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The negative housing market was rated as the number one news topic by the Columbus Dispatch in 2007, but it's not as bad as the media has reported. Everyone seems to be getting on the negative bandwagon. Here are two good example that I thought was interesting:
'Here's a typical example from USA Today, Oct. 26, 2007, page 1B:
"New Home Sales Unexpectedly Rise. New homes sales posted an unexpected increase in September. But analysts were highly skeptical given the credit crunch and predicted further sales declines. The Commerce Department said sales of new homes rose 4.8 percent last month..."
By the way, here's what they didn't report. Sales in the West were up 36.6 percent. The media totally discounted these statistics. What about a different headline: "Great News! Real Estate Sales Surge Despite Biggest Credit Crunch in Decades"?'
Here is another good example:
'In Sept. 6, 2007, article entitled, "New Mortgage Foreclosures Set Record," Martin Crutsinger provided the following summary of a speech given by Doug Duncan, the chief economist for the National Mortgage Bankers Association. Here's how it was reported:
"The number of homeowners receiving foreclosure notices hit a record high in the spring, driven up by problems with subprime mortgages. The Mortgage Bankers Association reported Thursday that mortgage-holders starting the foreclosure process in the April-June quarter reached 0.65 percent, marking the third consecutive quarter that this figure has set an all-time high."
"The delinquency rate has risen to 5.12 percent...The worsening performance was driven by two factors -- heavy losses in the Midwest states of Ohio, Michigan and Indiana, and the collapse of previously booming housing markets in California, Florida, Nevada and Arizona...Analysts said the problems in the formerly red-hot housing markets of California, Florida, Nevada and Arizona reflected in part speculators walking away from mortgages they can no longer afford."
This article ends with the negative media's favorite theme for scaring their readers and/or listeners: "Two million people will face foreclosure in the next two years."
Here are the numbers that the negative media did NOT report from Duncan's speech:
Thirty-five percent of the homes in the U.S. do NOT have a mortgage.
Some 94.88 percent of the loans ARE performing.
The foreclosure problem in this country is really a story about seven states.
The biggest foreclosure problems are in Michigan, Ohio and Indiana. These are manufacturing states that had horrible job losses. Since 2001, Michigan has lost 300,000 jobs. These states would probably have had problems no matter what the market was doing.
The other four states -- California, Florida, Nevada and Arizona -- experienced significant overbuilding. Twenty five percent of the foreclosures in these states are on properties that are held by investors who were speculating.
Only 25 percent of all mortgages are subprime, and of these, 75 percent are performing.
In the other 43 states, foreclosures have fallen in 2007 from 2006 (data from Michael Clawson, vice president, Central Texas Mortgage).'
