I saw the headline, “Fannie Mae: Despite It All, Americans Want to Buy, Not Rent,” and thought there might be some good news there. There was, but there was too much silliness to drown it out.
The story come from a Fannie Mae press release entitled “Americans’ Outlook on Housing Continues to Inch Forward Despite Dip in Overall Economic Confidence.” It explains that Americans remain cautiously optimistic about the market.
Which is all fine and good. Where people think the economy is going can affect where it actually goes. If they expect prices to rise, for example, they’ll be willing to pay a bit more… and prices will rise.
So there’s good news — for example, “Eighteen percent say now is a good time to sell, marking the highest level since the survey’s inception” and only 11 percent think home prices will go down in the next year. And two-thirds say they would prefer to buy if they were going to move.
There’s also some negative stuff: lower consumer optimism, for example.
But then there’s the silly stuff. My favorite: “Survey respondents expect home prices to increase 1.6 percent in the next year, on average.”
Huh? This is a phone survey of 1,002 random people. How the bleep could your average guy on the street possibly know what home prices will do? I mean, what’s the point in asking, “How much do you think home prices will rise?”
It’s one thing to poll people about whether they think prices will go up or down, but to ask them for a number? Where did that 1.6% come from? Are these people economists? Realtors? Mathematicians?
If someone asked me, “Do you think gas prices will go up or down over the next year?” I could probably venture a guess one way or the other. But if asked “By how much?” the only rational response is “How the heck would I know?”
Put another way, if you read that “Joe Schlebotnik, random guy at the mall, thinks housing prices will drop 2.1 percent next year,” would it make a difference?
The survey has more of these useless statistics. For example, 40 percent of consumers expect mortgage interest rates to rise in 2013 by an average of four percent.
Based on what, exactly? And they really think rates will double in a year? (The Fed has been pretty clear that it’s not going to raise rates for the next couple of years. Granted, that’s no guarantee that mortgage rates will stay at 3.whatever percent, but they certainly won’t double.)
A better way to phrase that might be “40 percent of consumers show they are clueless about the housing economy, and thus their responses are statistical noise.”