Property Grunt

Friday, January 26, 2007

Watching it all very closely.

Yesterday I caught Jonathan Miller of the Matrix on Morning Call on CNBC. he was debating with Adam Koval of Socketsite about whether condo prices are the best way to gauge the housing market. Check Jonathan's entry who will give you the blow by blow. My opinion is that are a variety of variables that affect the market and simply looking at the condo index just doesn't cut it.

This was actually the first time I ever seen Jonathan on television and it was quite informative. I think that CNBC will be calling upon Mr. Miller more often in the near future, especially with the way this market is going.

Speaking of which, I would like to present two articles on the housing market.

The first one is from the New York Times.

January 26, 2007
Sales of New Homes Plummet in 2006
Filed at 10:43 a.m. ET

WASHINGTON (AP) -- Sales of new homes plunged in 2006 by the largest amount in 16 years as the nation's housing industry suffered through a sharp contraction after five boom years.

However, there have been some signs that the steep slide in housing may be coming to an end. For December, new home sales were up 4.8 percent, the second strong monthly gain after a 7.4 percent rise in November.

While those increases were better than expected, analysts cautioned that they were influenced by unusually warm weather in those two months.

The Commerce Department reported that sales of new single-family homes totaled 1.06 million units for all of 2006, down 17.3 percent from the all-time high for sales of 1.28 million units set in 2005.

After setting sales records for five straight years, sales of both new and existing homes suffered sharp declines last year, and that has caused ripple effects throughout the whole economy.

Last year's plunge in new home sales was the biggest drop since a 17.8 percent drop since the recession year of 1990. Sales of existing homes fell by 8.4 percent to an annual rate of 6.48 million units, it was reported Thursday. That was the biggest decline in the sale of previously owned homes since 1989.

The median price of a new home sold in 2006 was up by 1.8 percent from 2005 but that price gain was far lower than the 9 percent jump in new home prices in 2005.

New home sales were up in all parts of the country in December except the West which posted a 4.4 percent drop. Sales rose by 27.3 percent in the Northeast, 26.6 percent in the Midwest and a much smaller 0.3 percent in the South.

Separately, the Commerce Department reported that orders to U.S. factories for big-ticket manufactured goods rose in December by the largest amount in three months, led by a huge jump in demand for commercial aircraft and the biggest increase in orders for cars and trucks in more than two years.

New orders for durable goods rose 3.1 percent last month to a seasonally adjusted total of $221.9 billion. The gain followed a 2.2 percent November increase and was the strongest showing since an 8.7 percent September advance.

Orders for commercial aircraft surged by 26.5 percent, reflecting the sizable 212 plane orders that Boeing Co. booked during the month. There also were gains in a number of other industries, providing evidence that manufacturing is working its way through last year's economic slowdown.

The auto sector, which struggled last year with rising gasoline prices and stiff foreign competition, saw a 6.8 percent rise in orders for vehicles and parts, the biggest one-month gain since August 2004.

Excluding transportation, orders for durable goods posted a solid 2.3 percent increase, the best showing in this category since last March and much better than analysts had been expecting.

For all of 2006, new orders rose by 7 percent, a slight slowdown from an 8.6 percent increase in 2005. Orders had risen by 6.9 percent in 2004 after having fallen in 2002 and 2003 as the country was struggling to emerge from the 2001 recession. Manufacturing was the hardest hit sector in the last downturn.

Economic growth slowed to a lackluster 2 percent in the July-September quarter, raising concerns that the steep slump in housing could trigger an outright recession.

However, in recent weeks a number of reports have shown the year ended with stronger-than-expected activity, easing worries about such a general slowdown.

The second is from Yahoo.

New US home sales rise by more-than-expected 4.8 percent

New US home sales rose by a more-than-expected 4.8 percent in December, the Commerce Department reported.

Sales came to an annualized clip of 1.120 million, comfortably ahead of the 1.050 million sales pace expected on Wall Street. The agency revised up its estimate for November sales to 1.069 million from 1.047 million.

Despite the better-than-expected December sales pace, sales for 2006 slumped 17.3 percent -- the sharpest decline in annual sales since 1990 -- to 1.061 million homes.

The median price of a new US home fell 1.5 percent from a year earlier to 235,000 dollars in December, the department said.

After booming for years, the US housing market cooled sharply last year, sparking concerns about the health of the wider economy.

These are two articles that were filed today and are reporting on the same subject. Yet they have very different headlines and perspectives. So what the hell is going on? Why are we having this glass half full/glass half empty scenario.

I could probably go on about a media conspiracy or some type of payola is going down. But as a student of media it comes down to one thing. People. Media, particulalry news is not a science. It is an art. All the stories that you see splashed on the news whether it is tabloid fodder or political reporting gets chooped up, digested, edited and repolished before it is presented to the public. Whenever a news story is being put together, the staff presenting has to figure an angle, a perspective. Sometimes its more than just the facts. It is a process that works, unfortunately it does have its flaws.

That is why I recommend that you do not take news reports, blogs or any other type of information at face vlue. Even those of great authority.

And remember, the media is made up of people, and people by nature are not perfect.