Just when I thought the afternoon couldn’t get any slower, along comes this bombshell from the Motley Fool:
I Want My Bubble Back!
By Seth JaysonThere’s nothing funnier or more satisfying (for me, at least) than watching the National Association of Realtors (NAR) change its tune these days. The latest news release from this sunny-Jim industry group finally fesses up to its past fiction, but even when it admits the bubble’s going to pop, it can’t muster the courage to just come out and say it.
Nope, according to the news template the NAR released to the press on June 6, “The housing boom has ended, but sales at historically healthy levels will continue.”
Wow, sounds great! What about all those poor HGTV-addled suckers — oops, I mean investors — who’ve been buying property on interest-only ARMs with the hopes of flipping it for an easy profit?
Not to worry, folks — a flop in prices is good! Here’s why, according to the NAR. “Experiencing a slowing from a hot market is a good thing because we need a solid housing sector to provide an underlying base to the economy, and slower appreciation will help to preserve long-term affordability.”
I hope all those people out there who leveraged themselves up to their eyeballs with risky loans to get into the market are going to be greatly comforted by the “long-term affordability” their homes may offer the buyers of the future.
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So, yeah, the NAR is full of it and will spin the numbers any way it can to keep up the pleasant fiction that all is well. But the cracks began to show in subsequent remarks from NAR “Chief Economist” David Lereah. The head outfit that ridiculed the idea of a housing bubble for years is now crying for Ben Bernanke to bring it back.
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The real problem here isn’t the NAR, of course. You have to expect these people to spin the facts for their industry, even if that means they’re putting their checkbook concerns ahead of yours, and even if it leaves them begging the Fed for an adherence to shortsighted economic policies that could send inflation spiking.No, the real problem here is the uncritical press out there, which is all too happy to pepper every contrary indicator or bearish remark with an NAR official’s informed-sounding bubble denial. Never mind if what the NAR folks are saying doesnt seem to make sense (or contradicts what they said just a few months back). Hey, opposing viewpoints give the appearance of objectivity, and they’re an easy way of pretending to have looked for truth. It keeps your editor off your back, and if people out there get burned on account of your waffling reportage, no one can say they weren’t warned. Look, here’s the quote from the other guy!
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Those home industry advertisements might feature kitties and puppies, blue skies and little girls with dimples frolicking in the home of your dreams, but the people putting together those ads measure their success by how many greenbacks they can extract from your wallet. The only person out there who’s really looking out for your financial well-being is you.
Amen to the last sentence in the article.
Those home industry advertisements might feature kitties and puppies, blue skies and little girls with dimples frolicking in the home of your dreams, but the people putting together those ads measure their success by how many greenbacks they can extract from your wallet. The only person out there who’s really looking out for your financial well-being is you.
Amen!
It was nice to see him call out the media for doing nothing more than printing NAR press releases without an ounce of critical review of what the were saying.
…what they were saying.
So hard to type after lunch.
Loved the article. Couldn’t have said it any better. I recommend all people read the full text of the article as well!
-Richie
anyone see the t-mobile commercial with the real estate agent.
” if a celebrity dies in your home its a bonus”
hahah sounds like typical RE agent.
-K
“No, the real problem here is the uncritical press out there, which is all too happy to pepper every contrary indicator or bearish remark with an NAR official’s informed-sounding bubble denial.”
Yes, yes, and yes.
It was always a matter of time before the MSM started to turn on NAR. The press has looked stupid and ill-informed as this correction has caught them by surprise, and now they need someone to blame.
anyone see the t-mobile commercial with the real estate agent.
I like the line… “any closet is a walk in closet if you try hard enough”
I find on top of that NJ media much more biased than even NAR. The local media did not even bother to write any article on NAR or Otteau report. They used to write everytime the market was booming. StarLedger sucks.
You know, I really thought that the NAR was more sophisticated. I don’t take exception to the behavior of the NAR or media. Any discerning person can smell the game from a mile away, and ultimately “caveat emptor” as they say.
However, as the calendar turns to June, we see this hackneyed bunch folding up their tents. That’s it? They should have planning for this day for at least 2 years. This is plan B?
Every lawsuit that can be thrown at this industry should be undertaken. I am shocked at this bunch of connect-the-dots incompetents. Where is Franklin Raines to clean up this mess?
A good friend gave me the best advice about real estate…
“At the end of the day, NO ONE IS YOUR FRIEND. Not your agent, not your mortgage broker, not your bank. They’ll make the deal and walk away”. He told me that 6 months ago and my wife and I decided not to buy this year and are looking to rent elsewhere.
Best advice ever!
-frustrated in Hudson County!
Shailesh,
Who do you think pays for the entire real estate section in the Star Ledger?
Before listening to what comes out of someones mouth, figure out who is paying their salary. Classic example is David Lereah
i don’t think you can say that every media outlet has failed… the economist and others were ringing the bell about the bubble for at least 1-2 years… as for newspapers, that’s a different story…
The best business advise is found in the movie Wall Street.
“If you need a friend, get a dog”
G. Gekko
Sounds silly on a housing bubble blog, but I learned when I had my daughter… what is a life altering event to you, is someone else’s job.
Do you give 110% and think of the “client” every minute? Does your realtor? Does your mortage banker?
Anon 4:17 is right- no one is your friend.
anon 6:07
I could never understand when some one is saying they are giving: 110%, 120% or 200%. You can be giving 200% – unless you were only giving 50% and now you doubled your efforts – those the 200%.
Seems like the entire real estate industry is trying to get behind Lereah and his plea to the Fed.
Blame It On Bernanke
grim
Don’t worry, as a real estate agent, I have your best interest at heart. I’ll “research” it for you.
unless you really have to no point in buying a house now. with an increaseing # of sellers dropping prices $75-$100k on $650k homes you don’t know when the bottom will be reached. remember in the first few years you build almost no equity on say a $400k-$500k loan so if you overpay it will take you years to recover.
this is the downside of sellers pricing their properties too high. there’s no sense of what a property is worth in the marketplace. all this distortion coupled with a declining value market is why buyers sit on the fences.
halting interest rates will do nothing to save housing. the idiots at the NAR are aptly named such because they don’t understand what’s going on. in actuality rising rates should propel more buyers into the market to lock in rates while they’re low.
the bottom line is affordability as it relates to house prices. not everyone looks at a monthly payment to determine how much house to buy.
You’re exactly right. Rates are still at “historical lows”. We didn’t even hit 7% on the 30 year and they are crying uncle already.
-Richie
Some recent sales…
15 Hobart Ave, Short Hills
3BR, 2.5BA
MLS 2236253
Jan 2006 – $925K
Feb 2006 – $895K
Mar 2006 – $869K
Apr 2006 – Under Contract
Jun 2006 – Closed $855K
309 Lupine Way, Short Hills
4BR, 2.5BA
MLS 2251882
Mar 01, 2006 – $989K
Mar 21, 2006 – $949K
Apr 07, 2006 – Under Contract
Jun 02, 2006 – Closed $910K
These sellers were willing to take $40K under current asking ($80K under original asking) after just one month on the market.
unrealtor, i’m seeing price reductions after 1-2 open houses followed by another reduction if the property doesn’t sell in 30-40 days. asking prices mean nothing, it’s what the market rate will bear. the property at mls #2276512 was originally listed in feb at $629k another another # and now look, $110k drop.
no one knows where the bottom is, but it seems we’re not there yet.
Is the Home For Sale by Owners data included in the New Jersey MLS ?
If it is then, National New Jersey Home for Sale inventory is above average !!!
Tomorrow, take a ride in your neighborhood or next township…. don`t be surprise that lots of Home For Sale signs in most streets and corners !!!
Wake up folks…the market is not collapsing as you think.
I was just browsing baristanet… take a look at some of the recent sales they have listed from the last few months – prices are strong and many of the places are selling above the listing price.
Thanks anonymous! We were getting worried that the housing market was going to crash.
So what you are telling us, is that the housing market isn’t going to crash. But not because some major macroeconomic indicator is pointing elsewhere, or some major economic research think-tank has just released a study..
..but that because a web page, entirely sponsored by realtors, filled with realtor-provided content is telling us so?
Oh come now.
You do know that Baristanet took my link off their site because of realtor complaints.. right?
grim
Richard, I think the second house (Lupine) really illustrates that seller psychology is changing.
While you’re right that asking prices are often fantasy, the comps on that street support the asking price. This is the same street where an owner bought for $1.3M last June and is now selling for $1M, taking a $300K loss.
The first house (Hobart) sat much longer, before the sellers cut a deal.
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