Today the home builders released their monthly sentiment report, which is the product of a survey by the National Association of Home Builders and Wells Fargo . The sentiment number gauges current sales conditions, future sales expectations and buyer traffic.
They boil it down to one number at the top, with 50 being the dividing line between “positive” sentiment and “negative” sentiment. The number for November stands at 19, unchanged from last month, which is still the lowest on record.
The biggest focus of this month’s report is negative media attention to the housing market: “Builders are worried that the national media has tended to report negative housing stories as if there is one real estate market, when in fact, there is no such thing,” says Brian Catalde, president of the NAHB in the press release. “As a result, some healthy markets are being unfairly impacted by this negative media coverage.”
I agree with Mr. Catalde that the bulk of the media coverage tends to be far more general than pointed and that the very premise of the real estate business--location location, location--gets lost in the flurry of national numbers and statistics and ultimately fear. Home buying is one of the most emotional purchases anyone can make, so buyer sentiment, confidence, is as big a factor as location, number of bathrooms and granite in the kitchen. Some local markets, with strong demographics, will inevitably fall victim to buyer fear, largely fueled by national news.
Here’s where I respectfully disagree: The media may focus on the negative numbers, but we don’t make them up, and I’m specifically talking about the mortgage crisis that is the real driver in today’s housing recession. Defaults and foreclosures are at record levels. The lending industry has fundamentally changed the way it does business in just the last six months, and many of the loans that fueled housing prosperity in the last decade simply aren’t being offered anymore.
That hits the big public home builders hard because they build the bulk of the starter homes in this country, the ones that younger folks with lesser credit are looking to buy. They also build step-up homes, which depend on buyers being able to sell their existing homes, which may be to, again, subprime borrowers. We report the earnings from the big builders, and they are not pretty numbers these days.
I remember, during the height of the housing boom, doing dozens of stories on sky-high appreciation, on flippers making millions, and on front-porch bidding wars. I don’t recall anyone blaming the media for the good times.
Questions? Comments? RealtyCheck@cnbc.com