Readers Respond: Home prices and the media
When luxury home builder Toll Brothers posted its second-quarter earnings, executive chairman Robert Toll questioned the accuracy of the media’s reporting on home prices.
Here’s what he said: "We question the recent media headlines announcing that home prices continue to fall. Many studies quoted in the media combine distressed sales data, including foreclosures and short sales, with new and/or non-distressed existing-home sales data. We believe that averaging distressed and non-distressed sales data provides a misleading picture to the public regarding home-price direction.
"In contrast to these reports, we are experiencing flat-to-slightly-increasing pricing in most markets. As consumers better understand that prices are firming, we believe they will gain confidence, which will help release some of the pent-up demand that must be building in the market."
Here is how our readers responded:
“Obviously, Mr. Toll needs a reality check. Blended prices are indeed a true representation of real-time pricing of available housing options for buyers. Certainly Toll Bros’ higher-end ‘new’ home offerings may have bottomed from their perspective, but in every market I can imagine, there are very high-quality options for interested buyers — all at huge discounts, and the market continues to see more homes coming to market. This dynamic will likely be with us for two more years.
“Simply check with County Tax folks to see what upscale properties are being sold at today versus a year ago, and which are now being reassessed at much lower taxable value.”
— Mike Hatfield
“Not to be too cynical, but it has been proven over and over the last several years that this country’s news media cannot be trusted. Reporting as front page news a slight increase in GDP, a decline in unemployment benefits sought, home price changes, etc., all supportive to this administration’s agenda, only to find out later the real numbers are nowhere near as positive should not be editorially buried in the back pages if even reported. Yes, the media is highly biased (just like its readers), but their bias is never reflected by a balance in an opposite perspective. Our local news, The Tulsa World, is a very liberal, populist, leftist leaning newspaper printed in the ‘reddest’ state as seen in the last general election’s numbers — a liberal print and point being subscribed to by a conservative base.”
— Chris Cole
“Yes, home prices are falling. I live in a great neighborhood (Grand Rapids, Cascade Township, Mich.) in one of the top school districts (Forest Hills Public Schools) in the state. Three years ago, homes were selling within two to three weeks in the $165,000 to $170,000 price range. The home next door has been sitting for two and a half years. I checked on Monday, are they are asking $148,900. And in the past three weeks they had exactly three couples go through. I work from home so I know when they show it. The home is vacant, in move-in condition. Newer white kitchen appliances are included, yet here it sits. There are three other homes for sale in this neighborhood (120 homes). Homes here are not moving even at greatly reduced prices. I was thinking of selling in a year but will have to hold on for at least two years.”
— Don Z.
“Certainly the foreclosed properties are influencing home prices, but my larger concern is the Case-Schiller Price Index that everyone looks at as a ‘scientific guide’ for home prices. It is nothing more than an average of prices of homes sold in a given time period. It has no bearing on the value of my home or any other. If mostly foreclosed homes sell this month then that index will be down. If we suddenly sell a bunch of upper-end homes, that index will be up.
“Neither tells me anything about my home value or any other. The media needs to qualify the value of this report or stop using it.”
— Gary Allen
A home's value is precisely
A home's value is precisely what someone will pay for it. The idea of intrinsic value in a home has been undercut. If the Case-Shiller or Core Logic data lead potential buyers to reduce their offers, by definition it is affecting the value of a home, whether I as the homeowner think it should or not. Similarly, if distressed sale homes are viewed as potential substitutes by home buyers, then they will also affect the value of competing homes. Again, wishing it weren't so, or being indignant about it doesn't change that. The question may be whether the PERCEPTION that these distressed homes are available and depressing prices has been "created" by media reports, thereby leading to an expectation among buyers that they can expect even greater discounts. In the end, it is moot--the seller does not have to accept a low ball offer, and the buyer is free to up his offer to what he believes is the "value" of the home.
At Home Depot meeting, a variety of voices
Customer service, glue traps and corporate democracy were among the issues on the table at a wide-ranging Home Depot annual shareholders meeting in Atlanta Thursday.
Home Depot’s shareholders approved the company’s recommendations for its board of directors and executive pay structure. And it defeated a shareholder proposal regarding shareholder control of corporate political gifts.
Julie Goodridge, CEO of Northstar Asset Management, called the proposal a step toward corporate democracy and a way to make the corporation’s political donations in line with the shareholders, instead of the executives.
Home Depot recommended against the measure regarding electioneering policies and contributions. "We believe that participating in the political process in a transparent manner is an important way to enhance shareholder value and promote good corporate citizenship," according to the company’s proxy statement. "We do not believe, however, that implementing an annual shareholder advisory vote on our political activity policy and plans would provide shareholders with any more meaningful information than is already available."
During the question and answer session, the first question was actually a criticism of Home Depot’s policy of carrying glue traps, described by Lindsay Wright as a cruel form of rodent control. An employee later in the proceedings applauded the company for carrying the same traps, which he described as effective.
Shareholders who praised the level of customer service were applauded roundly. But the biggest applause came when Frank Blake introduced four associates of the Joplin, Mo., store that was destroyed by a tornado May 22.
Speaking on the business of home improvement retailing, Blake showed a slide that added "interconnected retail" to the company’s traditional three-legged stool of retail success keys — passionate customer service, product authority and disciplined capital allocation.
"We believe over the next decade the winners in retail will be those that deliver a best in class multichannel experience that allows customers to buy how, when and where they want," he told shareholders.
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Home Depot recognizes Joplin associates at annual meeting
Four Joplin, Mo., associates of a Home Depot store destroyed by a tornado May 22 were flown to Atlanta for the company’s annual shareholders meeting.
CEO Frank Blake introduced Jason Smith, the manager on duty the night of the storm, Joe Barbosa, Joe Cabalero and Steve Cope, the store’s manager. The four men received extended applause as well as Angel Awards, given to associates who help save lives.
Blake also read a letter from a customer who praised the store’s staff for saving the lives of her husband and her two children. The family was driving near the store and ran inside to escape the tornado. "We were met be calm employees the whole time," read the letter.
One employee, Dean Wells, died during the tornado as he made a final sweep of the store to check for customers, Blake said. Cope accepted the Angel Award in Dean’s honor.
"We are committed to the community, and we will rebuild the store," Blake said.
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