Blame 2010, one of the most extraordinary years for the housing market on record, for 2011 – perhaps one of the weirdest.
The first half of 2010 was driven by a pair of homebuyer tax credits that simultaneously goosed sales and artificially inflated prices. That created a pair of six-month periods marked by their extremes – extreme homebuyer frenzy in the first, and extreme homebuyer apathy in the second.
And just as we were catching our breath after the tax credit-inspired mania, a series of technical difficulties caused the foreclosure picture to essentially go off the air.
It all set the stage for an intellectually interesting, but practically frustrating, 2011.
In the first half of this year, we were comparing home sales to the artificial highs of Jan.-June 2010. Absent a $6,500 or $8,000 incentive from Uncle Sam, of course 2011’s first-half numbers couldn’t match up.
Likewise, comparing this year’s so-far anemic second half numbers to the abysmal post-tax credit numbers of last year and loudly proclaiming “we’re up!” is disingenuous. August 2010’s 3,652 single-family sales represented the slowest August for single-family home sales since at least 1987, with closed sales failing to break the 4,000-sale plateau for the first time on record, according to data obtained from The Warren Group, publisher of Banker & Tradesman. The second-worst August since 1987 was in 1990, with 4,100 sales recorded. The third worst? Yup, last month, at 4,203.
It’s like comparing the 2011 Red Sox to the 2010 Red Sox and saying this year’s club was a success. Sure, the 2011 squad eked out one more win – 90 wins versus just 89 last year – but really, both teams turned out to be tremendous disappointments.
As for foreclosures, we look at the 2011 numbers and rejoice because we are down compared to last year. But that doesn’t account for the fact that last August’s 1,207 completed foreclosure deeds represents the highest August mark since The Warren Group began publishing foreclosure data in 2006. One would hope we’d be down from that level.
It begs the question of what, exactly, happens to conventional wisdom when you’re no longer comparing apples to apples, or even apples to oranges? Contrasting 2010 and 2011, as far as the housing market goes, is more like comparing pizza to automobiles. There simply is no comparison.
We can confidently predict October foreclosures will appear to spike in comparison to 2010. But even then, we’ll simply be comparing October 2011 – hopefully a “normal” month – to October 2010, a month in which lenders essentially stopped the foreclosure process in order to more adequately refine and streamline their processes.
Caught in the middle of all this statistical weirdness, of course, are bewildered homeowners and homebuyers.
How can they be expected to have any confidence in their decisions to buy or sell when each month, the numbers seem to indicate something entirely different? If it was wise to go bargain hunting in May and June when sales were “down” over last year, was it also wise to list your home in August as sales and demand seemingly “recovered?”
Because of last year, we’re left this year with a month that boasts both a year-over-year uptick in sales and a concurrent slide in foreclosures – both traditionally “good” things – but which is nevertheless underwhelming at best and near-historically bad at worst.
Were we statisticians, we might feel compelled to dismiss 2010 as a statistical outlier. Alas, we don’t have the luxury of simply dismissing or writing off last year. It happened. We were all there.
But what we can do is learn from last year’s truly once-in-a-lifetime series of events and interventions – and this year’s after effects – and apply those lessons to next year and beyond. In that way, we hope our future selves won’t lose any more hair trying in vain to draw comparisons between two distinctly incomparable moments in time.
