Statistics…They Don’t Tell the Entire Story

Westcoe Realtors, Riverside California…In a statistics class in college, the professor constantly expounded on the power of statistics and numbers…and their potential to either tell the truth, or cloud the truth.  Which way they went depended on who was doing the telling, and what they wanted to say. 

For example, he used an advertisement that was prevalent at the time to show us what he meant…”Nothing has been found to be more effective at relieving your headache than Bayer Aspirin.” (Please, Bayer users…I am not bashing here, just repeating an example).  This ad had been a Bayer slogan for a number of years, and to the untrained, it certainly implied that Bayer aspirin was the best at relieving your headache.  However, what the slogan said specifically was…”nothing has been found to be more effective…”.  In reality, what the statistics showed was that all leading brands of aspirin were the same at relieving headaches!  Hence, nothing was more effective than Bayer because they were all the same!

I bring this up today because last night on the national news, there was a big story about foreclosures (what else is new…the press has been fanning these flames for months).  In this story, the lead was…”In July, foreclosures were up over 57% as the housing market continues to slide.”..and then they flashed some eye-grabbing graphics to show the viewing public how dastardly this news was, and how badly we should all feel.  However, only if you looked real hard, did you see that this increase was comparing July of 2008 with July of 2007!   Please…a year is an eternity in this industry, and comparing anything in 2007 to 2008 is like comparing your weekend boat to a 2500 passenger cruise liner…that dog just won’t hunt.

If you want accurate data on the real estate market, then you must compare last month with this month, or at worst, last quarter to the current quarter.  To go back a full year is ridiculous.  The sub-prime mess didn’t hit until August of 2007, and even that took a few months to sort out how bad it was going to be.  However, as we have said many times, the news media is in business to either sell papers or increase viewership…and simply stating that the real estate market has leveled out and perhaps reached a status quot is not going to make their headlines, much less entice some snappy graphics.

So what about the more accurate statistics?  What the news could have told you is that sales for the past 6 months (at least in the Riverside area) have increased steadily since the first of the year.  Through June of 2008, the number of sales has been as follows:

January          154           February        221               March          317         April           368

May                 445          June                428

See what I mean?  As I also noted in previous blogs, our available inventory has remained steady during this same 6 month period at between 2698 to 2837…hardly the signs of a “sky-is-falling” mentality.  If our market was truly as bad as the news would have you believe, units sales would be falling, and available inventory would be rising…neither of which is happening. 

 In the end, we obviously have no control over what the media says or does…but YOU do have control over what you hear, and what you understand.  Our point is simply that much of what is said needs further analysis to get the real, clear picture…and if you can’t get this clear picture from your favorite newspaper, magazine, TV news, etc., then call us…at least we can tell you what is happening here locally. 

And we promise not to slant the statistics!