Admittedly, our National Association has been taken a beating of late for its adjusting and re-adjusting (and re-re-adjusting) of its 2007 homes sales forecasts. That, along with the seeming “It’s Always Sunny in Real Estate” spin that many critics read into the latest iteration of its public awareness initiative, have gotten us to the point that many in the press and the RE.net are questioning NAR’s credibility, both as a distiller of housing industry economic data and a truth teller when it comes to what’s really in consumers’ best interests in today’s real estate markets.

While NAR (or VAR either, for that matter) is not above criticism, there are always (at least) two sides to every story. There are even multiple facets to the same story. And there are certainly multiple ways of collecting and analyzing data, and multiple, sometimes contradictory, conclusions that can be drawn from that analysis. I’ll not belabor the point, except to say this: In particular, I believe that NAR’s Chief Economist Lawrence Yun has gotten a bad rap for what some see as his too-rosy forecasts and well-spun public comments about the health of the real estate economy.

Thankfully, he now has a new platform for explaining himself and the inner workings of NAR’s econometrics, and it’s worth a read. It’s not a blog (yet), but NAR has begun to post commentaries by Yun at realtor.org behind the “research” tab. In particular, his recent post on some of the reasons for divergent home price trends is a spin-free, must-read.

I’m glad Lawrence is finding his voice. He’s a fresh, thoughtful, truth-telling asset to NAR. Would that more in the media (and, yes, the real estate blogosphere) were as thoughtful.

Now if they’d just turn his commentaries into a blog, we could all comment….

(I’m told Lawrence’s commentaries will be posted with some frequency at http://www.realtor.org/research, in case you want to bookmark it.)

Three reasonable facts . . .

1. These days (and perhaps always) consumer confidence plays a large role in the state of the housing market. Many buyers and sellers are fearful that home values are dropping precipitously, or will be soon.
2. Consumer confidence, in many ways, is shaped by the mainstream media — as this is where many Americas get information about the housing market.
3. One of the highly regarded sources of information on the housing market is the Case-Shiller Index, which tracks 20 major markets.

. . . that may be having unreasonable effects . . .

• The markets featured by the Case-Shiller index tend to be in California, Florida and other down markets. This makes the index show price declines, which the media highlight, which scares consumers. As Lawrence Yun states, “This is total distortion of market conditions based on a small selection of falling local metro coverage.”
• A second source of information on the housing market, the Office of Federal Housing Enterprise Oversight (OFHEO), shows 70% of 287 local markets having price increases. Again from Yun, “the OFHEO survey gets far less coverage than the Case-Shiller index. Perhaps the media is intent on looking for sensationalized headlines. After all, the media is in the business of selling news, and more sales can be made with sensationalism. (I have been told by few reporters off-the-record that they are interested in increasing their viewership even if it means putting things out of context.) “
• And perhaps the most unreasonable of all, “Another factor that rarely gets attention is that Dr. Shiller, a Yale professor, has a side business in Chicago. His index is used at the Chicago Mercantile Exchange for hedging housing futures values. The more hedging of bets that occur, the more profits go into Dr. Shiller’s bank account. And more hedging of the bets will take place if people believe there will be a crash in housing values. So naturally he has a financial incentive to “scare” the market.”

The entire article from Lawrence Yun is definitely worth reading — and it is great to see NAR bringing these facts to light.

H/T - Jim Duncan, RealCentralVA.com