Third Quarter Real Estate Market Data

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Dave Stark [PDF]:

We are currently witnessing a phenomenon that I have not
seen in my nearly 30 years in real estate brokerage. For the first
time in anyone’s memory, we are seeing a noticeable slowdown in sales despite continuing record low interest rates. I’ve experienced many soft markets before; most (1980 – 1982 particularly) were far more severe than this. But all of those were precipitated by rapidly rising interest rates. This one seems to be occurring even though rates have actually fallen (that’s right, fallen) over the past 60 to 90 days by nearly two thirds of a percentage point, remaining near all time lows. At this writing, 30 year rates are around 6.375%. What’s going on?

I’ve heard many explanations offered, and many have some validity. For starters, the Federal Reserve has raised short term interest rates steadily over the last two years. This has probably led many consumers to assume that mortgage rates were rising too. They did rise a little, but not much… they’re still within a percentage point or so of their lows. It’s also true, as you see below and on the following pages, that inventories have continued to rise, leading many to assume that the market is “slow,” since they see more for sale signs than they’re used to. Perhaps most importantly, the media has been relentlessly predicting a “bursting real estate bubble” for two years now, and they’ve seized on any evidence of a slowdown to fuel the gloomy predictions. While fears of a bursting bubble are utterly unfounded, especially here (see page 2), we’re hearing that many buyers are afraid to buy, thinking that real estate has become a bad investment on which they’ll lose money. A self fulfilling prophecy if ever there was one. Add in the fact that the fall is normally the slowest time of year anyway, and the market appears just plain tired after a sizzling 5 year run.

Kinsley on the Dem’s Tax Plans

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Michael Kinsley:

Democrats call for ending the “Disabled Veterans Tax” and the “Military Families Tax.” The what? There cannot be any such thing as a Disabled Veterans Tax. It is a label dreamed up by people wanting special treatment, like the Republicans’ brilliant “Death Tax” for the estate tax. Maybe they deserve it, maybe they don’t. But why can’t we leave this bullying by terminology to Newt Gingrich?

The problem with tax credits in general is that they never appear in the budget, so they never get the same scrutiny as direct spending, although their impact on the deficit is exactly the same. By definition, they cost more than whatever benefit they are intended to achieve, since no one is going to be induced to spend an extra dollar on, say, dance lessons (because some member of Congress has decided that it would be good for the country if more people knew how to dance) unless the subsidy is worth more than a dollar.

The Economist:

Tax credits are the worst possible tax policy from the standpoint of economic growth. They are distortionary: they cause consumers to divert spending from higher-valued to lower-valued uses. They are a clumsy way to solve externality problems: if you want less of something, tax it. They are not transparent, so people have a very hard time finding out how much the government is spending on, say, dance lessons. And they may actually discourage work.

For almost everyone except rock stars, leisure and work are basically perfect substitutes: a decision to work less is a decision to consume more leisure. The basic intuition of supply-side economics was that if you cut the taxes on people’s labour, they would work more, since to them, the tax cut would essentially be the same as a wage increase. This intuition is simple, easy to grasp, and widely accepted. Unfortunately, it is also wrong.

Interesting Data Mining Article: “I have Nothing to Hide”

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Guy Kewney:

But you need to understand the basic principles of data mining to understand why the world of spooks and the world of search engines are about to overlap, and why you should be nervous about this.

The lesson here is one I call “The Sainsbury’s Lesson” when doing presentations for technical audiences, because I was taught this by a data miner who worked for the giant British supermarket of that name.

The story, summarised, is that Sainsbury’s was spending an absurd amount of money sending people promotional coupons, money-off special offers, and other junk mail to encourage them to swing by the Sainsbury’s supermarket next time, rather than Waitrose or Safeway or Asda – and it was pretty hard to be sure it was actually doing any good.
The trouble was simple: they were sending girly shampoo promotions to households with six rugby-playing male students, or home improvement promotions to households with one elderly pensioner with osteoporosis, or bulk beer deals to households where they were all strictly teetotal. Not profitable stuff. And their IT staff heard about this and said: “But you don’t have to do that!”

Worry about governments who will make “pre-crime” a reality.

Politics & Philly Cheese Steaks

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The Economist:

The Philly cheese steak is serious business. Ordering etiquette must be adhered to. Customers must state their preferred type of cheese and whether onions will or will not (“wit” or “witout”) be added. John Kerry, when campaigning for president in 2004 in Philadelphia, botched it badly, asking for Swiss cheese instead of the more traditional Cheez Whiz, a processed cheese spread. Even provolone or American cheese would have been better. George Bush ordered “Whiz wit” like a local.

A Word on Exit Polls

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Mark Blumenthal:

Yes, the television networks will be conducting exit polls today. But if you are looking for the leaked exit poll estimates that typically appear online on Election Day, you are probably out of luck at least until later tonight. More on that below. But as long as you are here, let me tell you a little bit about how exit polls are conducted, how they will be different this year, and why it is probably best to try to ignore the exit poll estimates that will inevitably leak later tonight.

I have always been a fan of exit polls. Despite their shortcomings and the inevitable controversies, the final network exit polls remain our best source of data on who voted and why. Having said that, exit polls are still just random sample surveys, possessing the usual limitations plus some that are unique to exit polling.

Election Litigation Website

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Peter Swire:

As lawyers look for close races to contest, it is important to remember that just because the result of an election is challenged in court, it does not necessarily mean that the public should view the result as tainted or the electoral process broken. Instead, if the litigation ends with the losing side acknowledging that ultimately the votes weren’t there, then this kind of delayed concession speech should be accepted as evidence of the system working successfully, just as if the concession speech is delivered tonight.

Election Day Links

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I had a conversation with a young 4th grader this morning while queueing up at the poll. We clearly need to improve our civics awareness and interest.

Kristian Knutsen is live blogging today’s election.