By:Dennis Norman
This morning I received a press release from Move,Inc.,the company that operates Realtor.Com for the National Association of REALTORS(R),with a headline that read “One in Five Americans Plan to Buy a Home Despite Economic Conditions.” After all the bad news about housing I have seen I was elated to see something positive! I thought to myself;WOW! Is this good news or what? It’s time to jump back into residential development! I better start calling all my developer buddies and tell them it is time to get off the couch and get back to building new homes!
As I was at the height of my euphoria something suddenly didn’t feel right. Hmm….where did this data come from? Oh yeah,Move,Inc. the company that operates the largest real estate search site in the world (and ultimately has a vested interest in homes selling). I was still OK with that though,I don’t have a reason to think they would create stats just to try to boost the market.
But still though,the more I thought about it,1 in 5 Americans are going to buy a home? That’s a lot of homes! Over what period of time is Move talking about? The answer to this question was not clear in their release. The first mention of this fact indicates 18.1% of adults plan to buy THIS year. Later under the “pent-up demand increasing”heading it says 5.8% in the next 12 months,12.8% of Americans plan to buy in the next two years and 11% plan to buy in two to five years.
Even with the more conservative numbers in the pent-up demand section it still seemed too good to be true. As I have mentioned many times before I am not an economist nor do I have a PhD or an MBA but I thought I would dig into this a little further before I get out my party hats and noise makers. Here’s what I came up with:
- Approximate U.S. population of adults (18 and over) 210,000,000
- Move says 5.8% will buy in next 12 months,that works out to over 12 million homes being sold in the next 12 months. (it would be over 38 million homes in the next year if we went with the stat their headline was based upon,18.1%)
- According to the National Association of REALTORS(R) there were 3.6 million existing homes for sale at the end of January. According to the Commerce Department there were 342,000 new homes for sale at the end of January and new homes started in February at a seasonally adjusted annual rate of 583,000 new homes.
If we take the entire existing home inventory,new home inventory and add in the new home starts for the upcoming year we end up with a little over 4.5 million homes or barely over 1/3 that there will be buyers for according to the Move,Inc. report. As much as I would love for this to be true,that we will actually have a housing shortage,I just don’t think that is reality.
As I stressed in my post about housing starts I’m really not a naysayer or pessimistic,I just wish there was more accurate information reported about the market so the consumer could make informed decisions instead of reacting to headlines with no basis in reality at all (sort of like the headline of this post….in my case my defense is it is sarcasm on my part 
The sad thing is how this stuff spreads. I just did a Google search on “One in Five Americans Plan to Buy a Home”to find dozens of articles out there based upon this press release. By tomorrow I am sure it will hit some major newspapers or television networks as well.
I do have to admit I was also quite concerned with the fact there were only 1005 people surveyed for this study. That seemed like an awful small amount compared with the 210M adults out there. But,in defense of Move,Inc.,when I went to the web site of Creative Research Systems and used their online calculator to determine how many people you would need to survey in order to have a 95% confidence level and a 3% margin of error based upon 210M people and the answer was 1067. So I guess size does matter,but not much.
Related posts:
- One Out of Four Renters Never Plan to Own a Home
- Two-thirds of Americans less likely to buy a house due to poor economy
- Survey shows over half American adults think housing recovery is years away
- Survey shows Americans not expecting housing market recovery until after 2012
- Obama Administration HAMP Loan Modification Program Falling Short
