.NOT.TRUST.THEM!  They exist for the singular and sole purpose of drumming-up business for their members; retailers, mortgage brokers, home builders, and realtors, respectively.  Their “data” and “analysis” will, with almost 100% certainty, grossly overstate any realistic projections and even worse, produce misleading historical “data” to boot!

Compare Recent data from the National Association of Realtors (pdf) with the data from analytics company Corelogic (CoreLogic_December_2010_HPI, I have the Excel file but can’t upload to WordPress).  NAR says the price on existing home sales increased 0.5% in 2010, while the price on new homes increased 2.2%.  Corelogic’s national single-family combined home price index shows a -5.46% change.

Who do you believe?  The industry group that represents people who make money when houses are bought/sold for the most amount of money, or an independent analytical shop that uses a pretty robust methodology (reproduced below)?

The CoreLogic HPI incorporates more than 30 years worth of repeat sales transactions, representing more than 55 million observations sourced from CoreLogic industry-leading property information and its securities and servicing databases. The CoreLogic HPI provides a multi-tier market evaluation based on price, time between sales, property type, loan type (conforming vs. nonconforming), and distressed sales. The CoreLogic HPI is a repeat-sales index that tracks increases and decreases in sales prices for the same homes over time, which provides a more accurate “constant-quality” view of pricing trends than basing analysis on all home sales. The CoreLogic HPI provides the most comprehensive set of monthly home
price indices and median sales prices available covering 6,208 ZIP codes (58 percent of total U.S. population), 572 Core Based Statistical Areas (85 percent of total U.S. population) and 1,027 counties (82 percent of total U.S. population) located in all 50 states and the District of Columbia.

Not only does the National Association of Realtors (and really, ALL trade groups) issue over-optimistic future predictions (to get people to buy/sell houses), but they misrepresent historical data!  That should be a crime (if it isn’t already)!

I’m not saying Corelogic’s data is 100% accurate, but I will take their #’s over a trade group’s every.single.time.

UPDATE: Jonathan Miller of Miller/Samuel has a good post about this as well, and includes the NAR’s explanation of their bogus methodology.  Highly recommended read!

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One Response to ““Data” From Trade & Industry Groups Is NOT To Be Trusted, Part 74,301”

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  1. Tweets that mention “Data” From Trade & Industry Groups Is NOT To Be Trusted, Part 74,301 « Stone Street Advisors -- Topsy.com - February 18, 2011

    […] This post was mentioned on Twitter by JT SMITH, Matt Webb. Matt Webb said: new POST: "Data" From Trade & Industry Groups Is NOT To Be Trusted, Part 74,301 http://wp.me/pOYGU-lS #NAR #housing #NRF #NAHB #MBA #lies $$ […]

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