I’m off on my NAR/news media rant early this year. A client emailed me a link to a recent news article about the 5 worst real estate markets in the country for Q1 of 2011. Salem, Oregon was listed as number 3. They based this article on the NAR data that was released. Any of you that have read my blog know I am by no means a Pollyanna on this market and I expect good data when talking about anything. I also expect it to be put into context for the average consumer who doesn’t live and die by real estate data.
How the NAR collects data has been controversial and CoreLogic called them out on the inaccuracy of their data before. Unfortunately this is no exception. NAR takes samples of MLS data and then has a “drift” calculation they use to “correct” for their sample error. The problem this creates is that most consumers don’t understand the way statistics work, but tend to believe what they read. So here is the real deal about that data released by the NAR.
- The data is for the Salem metro area, not Salem proper. This is defined by the census bureau as Marion and Polk counties.
- The NAR uses samples. So if they pull an uneven sample and say pulled more homes from Woodburn, Dallas, Stayton, Jefferson, or Mill city area which have been harder hit, the data will skew the wrong way.
- I have no idea what raw data the NAR used but it doesn’t jive with my data set which is a complete set of WVMLS data.
So, the article reported that Salem (which you now know means the Metropolitan Statistical Area, not Salem proper), had a median home price drop of 20.6%, first quarter of 2011 from first quarter of 2010. Here is what you really need to know. Using the full data set and not the samples/drift combination of the NAR, the first quarter dropped 14.9% year over year. Salem proper, which is how many consumers are reading that article, dropped 11.3% year over year, first quarter. These price drops are not at all unexpected because as many of you many remember the first and part of the second quarter of 2010 had the federal tax credit associated with them. We had a disproportionate amount of sales early in the year last year as the housing market was temporarily propped up. Prices had to come down and this is the market reaction to that event. A completely expected event, in my opinion.
Anyone that has been around me will hear me consistently say that we are still in a declining market here in Salem Oregon. There is nothing wrong with accepting the reality of our economy, but I do expect the NAR and the news media to propagate data that is true and accurate for our cities. That is their function, is it not? If I wanted inaccurate information, I can always pick up the National Inquirer to find out which celebrity had the latest alien baby or I can encourage Sarah Palin to start her own history channel for television. The news media has a responsibility to help to interpret that data for readers if they are going to propagate it. Seriously, news media and NAR, you blew it.