Do you trust the associations and companies that provide real estate data? When a firm reports that office vacancies are falling, do you feel in your gut that these numbers are accurate? How about when another firm reports that retail rents are due to rise?
Well, it just got a bit harder to trust some of these numbers thanks to the mistakes made by the largest Realtors association in Illinois.
The Illinois Association of Realtors reported last week that it may have been overstating the median sales prices of single-family homes and condominiums in Chicago for more than three years. The association rechecked its numbers after the Chicago Sun-Times, acting on a tip, called the group and questioned its median sales price data.
In May, the association reported that the median sales price of condos and single-family homes in Chicago stood at $299,000, a welcome increase of 10.3 percent from the same month one year earlier. This news was too good to be true, though, as anyone who’s tried to sell a residence in Chicago knows. The association admitted that the median sales price for May should have been reported as $249,000, or $50,000 less. This new, accurate, figure is actually 23 percent lower than the median sales price in Chicago in May of 2010.
The association has said that it did not overstate the sales price on purpose. Instead, the association cited an internal data-processing error. The association also said that its median sales price numbers might actually be incorrect all the way back to February of 2008, when the association first began reporting Chicago housing data separately. The association says that the data-processing error has only impacted Chicago numbers, not those for the rest of the state.
The screw-up has made the rounds, as this post on the New Jersey Real Estate Report blog site shows.
I’ve spoken with many of the numbers people who study sales and pricing trends for commercial real estate across the Midwest. One such statistician told me that he often faces pressure from industry officials who worry that he and his fellow researchers are being too hard on the industry, that their projections have been too negative.
To his credit, this statistician sticks to his team’s research, and doesn’t soften the company’s reports.
But the gaffe from the Illinois Association of Realtors will only increase the distrust many consumers already have for the real estate profession, both commercial and residential. Many consumers still place a large share of the blame for the country’s economic problems on the real estate industry, claiming that mortgage lenders approved too many borrowers for loans they couldn’t pay while real estate agents encouraged their clients to spend too much money on overvalued homes.
This is a simplistic view, of course. Many factors went into the housing and economic crises that our country is now facing. But major mistakes from the country’s largest real estate associations — and don’t forget, the prior chief economist of the National Association of Realtors consistently told anyone who would listen that there was no such thing as a housing bubble — do little to instill confidence in today’s struggling consumers.
— Dan Rafter