The devil is in the real estate data
Back in the 1990s, real estate sales data were considered closely guarded secrets - by some, at least. That meant one of the most difficult things about this job was finding numbers to support what real estate agents were saying about the market.
Back in the 1990s, real estate sales data were considered closely guarded secrets - by some, at least.
That meant one of the most difficult things about this job was finding numbers to support what real estate agents were saying about the market.
Fortunately, there were some Realtors who thought the attempt at secrecy was nonsense and successfully argued that, in the words of one, if they didn't provide sales numbers when the market was bad, how would I know when it was good.
Sensible, because all real estate is local - down to the block, if you've been to Kensington lately.
As the last decade has shown time and again, data dumps can be detrimental to market health.
If real estate is local, why should what goes on in Las Vegas matter to the folks in Hi-Nella or East or West Nantmeal? Yet as the real estate market was collapsing 10 years ago, buyers here were spooked by horror stories from the West that were reported repeatedly by cable-news outlets that need to fill their schedules.
The problem is compounded by overproduction of "top 10" lists, generated by an infinite number of real estate data engines headquartered primarily on the West Coast.
Those are the folks who pitch me stories about Pittsburgh, assuming that everything in Pennsylvania is a five-minute drive.
On Wednesday, one of them will send a report that rents in Philadelphia are declining. On Thursday, another sends one saying that rents are rising.
You see the problem: Too much information, not enough local evidence.
You can imagine my reaction when the data providers fight among themselves on the question of accuracy.
That happened recently, when Apartment List's Andrew Woo announced that millennials age 18 to 34 need five to 15 years to save for an "assumed" 20 percent down payment.
If you recall, I oppose demographers' efforts to lump us into groups, but it doesn't seem to bother anyone else, so forget it.
Here's what Woo said:
Millennials, age 18-34 without a college degree, need 15 years to save for a 20 percent down payment.
Millennials, age 18-34 with a college degree and student debt, need 10 years to save for a 20 percent down payment.
Millennials, age 18-34 with a college degree and without student debt, need five years to save for a 20 percent down payment.
That didn't sit well with Edward Pinto of the American Enterprise Institute, who called Woo's assertion "a whopper of fairy-tale proportions."
Coincidentally, Susan M. Dynarski, a nonresident fellow of the Brookings Institution and economics professor at the University of Michigan, recently said the dividing line between haves and have-nots in homeownership is education, not debt.
Using Federal Reserve data comparing those with no college, those with college but no student debt, and those with college and student debt, Dynarski said that it is the college degree and its earnings premium over not having a degree that helps build assets such as a home.
Pinto's bone of contention with Woo's analysis is far from the norm of the 3.5 percent down payment that has been reported by three sources: his institute, the National Association of Realtors, and the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey.
"At the same time, first-time buyer loan volume has been surging: April 2016 first-time buyer volume up 18 percent and 39 percent from April 2015 and April 2014, respectively," Pinto said.
Woo's assumption "may only be described as a whopper of fairy-tale proportions. As a result, the rest of his calculations are also fairy tales on the Whopper-O-Meter," Pinto said.
I like it when they argue.
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