PRESS RELEASE
Bernanke Warned by Real Estate Analysts:
Housing Collapse Is Much Worse Than You Say
May 22, 2007 (EIRNS)—A real estate investment and analysis firm, John Burns Real Estate Consulting, said on May 21 that it is "going public with our concerns" that the national sales information for both new and existing homes, is misleading and covering up a deep plunge of the housing sector. "The housing market has softened much more than is being reported" by the Fed, and the National Association of Realtors (NAR), says JBREC.
The firm reports that having purchased and compiled actual home sale closing data for 55% of the country, it finds existing-home sales down, not 9% as NAR reports, but: 22% in May 2006-April 2007, compared to May 2005-April 2006; and much more than that on a simple year-to-year comparison of the past couple of months. It found that existing-home sales have fallen every bit as much as the new-home sales of the biggest homebuilders D.R. Horton and Lennar, which are down 37% and 27%. It found that home brokerage transactions by Realogy Corp., the nation's biggest realtor company which owns Century 21, Coldwell Banker, and ERA, fell 18% from 2005 to 2006. And that mortgage applications for home purchase have fallen 18%, even though many buyers now have to fill out several applications in order to get a mortgage.
Taking the states with the worst housing sales/foreclosures crises, JBREC found Florida home sales down 34%, not 28% as NAR reported; Arizona sales down 38%, not 28%; and California's down 37%, not 24% as NAR reports. This strong underreporting of the collapse by NAR, the firm says, only dates from the middle of 2006; it doesn't claim any intentional misrepresentation by NAR.
As for new-home sales, JBREC reports the Census Bureau is continuing not to subtract cancellations from reported sales, giving sales figures which are much rosier than the grim reality, and are reported publicly by the Federal Reserve.
"In summary, we believe that the Fed should know that the housing market correction has been quite steep, and is also not showing signs of bottoming out," concludes JBREC.
Separately, a Wall Street firm reported May 18 that the foreclosure "shock cone" is widening: While total foreclosures, at all stages, are up 60-70% over last year so far, foreclosure notices—the front end of the process, when a mortgage is typically 90 days delinquent—are 127% higher so far than in 2006. It said that foreclosed homes being resold by banks or lenders, are hitting the housing market with an average price drop of 30% nationally.
