Incredibly Dumb Statistics

July 31, 2008

In the business section of today’s LVRJ, a headline blares that the state “Loses 10,700 jobs to China”. Reading in more detail, this includes 1650 jobs in “food services and hotels.”

Let’s think about that for a moment. How do you lose a hotel job to China? Are people who would otherwise come to Las Vegas going to Xian instead? Are Chinese hotel companies outcompeting Strip hotel companies? Did the number of hotel jobs on the Strip fall over the last 6 years? No.

This is one of the stupidest things yet published in the RJ. It turns out that this “study” was published by the “Economic Policy Institute”, which is notably liberal in outlook. Frothing Developer is a apolitical blog, but there is ample data that liberal policy makers think that free trade is bad and yearn for a return to the protectionist environment of the 1930’s (aka “The Great Depression”).

You have to read 5 paragraphs down before the RJ notes that

the number of Nevada jobs shipped to China pales in comparison to overall job formation here. Nevada businesses added 240,500 positions from 2001 to 2007, according to numbers from the state’s Department of Employment, Training and Rehabilitation. That includes 34,400 jobs in hotels and 6,900 positions in manufacturing. Nevada has clocked in as the only state with any recent manufacturing growth, said Ray Bacon, executive director of the Nevada Manufacturers Association.

Note that last line. It’s so interesting, I’m going to reprint it:

Nevada has clocked in as the only state with any recent manufacturing growth, said Ray Bacon, executive director of the Nevada Manufacturers Association.

As the Wall Street Journal pointed out this morning

Trade negotiations are never perfect, but for half a century the trend has been toward freer trade and more open markets. This has opened vast new opportunities for global business, spreading competition and innovation that have helped to raise living standards across the globe.

So pervasive have the blessings of trade become that they are taken for granted. Americans hear a lot about textile plant closings in North Carolina, but they barely notice their expanded purchasing power thanks to Wal-Mart’s vast global supply network. Thirty years ago something as simple as cotton shirts and trousers were expensive; now they’re cheap. Fresh fruit was once rare in January; now it’s ubiquitous.


Home Prices Did Not Plunge 16% This Month

July 30, 2008

Case Shiller housing index numbers have been released for May 2008, and once again, the headlines tell a different story than the reality.  If you scanned a few of today’s articles you might not be blamed if you thought that home prices had plummeted 16% this past month.  The drop, of course, is versus 2007, not versus April 2008, and is old news at this point.  But some journalists, and more than a few bloggers still can’t resist casting out the old “Home Prices Plunge 16%” reader bait.

The actual Las Vegas numbers show a 2.9% decrease in average prices over the April 2008 numbers.  While the index has still not leveled off, the May numbers are a significant improvement over the drops in November ’07 through March ’08.

When looking at Case Shiller indices it’s important to remember two facts:

1.    A significant number of the home sales the index is currently measuring are foreclosures, which are skewing the indexes lower.  When these forced sales at abnormally low prices finally work themselves through the market we should expect to see the index start to rebound fairly quickly as more “normal” sales are reflected.

2.    The index lags the market very significantly.  The numbers Case Shiller calls “May ’08” are actually taken from a three month rolling average of sales for March, April, and May.  With market uncertainty at or near an all-time high, March may very well have been the real low.

-Frothing Mark


Las Vegas Job Growth Picks Up Steam

July 28, 2008

The RJ published details this morning on the job boom in Las Vegas. True to character, they pitched it with a negative tone, but it’s hard not to get excited about these numbers:

The $675 million Aliante Station, which is scheduled to open Nov. 11, began taking applications for its nearly 1,200 jobs July 6.

Dennis Shipley, corporate director of human resources for Cannery Casino Resorts, said the company received approximately 20,000 applications for 1,200 jobs for its new $250 million Eastside Cannery.

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Wynn Resorts won’t start interviewing job candidates until early August, Rosol said; job offers will follow in late September.

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The nearly 7,700 new jobs these three properties are bringing to the market are just the beginning of a jump in employment in the industry.

And let’s not forget M Resort, which has quietly been making headway under the radar:

•The $1 billion M Resort will begin taking applications in September to fill the nearly 2,000 jobs at the hotel-casino scheduled to open next spring.


Nevada: Strong Employment and Population Growth

July 28, 2008

Here’s a nice chart, courtesy of Tom Stewart at Consolidated Mortgage. It goes back to 1990.

image

To someone who says “yeah, but we didn’t have employment growth in the last 12 months”, the response is: what charts like this tell us is that there is deep underlying strength in Nevada’s growth patterns. It’s that kind of strength that leads regions out of recessions.


Median Sales Prices Rising

July 24, 2008

Look at the difference between the Year-over-Year comparisons and the recent trends.

The New York Times reports:

Values are dropping as well, which is cutting into many homeowners’ equity lines. The median price of a previously owned home in June was $215,100, down 6.1 percent from a year previous.

But look at the graph they printed on the same article:

image

Does it look like values are dropping to you? Funny, to me, it looks like values bottomed in February, and that they’ve risen in April, May, and even more (3.5%) in June.

It boggles the mind that the Times can print such misleading assessments in the face of such clear data.


Home Sales Up Again in the West

July 24, 2008

Just like last month, pending sales fell in the rest of the country, prompting headlines like “Home Sales Fell More Than Expected”. However, once again, sales were up in the West:

Sales slowed to an annual rate of 4.86 million, adjusted for seasonal variables. That follows a 2 percent increase in May. Total sales are 15.5 percent below their level in June 2007.

Only the West had higher sales, reporting a 1 percent increase. Sales declined 6.6 percent in the Northeast, 3.4 percent in the Midwest and 3.1 percent in the South


Contingent Sales, Part 2

July 23, 2008

A reader posed a very good question recently regarding the impact of contingent sales and what happens to inventory numbers when a contingent buyer is unable to sell their current home.

If a sale is contingent and the buyer’s current residence doesn’t sell then theoretically the house they had in a contingent contract should come back into inventory as an active listing.  If this were happening a lot you’d expect to see the number of contingent units dropping over time and active inventory rising over time.  While we’ve only been collecting pending and contingent data for the past few months, we’re seeing exactly the opposite so far.

Contingent sales are going up steadily, while inventory is dropping significantly.  At this point in the cycle, sellers (and their Realtors) are getting smarter.  If a buyer makes a contingent offer the sellers are going to make sure the buyer is being realistic about the price of the home they have to sell first.

Are there contingent sales out there that won’t go through?  Sure.  But the days when buyers were making contingent offers based on unrealistic expecations of the value of their homes are long over.

-Frothing Mark