The headline, “Home buyers face tight inventories, rising prices this spring” followed a predictable script for the past two years, but the level of sensationalized reporting in the Boston Globe’s recent story may have crossed a line. First a cash bidding war in Newton was reported without context, and second an alarming statement about inventory in Cambridge does not stand-up to cross-examination:
“In Cambridge, where listings plunged 65 percent from a year ago, …”
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Real estate fact-checking: A brief history
When the Real Estate Cafe wrote it’s first blog post a more than a decade ago, we decided to call our blog “Counter Intelligence” because we wanted to use this powerful new tool to fact check real estate spin and tell the other side of the story. Words we wrote in February 2004 were tragically prophetic and ironically, are still unsettlingly true:
“This is where blogs might find an entry point in the real estate industry. As you know Ralph Nader and SteveBrobeck of the Consumer Federation of America both called the real estate industry a cartel more than a decade ago. One of my visions is a network of home buyers who post reviews of open houses and report on local market trends from the consumers’ perspective. As the air comes out of the real estate bubble and the industry slides into a multi-year down cycle, home buyers will become increasing cautious and hungry for this kind of ‘citizen journalism.’”
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Last week’s headline in the Boston Globe provides another reason why citizen journalists and DIY homebuyers should fact check industry spin.
Fact check: Inventory down by 65%?
As of Friday, April 11, a standard MLS report called “On-market snapshot” reveals that were 95 active listings in Cambridge. That’s down from 124 on the same day a year ago, but that reflects a 23% decline in active listings not 65% as reported in story in the Boston Globe a week ago.
Is it possible that inventory was off by 65% before the Globe article was published on April 6, 2014? Let’s check. The same MLS On-market snapshot reveals:
77 active listings in Cambridge on April 3, 2014
64 active listings in Cambridge on April 1, 2014
Further, the “Inventory Lab” the Real Estate Cafe shares with clients documents that there were 60 active listings in Cambridge on March 9, 2014, so it’s highly unlikely that the stat reported by the Globe was correct a month later.
If you go back to the frigid days of early January, you do find that there were only 33 active listings in Cambridge on Jan. 9, 2014. That number was 75% less that the previous year, an alarming fact even worse than what the Globe reported. But inventory responds to seasonality and that includes both warmer weather and increased demand; so it’s not surprising to find that the inventory level had already risen to 45 active listings in Cambridge on Feb. 9, 2014.
Current inventory vs sales volume
ACTIVE MLS listings are up threefold in Cambridge since January 2014 and have doubled since February. Equally significant is that the current inventory level is rough equivalent to the total number of MLS sales across all residential property types — single family, multi-family, condos & land — in Cambridge during the first three months of the year, 1Q2014.
We don’t know what source the Globe used to report that inventory was down 65% in Cambridge, but the good news is that appears to be wrong and there are more housing choices inside and OUTSIDE the MLS than homebuyers realize.
The Rest of the Story
A month ago, a headline in the industry press revealed this shocking finding:
Study suggests MLS played little or no role in nearly half of 2013 sales
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Should homebuyers look to the Globe or other local journalists to ask what role pocket listings and pre-MLS sales are playing behind the “low inventory” hype? Instead of waiting, the Real Estate Cafe has developed it’s own Inventory Lab and Bidding War Scorecard for clients, and is putting together a series of seminars on “Defensive Homebuying: What they don’t teach in Homebuying 101.”
Call to Action
To learn more about those offerings plus our seminars on Proactive House Hunting and the Hidden Costs of Reactive House Hunting, please contact the Real Estate Cafe at (617) 299-8675 to schedule a free consultation.
We’re particularly eager to hear from DIY homebuyers who’d like to earn commission credits for their content contributions. We call it the Real Estate Cafe’s Tipping Policy, and we’re eager to reward fact checkers and citizen journalists for their insights into what’s really happening.