"STATISTICS," Thomas Carlyle, the Scottish writer and philosopher remarked, "are the greatest liars of them all." Carlyle was writing in the first half of the 19Th century, but his words carry weight for today's real estate market.

I will not bore anyone with the differences in statistical terms (sorry Dr. Kersnick!), but there is a great amount of misreported data in the media. Here is a piece I read this morning:

"Home Prices Weakest in Decade--Global Insight, a company for economic and financial analysis and forecasting, released the 2007 second-quarter update of House Prices in America, the U.S. housing-valuation analysis, which shows the incidence of overvaluation in the nation’s housing market continues to decline, the result of falling home prices. Nationally, home prices are up year-over-year just 2.6%, the weakest gain since 1995."

Wait a minute! Prices are weakest in decade yet the prices are up 2.6% year over year? Given the steeper increases during 2004-5, isn't the increase fairly reasonable? Of course, real estate prices are impacted on a regional basis so lets take a quick look at the recent southern NJ market stats (from the South Jersey MLS).

Comparing the first two quarters of 2007 vs. 2006, the number of units sold declined 18.6% but average (oh no, a statistical variable) home prices INCREASED 5.8% driven by 5+ bedroom homes which are up 19.6%! Days on market increased 23.8% consistent with units sold (86 days for three bedroom homes).

What conclusions can we draw from this data? I am not sure...that's correct, I am not sure because statistics are so misleading. But I wander a bit since this is my blog and offer a guess-estimate.

The flattening of the home prices may be caused by the interest rate environment (although higher than previous years, it is still reasonable given the historical perspective) and it's impact on affordability. I doubt we are experiencing the same number of homeowners upgrading their homes since the monthly mortgage payment is not flat when upgrading.

I have informed my clients (sellers & buyers) that the local market is stable...not robust but not as flat as many in the media have reported. Since there are many over-priced homes offered, you need to pick through the piles of data to unearth the fairly priced homes. I expect that the sold home prices will continue on a fairly flat curve/line, but we may see the listing prices come closer to where homes are actually selling.

I am sure someone will massage a stat or two that "proves" that I am a liar!