Debunking Another Real Estate Puff Piece

Came across an RE puff piece in the Daily Record, thought it might be fun to post up some counterpoint..

Housing bubble hasn’t burst in Morris

Apparently, there is no bubble at all, so just shut down your browsers, pick up your checkbooks, and go buy two or three homes..

Dominick Prevete, regional vice president of Weichert, Realtors, believes that the market is getting back to normal.

Dominick, define normal for us. Is that when home prices fall in line with rents? Or is normal when median home prices fall back in line with median wages? Or wait, is it when home prices fall back in line with normal historic appreciation rates? Or is normal when affordability isn’t at all time lows?

“It’s still a seller’s market, and there’s strong demand,” he said.

On the other hand, there are more homes on the market and more choices for buyers. That means that sellers should expect more modest gains from now on.

Dom, I don’t get it, is it a sellers market with strong demand, or has supply built up to the point where prices should fall to compensate? We’ve been seeing a rather signficant increase in inventory over the past few months, which you seem to agree with. But, if this is the case, it would seem that demand is rapidly falling, i.e. not strong.. So which is it Dom, buyers or sellers?

Overall, Prevete called it a win-win market — for buyers and sellers.

That’s the ticket, you can’t be wrong when you take both sides..

Other reasons for optimism that he mentioned:
• Interest rates are still attractive.
• The employment picture in the state is good.
• New loan products are available.

Dear Mr. Prevete,

You, sir, are a moron.

You have optimism over these new “Loan Products”? The new loan products that has the banking industry and the fed shaking in their boots? These new loan products that let underqualified buyers overleverage themselves to purchase overpriced homes that risk significant depreciation? You’re optimistic?

“The only risk is that the underlying asset loses value — and I don’t expect home prices to quickly depreciate,” he said.

Mr. Prevete, would you and your organization (Weichert Realtors) care to sign a contract that holds yourselves responsible for any depreciation or loss on any sales you broker? If prices don’t go down, you’ve got nothing to lose right? Or is this statement just doubletalk? That you do indeed expect home prices to depreciate, just not quickly.

On to Mr. Blumenkehl, who provided us with these gems:

“God isn’t making any more dirt,” he said, “but he is having people move to New Jersey and buy houses.”

Oh god almighty, is the NAR handing these guys pamplets of stupid things to say? Well Mr. Blumenkehl, it’s a good thing we’ve got plenty of buildable land in the U.S. And if we can’t build out, we’ve got enough room to build up.

His advice to buyers: “Buy. Come on in, the water’s fine. The market’s good.”

My advice to buyers: Is someone with a vested interest in selling you real estate the best person to trust?

Caveat Emptor,

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37 Responses to Debunking Another Real Estate Puff Piece

  1. grim says:

    The ironic thing about this piece is that a bubble, by definition, is supported only by asset price appreciation, not underlying fundamentals.

    So trying to disprove a bubble by using asset price appreciation isn’t disproving anything at all. In fact, it’s only more evidence that a bubble exists.

    If this article said something like: Rents are up 30% in Morris County, or that Wages were up 30% in Morris County, I would agree with it, but it doesn’t, because they are not.

    It would also have been nice if Mr. Boroson quoted the source for his data.


  2. Anonymous says:

    I have dealt with weichert realtors in the past and in my opinion they are the most ruthless of the bunch.

  3. Anonymous says:

    It’s kind of like the internet stocks. The number of eyeballs equated to profits but in reality it didn’t.
    The same can be said for real estate. Every fundamemental indicator you look at it’s dangerously overvalued. The bubbleheads always come back to supply and demand. Of course demand is great due to the excessvie use of high risk loans and the gullibility of the public to continue to buy 2nd homes and speculators betting fearlessly that prices only go up.This is called fake demand all generated by greed and speculation.
    I don’t care what Boronson or any other jerk says.This time it is different. And what’s different is how bad real estate falls vs prior periods.

  4. Anonymous says:

    Grim I highly suggest you put together a well written rebuttal to Mr. Boronson’s article and send it to him. Bottom of article gives his email.

  5. grim says:

    I sent him an invite to stop by and take a look, but nothing particularly well written.


  6. Richie says:

    I wonder if Warren Boroson & Dominick Prevete were wearing short skirts and waving their pom-poms when they wrote this article.

    What about interest-only loans — aren’t they especially risky?

    “The only risk is that the underlying asset loses value — and I don’t expect home prices to quickly depreciate,” he said.

    Uhh– and many towns didn’t expect to get 15″ of rain last week which wiped them out clean, did that help their home price increase?

    “God isn’t making any more dirt,” he said, “but he is having people move to New Jersey and buy houses.”

    And God isn’t handing out 30% pay increases to everyone these days. With the rising cost of fuel, and the whole “energy crisis” I think many people will feel a bit short-changed when they get their bonuses this year. There are many countless people moving out of this corrupt state to avoid the high cost of living. I don’t think either candidate for governor is going to solve that in one term. We’ve dealt with the highest auto-insurance rates in the country for TEN years, it’s still horrible for some drivers, but the fact is, it’s not going to get much better in 2 years.

    This statement was also tried in the past with the dot-com era, people got stupid amounts of money for a .COM name (ie: because there was limited amount of names on the internet. I think that boom kind of died out.

    The fact is, real-estate is a CYCLICAL market, although no one seems to want to mention that. It goes up, it goes down, it levels out, etc. etc.

    “Location, location, location,” she answered. “All three of our houses were in good, quiet, desirable locations. Pick the location over whatever is just cosmetic. You can always change the colors, but you cannot change the location.”

    …and you can’t change your neighbors, or the local government, or your taxes, or your monthly mortgage payments.

    Randolph is a nice town, although has anyone seen what Route 10 and Route 15 look like during rush hour? How do you say, parking lot? The main arteries in that area (Route 10/Route 15/Route 46/Route 80) have become all so congested that you need to leave your house before the sun comes up to make it to work in a decent amount of time.

    This almost sounds like the Mortgage spam emails I receive every day. US MORTZGAGE RATES HAVE NEVER BEEN LOWER!! – sure they have, did you see when they were just over 5% in 2003??


  7. Anonymous says:


    Forget the invite.

    You have written extensively about the reasons and incators for a bubble. Please send a well written rebuttal to Boronson and ask him if he will print it just like that Rah Rah article he wrote.

  8. Anth says:

    I’m listening to the radio on my way to work. You remember Crazy Eddie? Well, he’s got a radio ad job now. The ad was “monster-truckish” like SUNDAY SUNDAY SUNDAY, REAL ESTATE EXPO, TURN 5,000 to 50,000 INSTANTLY, ITS INSAAAAAANNNNNEEEE!!!! (No kidding)

    Touting Trump, the righ/poor dad guy (ever see this jerk? I watched 10 minutes of him on cnbc once and wanted to puke, holy infomercial), Robbins (HAH!), even George Forman (I really want to take RE advice from a retired boxer who got richer lending his name to a portable grill).

    Real Estate Wealth Expo
    Robert Kiyosaki, Donald Trump, Kim Kiyosaki

    Admission is from $50 to $500

    Man, you know this market is in trouble when they have the greatest used car salesman trying to get the bottom feeders bankrupt (for real).

    Grim, you want to counterpoint something? Counterpoint the article on the RE expo homepage. It is JAMPACKED WITH LIES, INSAAAAANNNEE!

    -“I have learned, as a rule of thumb, never to ask whether you can do something. Say, instead, that you are doing it. Then fasten your seat belt. The most remarkable things follow.” -Julia Cameron

    “losing equity in a mountain of debt, yeah, I guess that isn’t unremarkable..” -Anth

  9. Anonymous says:

    And we all remember what happened to Crazy Eddie, right?

    The business imploded and Mr. Antar ended up in prison.

    Gotta wonder if there will be some kind of legal entanglements brought to light when all this craziness subsides.

  10. grim says:

    I actually got an invite to that event in the mail. It was a good laugh. I thought about going, but then I noticed the admission price.

    The only people getting rich because of that seminar are the people that set it up.


  11. Anth says:

    And Mr. Trump:

    He made 1.5 million for a 1 hour speach.

  12. Anonymous says:

    I accidentally found your blog & couldn’t stop laughing at your supposed intelect It is no surprise to me that the majority of readers are as negative & pessimistic as yourself. Please show me what market indicators show a bubble. A home is not a piece of paper such as stock in CISCO.

    Do you remember the 80’s? We had double-digit rates & homes took long to sell. Many builders over built & yet homes still held their value. Perhaps they didn’t appreciate much. As a matter of fact, there has been no record of homes depreciating in value since the great depression. Are you comparing our current economy to the great depression?

    Yes, there is a market slow down. It has nothing to do with the economy, jobs, interest rates, or over building. There may be indication of major slow downs with over building in other parts of the country, but not here.

    Most of you don’t own anything & probably have very little to look forward to.

  13. Anonymous says:

    Puleez, is it doomtime yet? didnt you have one of these sites running in 1987? you know, if you bought at the tippity top of the mountain, your house has more than doubled since? only a fool would follow your logic, anyone with a brain follows the numbers ad they say own a piece of america. by the way, give me a call when you are looking for your next apartment, i promise to keeep your rent in line with whatever the market rises to, and i’ll give you rent receipts that are suitable for framing

  14. Anonymous says:

    Let me guess.. Both realtors? Sure sounds like it! And angry ones at that!

    Alot of talk, nothing to back it up but the same realtor-speak everyone else is peddling.

    Slow down hitting you hard in the wallet?

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