How Dumb Does the NAR Think Homebuyers Are?

The amount of misdirection coming from the NAR (National Association of Realtors) seems to be inversely correlated with the skittishness exhibited by potential buyers as seen in comments for yesterday's report on existing home sales.

Sales of previously owned homes in the U.S. made a new 10-year low in June, down 2.6 percent from May and almost 16 percent below year ago levels, while inventory poked back above the 11 month mark for the second time in the last three months.

NAR President Richard F. Gaylord noted the reluctance of home buyers, now sitting on the fence, who just may be missing out on their chance to get rich!

A recent online survey of realtors shows nearly a quarter of potential home buyers are waiting on the sidelines. However, timing the market can be very tricky, which is why home buyers should always have a long-term view to build wealth.

Loosely translated this means, "You should buy now because, even if your house goes down in value over the next year (maybe two years, possibly as long as three to five years, and, in a worst case scenario, six or eight years), if you look out another 10 or 15 years, you're gonna be rich!"

It's all about "building wealth" - a hot-button phrase that was surely more effective when home prices were rising instead of falling.

Chief Economist Lawrence Yun then uses the freakishly high level of short sales and foreclosures to discredit the 6.1 percent decline in real estate prices while conveniently failing to mention that these transactions have bolstered real estate sales in some areas.

Yun said there is a downward distortion in the price data. “With short sales and foreclosures accounting for approximately one-third of transactions, it’s hard to make an apples-to-apples comparison with a year ago when they were only a minor portion of the market,” he said.

Despite the overall sales decline, unpublished snapshot data shows existing-home sales rising significantly from a year ago in Bakersfield, Calif.; Fort Myers, Fla.; and Las Vegas.

“Sales are now beginning to pick up in Orlando, Fla., Phoenix, and Oakland, Calif.,” Yun said. “Interestingly, sales fell in Atlanta, Houston, and Kansas City, Mo., despite affordable home prices and solid local employment conditions.”

Translation: Don't pay any attention to the falling prices because they are driven by distressed sales, but don't pay attention to distressed sales when looking at rising sales volume in certain areas.

Never mind that housing bubble hotspots like Las Vegas are now foreclosure hotspots.

How stupid do they think people are?

Comments

[mark mchugh]

Tim,
really, really stupid.

We ran out of suckers two years ago. My favorite is "take advantage of today's low rates...", which means pay an inflated price, so the bank isn't under-water, and have zero equity for years to come. Some advantage!

Housing will remain sick until rates go up and prices crash (but who wants to hear that?). Oh, and we remember that without 20% down you're just asking for more trouble. Reconcile that with the concept that nobody saw fit to save money for the last five years, and isn't it obvious that sales should explode any day now?

And, they've got a new shill now - Paulson.

[Doug Poretz]

Whereas the NAR is (and always has been) a group that likes to be irrationally optimistic (e.g., they have always run "now is the best time to buy a house" whenever the market goes south), it has been interesting to watch what the homebuilers say and have said, especially the publicly owned homebuilders. Go back to their conference calls of as much as 6-8 quarters ago, maybe even more. The homebuilders started warning of the soft market in pretty homest terms, plus their own personal actions (i.e., selling stock) reflected that they were putting their money where their mouths were (or, more accurately, taking money out of where they did not want to be: their own companies). Is there a moral? Watch and listen to what the publicly homebuilders are doing and saying -- they have to get their comments and opinion past their attorneys who are sensitive to Sarbanes Oxley, etc.

[rm]

[Yun said there is a downward distortion in the price data.]

The banks have been spewing this crap for years. For a very long time, they would disregard foreclosure/REO's as comps because they weren't a "valid" indication of real value.

When it comes to appraisals, BPO's, EVERYTHING has been done to skew upwards.

"The rules apply to everyone, except us."

The banks have been making up the rules as they go along, playing by those that suit their interest, then changing them when they see fit.

[rm]

[The homebuilders started warning of the soft market in pretty homest terms, plus their own personal actions (i.e., selling stock)]

Always a better indicator, as they [usually] have a LOT of skin in the game, whereas the realtors' skin is invested in their wardrobe and automobile.

[bearfund]

I don't know; how stupid have buyers proven themselves to be?

[Tom B]

The NAR are SALES people-- enough said. Still, with employment being a mess MANY will be buying and selling homes unwillingly to relocate-- and losing equity.

[John Pseudonym]

If you need/want (and can afford) a house, buy one!

Go out and make a ridiculously low offer; you may be surprised at the answer to your bid.

A real estate friend of mine is telling me that builders are are willing sell finished homes at cost or even less just to free up the money they have sitting in them.

Rates will go up from here as the credit worthiness of the USA comes into question.

Do some research and figure out the actual cost of building the home you want and make an offer 10% below that. Negotiate up to the actual cost but no more; walking away is a very powerful tool in this market.

[Jay Jay]

Wht does buiders cost have to do with anything? They sell it for as much as they can whether that means a 25% markup or 25% below their cost.

Nobody really needs to own a house, the utility of renting one is nearly the same. Sure there are times that it would be advantagious to own, but not now.

[Did U Think The Ponzi Scheme Would Last?]

Interest rates are now on the rise. If you can buy some place where the price inflation never really happened (parts of TX and other places) then the 6.5% rate you can get today is not that bad historically. But as rates move up, the bubble priced homes must move down in price because we all know its about "how much can you afford to pay each month" more than anything else (except "how much do you have for a down payment").

Home prices have a lot further to drop. In 3-4 years you will be able to buy a house in Fl again for 1990s prices.

[jackooo]

How can interest rates be on the rise? Didn't the fed lower the rates?

[jackooo]

Anyone that buys now will be paying on a mortgage that will be higher than the house is worth for years.
A $400,000 mortgage to buy a house worth $300,000 in one year is NUTS!!!

[John Pseudonym]

"How can interest rates be on the rise? Didn't the fed lower the rates?"

The market is already forcing rates higher. As the credit worthiness of the US financial system comes into question globally, rates are going to shoot up no matter what the Fed does.



In a best case scenario, once the Fed has saved the banks, they will turn on inflation and raise rates to beat it back.

[Tom B]

"As the credit worthiness of the US financial system comes into question globally, rates are going to shoot up no matter what the Fed does."

I would call the situation absurd, if "grim" wasn't more appropriate. I think the economy would get better, faster, if the banks had lowered THEIR mortgage rates to track movements by the Feds....

[wildbill]

The Fed has been holding short term interest rates down (by pumping billions into the banking system, thus causing inflation to increase).

The market knows that the Fed can't keep the rates down indefinitely and are anticipating that, eventually, rates will have to go back up to counter inflationary expectations.

[John Pseudonym]

"As the credit worthiness of the US financial system comes into question globally, rates are going to shoot up no matter what the Fed does."

I would call the situation absurd, if "grim" wasn't more appropriate. I think the economy would get better, faster, if the banks had lowered THEIR mortgage rates to track movements by the Feds....

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"International Monetary Fund (IMF) have informed Bernanke about a plan that would have been unheard-of in the past: a general examination of the US financial system."

There is a chance that the rating of US debt will be lowered. If that happens, interest rates will take off as foreign owners sell US debt instruments.

www.spiegel.de/interna...

[The Hammer]

The NAR is a scumbag organization. they have used and abused buyers for years. Now buyers understand that they are a manipulative organization that represent rewhores (salespeople)!

House prices will not stop going down until home prices are AFFORDABLE. It is that simple. Over the long term prices will trend toward a multiple of income. In many higher priced markets house prices are still out of whack vs incomes and rents.
If incomes barely budged for the last 5 years then how can house prices at 50-100% appreciation over the same period hold?

Some stupid phoney realtor who called herself a buyers broker gave me some sales pitch about houses saying that incomes went up 17% in the last 7 years but home prices went up 100%+ then went on to try to sell me a second homeshack that was up multiples of just 12 years ago. It's funny how she tried to show how concerned she was then pimped some house that was way above incomes and rents.
I am trying to avoid rewhores when looking for a vacation house.

[Did U Think The Ponzi Scheme Would Last?]

Quick note to people who seem to think that the fed controls long term interest rates. In short, they don't. Rates are set by open market auctions for debt with the lowest rate bidder winning. People who are looking to store their wealth in a safe place will not be putting it into home loans for houses at bubble prices unless they are being paid for their risk. Watch interest rates start to rise - they will be 12% or more in the next 2-3 years.

The ponzi scheme is over.