Regular readers know that I keep tabs on a number of local journalists that I’ve tagged as being industry cheerleaders. These journalists routinely write puff-pieces praising real estate and urging people to buy without regard to caution. One of these cheerleaders is journalist Warren Boroson.
Here is his most current piece:
There I was, bopping through the aisles at a Barnes & Noble, when what do I see?
A book called “SELL NOW! The End of the Housing Bubble.”
The publisher is a respected name, St. Martin’s Press. Copyright 2006.
So I bought it. And read it.
A strange book.
The author predicts that house prices will fall off the table, returning to their 1997 levels. All over the developed world.
Houses in New York and northern New Jersey will lose 44.6 percent of their value, falling from an average of $454,522 (in 2005) to $252,028 during the next five to seven years.
Anyway, my response is that people pay a lot of money for houses because houses are nice. You become the king of your castle; by paying down your mortgage, you own more and more of that castle — instead of making your landlord richer.
Yes, it’s clear that house prices in some areas are softening now. And maybe some people would be better off selling. But what a hassle!
And he may turn out to be totally correct, although I doubt it.
But if he’s right, he will have made a self-fulfilling prophecy. If everyone who reads his book does what he advocates, the real-estate market will indeed be in serious trouble.
Now, after you’ve read the article (or the highlights I’ve posted here). Take a look at this piece:
Who else might want to seize the opportunity to take profits? Anyone with more house than they really need. Warren and Rebecca Boroson bought their Glen Rock, N.J., home 29 years ago for $69,900 and raised their two sons there. But now, says Warren, “our children are grown and out of the house. We had four bedrooms, which is three more to mess up than we needed.” Last year the Borosons sold for $579,000 and moved to a high-rise apartment in Hackensack, N.J., with a doorman and a swimming pool. [a rental]
“We sold mainly to lock in the profit,” Warren says. “It was a little faster than we’d planned. But if you’re planning to sell in a few years, you might as well do it now while you’re sure the market is still good.”
Warren writes a financial column for the Morris County, N.J., Daily Record that is syndicated nationwide. With an eye on retirement (he’s 69), he invested his cashed-out home equity in a laddered portfolio of bonds.
I have a bit of concern with one small piece of the article, I’m not sure if it’s just the way I’m reading it, but it comes off as a slam against the book’s author, John Talbot.
By the way, the author is someone named John R. Talbott. He is identified on the book’s back cover as a best-selling author (he wrote another book, called “The Coming Crash in the Housing Market”), was a visiting scholar at UCLA’s School of Management and was an investment banker at Goldman Sachs.
Whether he has any real-estate experience, whether he graduated from college and whether he has any advanced degrees is not disclosed.
This really seems like a below-the-belt slam against Mr. Talbot. A quick search on the web finds the following bios:
John R. Talbott is an economic consultant who has authored academic papers on economic growth and development and made presentations on the subject to the governments of Russia, Jordan, and Qatar. A visiting scholar at the Anderson School at UCLA, Talbott is also a former vice president in the investment banking division of Goldman, Sachs, and Company.
Here are two of John Talbot’s academic papers:
Not sure why a journalist would make such a rash assumption about someone’s education and background and not just do a little leg work to find the real facts. I suppose that if you can’t argue the facts, resorting to insult is the next best thing…