In the fall of 2006, as the world hurtled toward a financial crisis precipitated by loose mortgage lending practices that fueled one of the greatest housing bubbles in U.S. history, the National Association of Realtors launched a $40 million advertising campaign advising consumers that “It’s a great time to buy or sell a home.”
As it turned out, it was a great time to sell a home, if you could — prices in many markets had already peaked, and inventories were climbing. But many who bought at the tail end of the boom soon found themselves underwater.
A 2006 ad that was part of a $40 million NAR marketing campaign.
That’s the subtext of the question Realtor Magazine Senior Editor Graham Wood puts to realtor.com’s new chief economist, Jonathan Smoke.
“There have been criticisms of the ‘now is the right time to buy or sell’ message that many economists have touted,” Wood asks Smoke. “Do you agree with that messaging, or will you take a different approach to communicating housing data?”
Regardless of whether or not “many economists” touted NAR’s “right time to buy or sell” message, the question gives Smoke a chance to distance himself from NAR a bit. Realtor.com is NAR’s official listing search portal, but it’s operated by a publicly traded company, Move Inc., under the terms of an agreement dating back to 1996. The subtext of the question seems to be whether Smoke will give consumers advice that they can trust.
Smoke hits the softball tossed to him by Realtor Magazine’s “Speaking of Real Estate” blog out of the park, telling Wood, “You will come to appreciate that I’m not your typical economist.”
“Two of the most important philosophies I hold dear are, first, that all housing is local — and hyperlocal at that — and that behind each buying decision is a household with its own context for what’s right or best at that given time, as well as for the future,” Smoke says. “And secondly, fundamentally, life drives housing. Overall market conditions can influence the volume of activity, the balance of supply and demand, and the resulting price behavior, but it’s the neighborhood level of households forming and going through life events that determine the need to buy or sell. I’ve personally never made a decision to buy or sell a home based on what the talking heads are saying, so I’m never going to presume that I can tell the entire market that they should be buying or selling.”
After establishing that he’s his own man and putting a little distance between himself and the NAR of old, Smoke makes clear that he’ll be playing on the Realtor team.
For many years, NAR did not allow realtor.com to have a chief economist — the trade group apparently wanted to keep the media spotlight shining on its own prognosticator. NAR’s current Chief Economist, Lawrence Yun, took on the job in 2008, succeeding David Lereah, whose rosy spin on data during the boom discredited him in the eyes of some.
Smoke calls Yun “an incredible economist and spokesperson for the research NAR produces,” and promises to collaborate with NAR “to find ways to provide insights that leverage what we can see with realtor.com, and to explore innovations to leverage the collective data we have or create together to inform consumers and Realtors about the housing market. I’m sure our styles of presenting data will be different, and we may have some differing opinions occasionally, but I know that working together will benefit the industry and consumers.”
Realtor.com is privy to an impressive amount of listing data, and Smoke — who was named the portal’s chief economist last month — says he’s “just getting started surveying what we can produce” with it. Promising to “continue our unparalleled commitment to accuracy,” Smoke said “some of what we may provide may simply be the assurance that the metrics our audiences see are accurate and timely.”
Not long after announcing Smoke’s appointment as realtor.com’s new chief economist, the portal had to revise previous estimates that overstated inventory growth from December 2013 through April 2014. An “anomaly” with realtor.com’s back-end reporting system “caused some listings to be counted as for-sale inventory after they had been taken off the market,” realtor.com said at the time. The revised data showed that in April, for example, inventory was essentially unchanged from a year ago, not up 14.2 percent as realtor.com had originally reported in May.
NAR had a similar problem that made headlines in 2011, when the trade group announced it had overestimated home sales going back to 2007 by more than 14 percent. NAR blamed the problem on an adjustment it makes to account for sales that take place outside of MLSs, which it recalibrated.
Collecting and analyzing statistics can be a thankless job, and minor revisions to data are understandable, even routine. But because NAR represents the interest of Realtors, and realtor.com turns consumers into “leads” for real estate brokers and agents, both can expect skeptics to continue to question whether they’ll spin the numbers they collect in the interest of NAR’s members and realtor.com’s customers.