How Rumors Get Started 101
April 30th, 2008
I read an article from the Milford Daily News this Sunday that made me pause. The article headline reads:
Clerk: 805 Vacant Homes in Franklin
Now that got my attention because the town is not THAT large and the housing stock isn’t all low end condos or multi-families, which I am noticing large inventories of vacant and bank owned properties.
So I dug a bit deeper…
My conclusion: what a great example of bad reporting on the market!
Am I sensitive because I am a Realtor? Am I more positive about the real estate market because I rely on the success of home sales to have food with my meals?
No, I determined that I am logical and analytical about this market, if I do say so myself. Show me the stats and I will buy into it.
So why don’t I agree with this article (read full text here)?
- No reliable source
- Sending wrong messages to the public
- No relevance to conclusions drawn
Let’s take this article apart:
First, my opinion is that the article headline is meant to impress an emotion about the continued depression of the real estate marketplace in Franklin, MA. Even though “vacant” does not equal foreclosed, I think the article leads us down that path.
What is vacant meaning? The town clerk reports this abnormal number of vacant homes is made up of retiring (leaving town) boomers, for sale properties, and young people jumping around in their jobs. How the heck does she come up with this??
I am not aware of any job or stat that is recorded at the Town Clerk that would give her this data. Would I call the Clerk if I moved out of my home (without selling it)?
My clients usually stay in a home while selling, so she loses me on the for sale properties.
I then took a look at the state sites for demographic data. Of course, the best I can do is year 2000 census numbers. 14.9% of the population was over the age of 55 at this time. This is less than 4,500 persons out of almost 30,000 people! Not exactly a hotbed of retirees that would affect the town by a trend of heading South.
And in regards to the job jumping: “Young people today – their jobs are moving them around. It’s just the way of life today.” What? Franklin is in the heart of Rt 495 and a hotbed of great corporations. It is not like there is a high unemployment rate out there, so I am confused about this statistic also!
Next point is the terrific news source (sarcasism) of the chosen Realtor. Agent Nathanial Morse is quoted in the story, I believe, because he lives in town. It cannot be because of his experience, because he sells only about a property every other month, and not one of them has been in town (per MLS stats)!
My critique is less about Mr. Morse, but why would the paper choose him as the source? There is nothing but opinions coming from him:
“People here can’t sell their homes, so they’re having to drop their prices and watch their life savings go away”
Morse has seen “significantly” more homes for sale, foreclosures, and bank-owned properties in town
“Even if people can afford to buy, unless you’ve got 20 percent to put down, banks won’t talk to you right now”
calling today’s rental market “almost the best it’s ever been.”
Not exactly true…
Sellers don’t have their homes climbing double digits in value like they were over the past years of growth, but their “life savings” have only taken an unwelcome step back recently.
In the first quarter of 2003, the year over year average price increase in Franklin was 16.55%.
14.12% in the first quarter of 2004.
.93% in the first quarter of 2005.
12.17% in the first quarter of 2006.
.26% in the first quarter of 2007.
Now, in looking at the FACTS, how bad does the result of the first quarter of 2008 have to be to make people lose their “life savings”? Isn’t this what should be reported? The Market Watch Report for the first quarter of 2008 should be posted any day, so stay tuned.
Regarding the financing evaluation Mr. Morse has done, absolutely wrong information. The most popular financing program out there currently is the FHA programs offering 3% down payment options, specialized programs for downpayment assistance, and rules regarding appraisals that don’t consider a “declining market” into the report like normal financing is facing.
Of course, I have had an easy time selling a home with clients holding down payments of 20%+ and great credit, but getting homes for all the other people is what makes me a professional!
Lastly, the evaluation of the rental market by Mr. Morse is also tough to swallow. MLS does not have any successful rentals posted by his brokerage, not one. I am not in the rental business, but I do own a 14 unit building personally and have been successful on 4 rentals over the past 2 years for special requests from clients. The rental market is also surprisingly slow, in my opinion.
So, to conclude my ranting about this particular article, there is one more statistic to share with you readers. There are 264 active properties on the market in Franklin today. Even if they were all foreclosures, that is a far cry from the 805 “vacant homes” reported in this newspaper.
This week’s Milford Daily News and, in particular, Joyce Kelly’s poor example of journalism, is my vote for Recyclable of the Week!
Categories: Market Conditions, Real Estate
This entry was posted on Wednesday, April 30th, 2008 at 11:18 pm and is filed under Market Conditions, Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Looks like this was an example of incestuous journalism. Sure wish people would get all the REAL facts before they start spouting! Great article!
Good on you. Your market experience certainly makes you a better info. source than a reporter that may do an article a month on real estate!
Aloha,
Keahi
RE/MAX 808 Realty
877-737-2093
808-737-2093