It was this article that came to my mind when the December 2010 existing home sales report from NAR came out. The report said:
"Existing-home sales report, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 12.3 percent to a seasonally adjusted annual rate of 5.28 million in December from an upwardly revised 4.70 million in November, but remain 2.9 percent below the 5.44 million pace in December 2009."
All you have to do is read Bloomberg, Yahoo!, or the Wall St Journal to see that many economists are using this data to point to a strengthening recovery (of the US economy). Well, I have been saying for the past three years that '08 & '09 would be terribly down years. I believed that 2010 would bring some stability (maybe even a little false hope). But, 2011 and 2012 would be down years again. I firmly believe this to be the case. I do not believe that one month up 12% can indicate to us that we are in recovery. Well, at least not here in Corona. Here is the data for Corona:
Month Closed Gain (Loss)
9/10 264
10/10 299 13.3%
11/10 263 (12%)
12/10 314 19.4%
1/11 191 (39.5%) - projected numbers
When I see these numbers, recovery is not the first word that jumps into my head. Schizophrenia, that is a word that pops up in my head. We are living in a market that is all over the place. I was looking at the median price closed in Corona during the month of December all the way back to 2002. Again, the numbers are absolutely staggering. The median price for a home in Corona during December 2002 was $274,900. The peak was December 2006 when then median priced home was $554,900. In December 2010, the median price has retreated all the way back to $315,000. That is 14% growth over 9 years, or an annual rate of growth of 1.5%.
By contrast, the Dow Jones Industrial average (the stock market) was at 8,400 on December 31, 2002. On December 31, 2010, it was at 11,578. This represents 37.8% growth or an annual growth rate of 3.6%.
If you invested $100,000 in the stock market in 2002, today you would have $138,198. If you invested the same $100k into real estate in Corona during the same time, you would have $114,444.
I know that Corona is not a leading indicator of the markets in America. But, what I do know is that things are not as the media would make it out to be. I, too, believe what Thomas Jefferson had to say about knowing nothing is better than knowing something false. The more that I examine the data and not what they want me to believe, I am inclined to believe that they are false.
Last thing, this whole topic reminded me of this George Carlin routine. It is literally one of the funniest bits of stand up comedy that I have seen. Here is the transcript of the bit and the you tube link, George Carlin Jammin' in New York:
"You might notice that, I don’t feel about that war the way we were told to feel about that war, the way that we were ordered and instructed by the United States government to feel about that war. See my mind doesn’t work that way. I got this real moron thing I do, it’s called thinking. And I am not a really good American because I like to form my own opinion. I don’t just roll over when I am told too. Sad to say too many Americans roll over on command. I have certain rules I live by. First, I don’t believe anything that the government tells me. And I don’t take very seriously the media or the press in this country."
