I jumped too soon…it’s the same story that we had online yesterday. It came on their online newspaper at late morning, and then made it to print today.
Here’s the e-mail I sent the writers:

You two did a fabulous job covering a difficult topic. You provided a complete, factual account. Although you will probably get hate mail from real estate bulls, you can rest assured that you covered the facts.

I liked the personal stories of the 3 sellers, which show us the true reality out there today: homes are taking longer to sell, driving down prices. Sellers are getting frustrated.

I would like to see an improvement in the quality of the real estate professionals interviewed. That part of the article was tainted toward the bull case, and those people made many wrong statements.

John Karevoll said that between now and fall, pricing will go up and down. He doesn’t see the drama in the price declines. Ask him to explain how the median is up so much, when individual home prices are down over 10%. I can
give you many examples of people coming to closing, owing money. Most who bought in 2004 and 2005 and are selling, are losing money today. This is not a matter of a few homes going up or down in price. Real estate doesn’t work like that. It’s a slow moving ship, and the ship has reversed course.

Ask Karevoll to dig inside the numbers. Ask him , “Isnt’ it true John that median is up because sales are skewed to the higher end because the first time buyer is priced out due to rising interest rates and high home prices. Isn’t it true that each individual home is worth less today than it was last winter?”

My thought is that Karevoll wants to toe the real estate line, since the NAR is one of his biggest clients. He would be uninterested in providing data to show you the true state of the market.

Steve Doyle, Brookfield Homes’ president, is likewise interested in spinning the facts. He says that ‘When you look at economics, we still have positive job growth”.

He’s right, but it’s a much smaller positive than it was a few years ago. Most employment in the last few years was in construction, real estate, and lending, and in retail and restaurants as people took our the home equity of ever rising home prices to go on shopping sprees. As housing cools, thse industries that have been our major growth, will keep weakening. Our manufacturing sector is shrinking. Nokia is now thinking of leaving. The 44,000 people per year leaving has left many vacancies for doctors, police
officers, engineers, cashiers. I keep seeing Hiring signs at so many stores. I read that high housing prices are making it harder for SD to recruit surgeons! The outlook for the San Diego job market is bleak. My hope is that biotech will some day take off again. Our biotech companies
are small, and my friend who is a manager at one of them, is concerned for her job prospects and is interviewing in the other big biotech cities.

All in all, a good article, although a little slanted toward the idea that real estate might go up again in the fall. This is not a soft landing, but a landslide.

Schahrzad Berkland
U-T Subscriber

Good for you! The LA Times had more courage, and went to the heart of the matter. I saw the link on Ben’s Blog. The U-T took a conservative stance.

These reporters should really get a realtor’s license and MLS access, so they can research their own stories. They rely on the Dataquick reports, and interviews from Karevoll and Ms. Young. Thus, they are easily misled, and mislead others.

Everything that follows below is credited to my friend, who wishes to remain anonymous.

The biggest disservice that the media is perpetrating on the public is the pounding out of the median price. While mathematically correct, it does NOT tell the whole story. The + $2mil home market is hot. Those buyers are not affected by interest rates, but by stock market returns. There is weakness in the low end market, because those buyers are sensitive to higher interest rates and rising home prices. This reduction in lower end homes sold and increase in $2 mil and up homes, is skewing the median up. [In reality, each home is worth less today than it was in 2005. Most are priced at 2004 values.-my comment]

Some say that our inventory will shrink this fall, as it usually does, and our market health will return. False. Demand is declining. Inventory is not as important as the demand/supply relationship. The months supply is more important than the inventory number, and the months supply is growing. Inventory will drop in September, but so will demand. The adjusting ARMs have the potential to be a real big deal.

Another myth, propagated by economists, is that so few people have ARMs, and so many people own their homes outright, that the $2 trillion of ARMs adjusting will be a blip on the radar. What they fail to realize is that the homes on the market set the value for the entire market.

Let me explain. San Diego has about 1.1 million homes, and 55% are owned by the person living in them. That gives a housing inventory of 750,000 homes. But each year, only about 42,000 homes are sold. That is 6% of the market. (BTW, it also indicates the average San Diegan stays in his home for 13 years.) This year we are on track to sell 30,000 homes. This small percentage of San Diego homes is setting the value for the other 1 million homes.

Now consider, that 60% of San Diegans last year used ARMs. If even half of the listings are ARM sellers, who must sell (or bank REOs or foreclosures, this will impact the resale market severely. This will impact all homeowners, whether their home is paid off or not. The resale market drives the price.

So the next time someone tells you it doesn’t matter about the ARMs because they are only .01% of the market, you say, “Yes, but they are 50% of the resale market, and the resale market sets the price for all homes”.

That’s the end of my myth busting for today.

I sent this to the U-T writers (my 2nd e-mail to them today), and ended with this:

“I hope I have educated you, because you certainly are NOT educating
me!”