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If there’s one thing the real estate industry needs to worry about, it’s mis-information. Bogus appraisals, misleading market analyses and self-serving press releases make it nearly impossible for to get accurate data about the market. Even Fannie Mae can’t be trusted to accurately report how many subprime loans it makes. And with regular releases of the misleading Case-Shiller report, is it any wonder buyers and sellers don’t know what to believe?

REALTORS need to get in front of this problem. Consumers don’t read the full reports but they do see the headlines. That’s bad news for real estate agents. Case-Shiller gets regular headline news, drowning agents’ voices.

Consumers implicitly trust Case-Shilller because it appears “scientific.” That’s unlike their usual experiences with house value “estimates” from agents or websites. REALTOR data is perceived to be self-serving, and MLS systems are based upon terribly incomplete information. Even sales prices are worrisome since some systems use tricky days-on-market reporting.

And then there’s Case-Schiller.

Great damage has been done to the housing market’s ability to recover by the Case-Shiller report. Every time this hobgoblin of an analysis is published, buyers and sellers are further misled about the market. Even real estate can’t match up the reports conclusions with the realities of the marketplace.

Case-Schiller data is not inaccurate. It’s the conclusions drawn from it that are erroneous.

Sellers and buyers are led to believe that the market is turning, up or down, every time the report is released, because media headlines are tailored and spun for news value, not consumer decision making. And Case-Shiller does very little to correct this themselves, for unknown reasons. Perhaps they just like the press spotlight.

Every few months, Case-Shiller tells sellers the market is back up, or falling again. That’s a conclusion anyone could make – with 50/50 accuracy and no need for all the data and studying. But it’s confusing sellers. Likewise, buyers await a bottom that has either already passed them by, or is yet to come. Again, a 50/50 shot that requires little more than a flip of the coin.

That’s why REALTORS must vigorously address the erroneous conclusions every time Case-Schiller is published.

Don’t expect the media to do it. It’s not in their interest. Micro-blips up and down grab attention and sell ads.

Real estate professionals should be the ones analyzing the data and communicating with consumers about what it means. Every time the Case-Shiller-Erroneous-Conclusion Report is published, agents should apply the data to their local market conditions. They need incorporate their experience and knowledge of the local market – and cast the Case-Shiller data within the pricing and buying conditions their actual customers might experience.

Not simply parrot its conclusions on their blogs.

How should REALTORS address the Case-Shiller conclusions? Here’s the short list:

1. The Case-Shiller report – especially the headlines derived from it – is all about averages. Statistics can be made to say anything. Averaging a national market is troublesome for local sellers. Case-Shiller define the “housing market” as the top 20 cities in the country. Yet any conclusion about the “market” is like averaging the temperature of the country. On any given day, the national average might be 40 degrees Fahrenheit, but that doesn’t mean it’s not minus-2 in Bozeman and 80 in Miami. Certainly, some cities are affected by national trends, such as retirement destinations and vacation markets, but Case-Shiller doesn’t account for those trends. Its headline conclusions are just a mashup of averages. So sellers in a declining market hear that the market is turning,  even though two feet of snow can still fall in Yellowstone in June.

2.  The report is backward facing. Case-Shiller reports on what happened not what is happening today. This is incredibly misleading to sellers who have to price  their homes for sale today and tomorrow. The December report saying prices went higher – in October. That’s virtually meaningless to a consumer today, especially if mortgage rates have risen in the meantime (as they have). Try selling a lower-priced stock today at last month’s higher value. Yet buyers and sellers see Case-Shiller conclusions as “news” that leads them to  believe such trends are relevant today.

3. Falling or rising trends depend upon perspective. The report covers more than a decade of data. It fixes values at 100 points as of 2000. From that point, you can look at data as higher or lower depending upon what time frame you select. But consumers think of value as a function of when they purchased last. If you bought a home three years ago, the market is down. If you bought in 2002, the market is then you’re up – in every market, including Nevada, Californa and Florida.

4. The report does not account for one-time or market distorting events. One of these was the collapse of the mortgage market. Prices declined rapidly because exotic financing and Federal interest rate intervention suddenly stopped. Case-Shiller conclusions today about falls from that period are exaggerated because real value didn’t rise: it was merely inflation. Likewise, more recent conclusions about stabilizing prices are also erroneous. The December report uses October figures to claim the market is flat or rising. But that data was skewed by the (expected) expiration of another the Home Buyer’s Tax Credit. Short-term units and prices rose only because buyers thought the credit would expire. Still, the extension of the credit didn’t prevent the top 20 cities from reporting real year-over-year declines.

These points might seem like economic arcana that statisticians would  fight over. Yet there’s real danger that such theoretical errors harm actual consumers. Every new Case-Shiller report has become a media sensation and a public event. Its conclusions become news that consumers talk about around their dinner table. Decisions about pricing and purchasing are influenced by the so-called conclusions of the Case-Shiller report.

Possibly, bad decisions, because of bad conclusions.

REALTORS need to be more vocal interpreters of such pronouncements about “the market.” It’s dangerous to consumers and brokers to simply parrot Case-Shiller headlines, and have the industry itself come to false conclusions about what’s really happening in housing market.