Friday, November 03, 2006

Realtors Launch Major Ad Campaign

The National Association of Realtors launched a major ad campaign to convince buyers that "It's a Great Time to Buy." Many Realtors are hurting as sales volumes have declined tremendously in the bubble markets. For example, in Los Angeles County, according to DataQuick, sales are down 31 percent compared to September of 2005. In Loudoun County, suburban Washington, DC, the dollar value of property sold has fallen 44% from last September.

"Look for NAR's advertisement during the weekends of November 3-5 and 10-12 in six leading U.S. newspapers: New York Times, Wall Street Journal, Washington Post, Chicago Tribune, USA Today, and Los Angeles Times.

The ad encourages consumers to ignore the negative media coverage on the current housing market and reminds them that the time is right to buy now, for several reasons:

            • Interest rates are low
            • A good inventory of homes is available
            • Prices have stabilized and are starting to rise
            • The future of the housing market and the economy is positive
            • Housing is a great investment, with average home valuations increasing 88 percent in the last 10 years
The ad closes with a call to action to contact your REALTOR® or visit REALTOR.com.

NAR is publicizing this message to the press through news release, media outreach, and selected television interviews.

In January 2007, NAR will take this message to the airwaves with television and radio commercials."

The National Association of Realtors is interested in thier membership and is not there to give prudent advice to potential homebuyers. Don't be fooled by their soft landing talk! In the bubble markets this will be a hard landing!

Update: Check out this spoof of the Realtors' Ad and also Big Picture's Excellent Analysis of the Ad.

42 comments:

  1. David,

    Not a comment on your post but in general. The shear amount I've learned on these blogs has been incredible. About six months ago it was brought up that the bubble might or might not go down nationally. Now? Its going down everywhere due to the end of the credit bubble. (Its not over, its just starting to end.)

    These ads cannot stop that. In fact, I hope they produce a cheap little mascot I could collect a la the pets.com sock puppet. :)

    Not to mention, starting in 2007? That will be trying to close the barn after the cows got out. By the J6pk will know too many people hurting on their mortgage.

    This will be very interesting by 2Q2007.

    Neil

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  2. NAR is Hoping for a Bumper Crop of Bigger Spring Fools and Planting $40 Million worth of TULIP BULBS !

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  3. Prices have stabilized and are starting to rise

    Huh? There is no evidence that either of these assertions is true.

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  4. It's about time! There are too many chicken littles out there feeding off of mutual unfounded fears! Let's hope this helps them open their eyes to reality!

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  5. This ad received uniformly cynical reviews across the country. Look for a change when it runs next week reminiscent of Lereah's change to the title of his book. That is if the NAR doesn't pull the ad altogether.

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  6. They're right. It is a great time to sell a home.

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  7. Let’s all listen to lance. It’s never the wrong time to buy, as long if it’s a home you plan on living in it for the long term?

    Who cares if your home is worth less than half, 10 yrs from now? Inflation and the economy will always take up the slack...right? Who cares if the majority of the economists believe were in the worst housing slump in history.

    We have the Dallas Federal Reserve President saying, as anybody not from the former planet of Pluto knows, the housing market is undergoing a substantial correction and inflicting real costs to millions of homeowners across the country.

    Let’s all forget about the cost of the home we purchase and listen to lance. If Lance is not a paid shill, he is certainly a nut case. Do the math people!!!!!!!!!!!!

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  8. How can the press eat this dog food and not ask the affordability question, which makes low interest rates irrelevant. The secret about poison loans is out of the bag, but the sideshow continues.

    Let see:

    2001: house for $100,000 at 7.8%

    2006: same house for $300,000 at 6.4%

    Wow, interest rates are low!

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  9. How is the group house living arrangement in Silver Spring going?

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  10. I have a couple of observations unrelated to the posting, but there don't seem to be any open forum sessions any more, so here goes.
    1) I used to think one strong point of this Blog was the focus on particular properties. I think it would be useful for this to continue on the way down too. Just a suggestion.
    2) Observations from my neck of the woods (NoVa, inside the Beltway). I moved in in July. Of the houses in the neighborhood for sale then, about 60% remain for sale today, 20% have been removed from the market without a sale, 10% have been placed on the rental market and 10% have sold. Price reductions remain quite large. One local house sold in 2004 for 850K, Subsequently had nearly 100K of addition work. Was placed on the market Jul06 for 1.4m and has had subsequent incremental 100K reductions. It is now asking 999K. (400K or a 28% reduction is quite significant.)It appears that initially the Realtor (tm) lavished quite a bit of attention on this house. Now, generally nobody comes or goes. I wonder if the declining asking price makes the agents less interested in expending the effort to market this house. It seems like a positive feedback loop, where the less marketing may lead to a longer DOM, leading to further price reduction and thus even less marketing.

    Anyway, that is what I see in my area. I'm interested to hear the observation of others.

    An interested observer.

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  11. Some good advice for propective buyers:

    Buyers, he said, need to be aware that they are dealing not just with a house but also with a seller wrestling with his ego. Sometimes it might be smarter to let the poor fellow keep his price, but ask for other concessions that might actually be more valuable. A new roof, new appliances or substantial assistance toward the closing costs all have material value, but they allow the seller the dignity of maintaining the price at a level that leaves him standing tall in his neighbors' eyes.

    "Haggle less over price and more over other stuff," McCabe said the research indicates. "Change the bargaining so you still get the deal you want."


    www.washingtonpost.com/wp-dyn/content/article/2006/11/03/AR2006110300666.html

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  12. What BS Propaganda!

    Keep up the good work exposing this unethical industry.

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  13. Since this ad is going down in flames how about suggestions for a new theme for the NAR's ad campaign?

    How about:

    "Hello. I'm from the NAR and I'm here to help you!"

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  14. I agree with the thinking of many other bubble-watchers, that this ad campaign is not nearly so much designed to create transactions as it is to buck up the demoralized sales force who are eating Ramen and hoping for a break. They want to see something for the relatively big bucks they pay the NAR in member fees each year, and this is it.

    Anonymous 6:27 -- enjoyed reading your statistics. The owner of the Big House clearly is toast, just how burnt? Must be a crappy time of year to sell anything up there. Now, with Thanksgiving and Christmas approaching, and Wal-Mart unleashing their sales almost a month early, there likely is close to zero interest in house-hunting by those few remaining potential buyers who don't want to wait until the crash is over.

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  15. Lance said...
    “Some good advice for propective buyers:”

    Wait a few days and Lance will counter is own argument.

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  16. Check out this hilarious spoof of the ad over at keith's blog.

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  17. i can't wait to hear how Lance spins the pain that comes during the course of next year.

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  18. David,

    I hope you read this. Gekko on Ben's blog noted that this is the first housing downturn with a national mortgage market.

    In other words, it will be the first time that nationally credit will tighten on mortgages based on national risk.

    That implies it could get very difficult to get credit soon.

    Just a thought...

    But I do note that quite a few "bubbleheads" have their savings. So they'll be amoung the few buyers.

    As to buying. Not yet. The old buyign advice is that houses are like apples on a tree. Sometimes you need to wait for a home to be ripe. Folks, the apples are just budding. Very bitter... In fact, the trees are too young to produce a decent crop. Wait.

    I calculated in my neighborhood that I'd save $400k over five years renting a home over buying. This is taking rents off of a local home rental service (online) and noting that similar homes were going for inflated values. I assumed a 7%/year increase in rent *and* a 7%/year increase in home values. Yes, these are nice homes. :) I'll put my money where my mouth is and rent.

    Please set up your own spreadsheet and do your own math. As Warren Buffet noted, there are three kinds of people. Those who can count, and those who cannot. ;)

    My powder is dry. I'm curious as to what down payments will be required in two years. Anyone betting on zero down loans? Not me.

    Neil

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  19. The Ad is very reminiscent (sp?) of those in the early 90's. Anyone remember the bumper stickers "Now really is a good (great?) time to buy a house". As I've said many times, same thing - different decade.

    Real estate goes in cycles. There are some great buys out there and will be more in the coming couple of years for those willing to put the effort in.

    It's time to do your homework if you are looking to buy in the next couple of years.

    I don't really want anything or I'd be out looking at foreclosures. My husband wants to get a multimillion dollar commercial property, so I have to marshall the resources. No more residential for me. But I'll never sell what I have.

    Good luck and happy hunting!

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  20. threadkilla said...
    "i can't wait to hear how Lance spins the pain that comes during the course of next year."

    He'll being saying "You see children ... there really never was a big, bad wolf coming! It was just a normal down side of the real estate cycle, and you're now further behind then ever having let the smart folks buy what you could have bought had you not been so afraid of your own shadows."

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  21. Lance said....He'll being saying "You see children ... there really never was a big, bad wolf coming! It was just a normal down side of the real estate cycle, and you're now further behind then ever having let the smart folks buy what you could have bought had you not been so afraid of your own shadows."


    i guess you keep forgeting that i pulled the trigger at the top of the last cycle and was upside down for 9 DAMN YEARS,

    yeah you read that right i owed more on my house than i could sell it for for almost a decade.

    i'll not make that mistake again.

    that being said, thanks to outsourcing and globalization my income has gone nowhere in the last 7 years so the ONLY way i can (i really can't) afford a home (AND EVERY SINGLE PERSON I KNOW HERE) in the area i now live is to use some IO ARM and i'm not gonna risk that.

    housing is toast i've seen this happen before but this time the pain is gonna be much much worse until the fundamental reality that incomes MUST match home prices gets back in line.


    so either incomes need to triple or home prices will get halved or more.

    and by this time next year that reality will be obvious.

    reminder: if you can't aford a 30 year fixed than YOU CAN NOT AFFORD THE HOUSE.....and this is a painfull lesson many will learn the hard way.

    the ONLY time one uses a ARM is when you have the $$$ to pay cash but you wanna manage your cash flow and NOT SO YOU CAN AFFORD TO BUY.


    BTW i've been doing a little informal poll and i've yet to find anybody that could buy the house they live in now if they were to buy based on their income and most say "the taxes alone would kill me"

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  22. Lance, How much is the NAR paying you per post?

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  23. Lance said...
    “He'll being saying "You see children ... there really never was a big, bad wolf coming! It was just a normal down side of the real estate cycle, and you're now further behind then ever having let the smart folks buy what you could have bought had you not been so afraid of your own shadows."

    There you go again Lance, calling for HUGE housing cuts. “A normal down side of the real estate cycle” by historical standards would be a reversion to the mean. Come on, get your story straight.

    http://www.bubblepic.com/displayimage.php?album=9&pos=4

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  24. Threadkilla,

    You must have purchased at the absolute peak and for top dollar during the last cycle. You also must have sold before the huge gains that occured over the past 5 or 6 years. Poor timing. Timing being the operative word.

    I know from your posts that you regret buying, but your real regret should be that you sold.

    I bought 8 or 9 properties in 1988 and 1989. It sucked for awhile, I'll agree with that. It certainly wasn't financial suicide and the only regrets I have today are the 2 or 3 I sold in the later 90's when the market somewhat recovered. Hindsight is great!

    We are already well off the peaks and with some time and effort, a purchase today with these low rates can carry minimal risk.

    If you seek "no risk" whatsoever, then you may as well keep renting. You will only risk your retirement.

    Oh, I know, you are saving like mad and stashing all your money in stocks and gold and what-have-you. First, and this is a tough one for me to swallow, one has to believe that renter's are actually saving that money. Second, you have to assume that these investments keep pace with inflation and don't drop in value. Third, you have to hope that interest rates don't rise substantially. Fourth, you have to hope that rents don't increase appreciably.

    It is not a no-brainer to continue to rent. What year did you sell your previous home and why did you sell? Many people bought in the late 80's or very early 90's and are sitting pretty right now with their house either paid-off or well on the way. Remember all those refi's to 15yr loans?

    Yes, many god-awful things could happen that could put you out on the street. This is true whether you rent or own. Before this latest "frenzy" occured, the rule was that it always took 5 to 7 years to get out of a house unscathed (to cover your transaction costs). No different now. That is the true "risk" in buying.

    There have always been people unwilling to take that risk and people willing to take it. One group is referred to as renters and the other owners. Simple as that.

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  25. robert said:
    "There you go again Lance, calling for HUGE housing cuts. “A normal down side of the real estate cycle” by historical standards would be a reversion to the mean. Come on, get your story straight."

    That's right Robert, put words in my mouth again. This is right in line with the way you like to manipulate posters' quotes ... taking sentences out of context and giving the impression that they've said things they haven't.

    AS for your "reversion to the mean" ... I think that was discussed prior and it was at that time pointed out to you that your "reversion to the mean" only holds during specific --- and relatively short --- periods of time. IF one were really to look at the "sales value" of a house as a measureable asset akin to a stock (which as you know I've argued against again and again), THEN one would find that more often than not whenever there was a major change going on (such as following the second world war), the "reversion to the mean" theory did NOT hold. So, just keep banking on "the economy" to give you that house you want to so bad, and do nothing on your own to earn it, and yes ... someday you'll get it. And someday, you'll find a pot of gold at the end of a rainbow. Anything is possible if you believe hard enough! Now someone I greatly admire is Va_Investor. Isn't it interesting how Va_Investor who HAS BEEN SUCCESSFUL in the past is (1) continuing to hold all her residential properties (and SHE is an investor who needs to be making money off of these properties unlike a homeowner who can be content with having a home that gives them the shelter and stability and other intangibles that one seeks in life) and (2) SHE and her husband are planning to go out right NOW and buy a multi-million dollar commercial property. Robert, hasn't it ever crossed your mind that following the example of those wh've been successful in the past is a better guarantee of your own success in the future than continuing to follow your own ideas which in the past haven't led you to great success? Just a thought ...

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  26. Hmmmm....a big ad campaign in the weeks of NAR's national convention? This is nothing more than NAR's way of telling it's members "Look what we're doing for you in this tough market!"

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  27. from the neuro-economist in WaPo:

    "Sometimes it might be smarter to let the poor fellow keep his price, but ask for other concessions that might actually be more valuable."

    nope, that's when it's time to step on his throat. it's BUSINESS, nothing personal.

    ego/door IMO.

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  28. anon said 901 said:
    "nope, that's when it's time to step on his throat. it's BUSINESS, nothing personal."

    'cept, you're forgetting that the ultimate decision to "play" is his ... not yours. you don't want to play nice? then fine, you don't get the house ... Someone who has the smarts to play nice does. That's how most of life works if you haven't noticed ... Those who feel a sense of entitlement to something --- anytthing --- are usually their own worst enemies. Afterall, people have choices in life. And why would anyone want to oblige deal with someone with a bad attitude when there are so many people out there with good attitudes to deal with?

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  29. Lance said...
    “That's right Robert, put words in my mouth again. This is right in line with the way you like to manipulate posters' quotes ... taking sentences out of context and giving the impression that they've said things they haven't.”

    Dates and times are given for your reading pleasure

    “AS for your "reversion to the mean" ... I think that was discussed prior and it was at that time pointed out to you that your "reversion to the mean" only holds during specific --- and relatively short --- periods of time.”

    So this is not a specific relatively short period of time? Take another look:
    http://www.bubblepic.com/displayimage.php?album=9&pos=4

    IF one were really to look at the "sales value" of a house as a measureable asset akin to a stock (which as you know I've argued against again and again), THEN one would find that more often than not whenever there was a major change going on (such as following the second world war), the "reversion to the mean" theory did NOT hold.”

    I agree, if you bought in 1890, then following WWII you would have finally made a profit.

    “ So, just keep banking on "the economy" to give you that house you want to so bad, and do nothing on your own to earn it, and yes ... someday you'll get it.”


    Funny you should mention that:
    http://www.realestatejournal.com/buysell/mortgages/20061106-ip.html?mod=RSS_Real_Estate_Journal&rejrss=frontpage

    “And someday, you'll find a pot of gold at the end of a rainbow. Anything is possible if you believe hard enough!”

    And maybe, you’ll finally find a renter for your basement, so you can pay your mortgage. Hey, anything’s possible

    “Robert, hasn't it ever crossed your mind that following the example of those wh've been successful in the past is a better guarantee of your own success in the future than continuing to follow your own ideas which in the past haven't led you to great success? Just a thought ...”

    Now Lance, don’t get all Carlton Sheets on us now, hold it together man. Those folks that are forclosing, are they “successful”?

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  30. Bubble Fans have gotten angrier and angrier at lance as their dire predictions have failed to materialize.

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  31. Lance,

    Thanks for the complement, although I suspect that your IQ is much higher than mine (both my father and son are in the 160's-I'm not up that high). Most of the people here just want a good deal. They don't want to overpay. This is easy to accomplish IF one is willing to put the time and effort in.

    My take is that most are not willing to put the time in. They, obviously, have no interest in investing. In fact, that is what they claim. So, let them try to figure it out. In the long run, they will be OK.

    One thing I learned early on (in my 20's) is that you will never get wealthy on your job alone. Your job, and income, allow you to do the things that will make you wealthy.

    Most people get so caught up in the day-to-day, that they are unable to see the real opportunities out there. I'm not talking about just real esatate.

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  32. I think reversion to the mean could happen in several ways including inflation driving up wages (highly probable in a government town). Also, the bust will not be uniform. High-end McMansions and borderline low-end housing will get hit the hardest. I still think properties are over-valued but I doubt that quality properties will slip much past 2004 prices.

    NOVA Fence Sitter

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  33. failure to recognize a bubble is a long tradition among "investors".
    unfortunately VA investor is going to loose both her husbands shorts and hers...going out to buy a multimillion dollar residential property at this time is suicide.

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  34. Want to read an interesting analysis of the NAR ad: Desperate Realtors... Desperate Retailers... Desperate Housewives... The website is
    http://www.rgemonitor.com/blog/roubini/

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  35. There have always been people unwilling to take that risk and people willing to take it. One group is referred to as renters and the other owners. Simple as that.

    Ugh. This statement is so ignorant and oversimplified. Now that you are moving into multimillion dollar commerical properties (heehee), go find a different blog. (BTW - it is hilarious that you are now bailing on residential real estate investments as soon as it is getting interesting, i.e., really profitable.)

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  36. "We continue to look for signs that a recovery is imminent but can't yet say that one is in sight," said a statement from company Chairman and CEO Robert Toll.

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  37. David, congratulations on being so visionary. Lance, congratulations for being the comic relief.

    Lance on Nov 5: "You see children ... there really never was a big, bad wolf coming! It was just a normal down side of the real estate cycle, and you're now further behind then ever having let the smart folks buy what you could have bought had you not been so afraid of your own shadows."

    Robert Toll on Nov 7: "We continue to look for signs that a recovery is imminent but can't yet say that one is in sight,"

    Lance is even more of a nutty true-believer than the housing industry. He's pure comic gold.

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  38. "One thing I learned early on (in my 20's) is that you will never get wealthy on your job alone. Your job, and income, allow you to do the things that will make you wealthy. Most people get so caught up in the day-to-day, that they are unable to see the real opportunities out there. I'm not talking about just real esatate."

    va_investor,

    Amen. I am shocked how few people participate in their 401K plans and many of those who do park their money in a money market fund. Way over half of Americans wait until their 50s to think about retirement planning. A remarkable number of smart people wait until one market or another reaches a bubble frenzy to take notice and invest. Then they lick their wounds for a decade after the inevitable collapse while their market of choice recovers.

    The people I know personally who actually "made it" tried a dozen different investments, jobs, businesses before making it big. You are right, many people immerse themselves in the day-to-day and don't look up from their rut until they are old.

    Someone once said, "Never confuse activity for achievement." Words to live by.

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  39. fogcutter,

    I guess we are like-minded here. The opportunities are limitless for those with creative minds. (Except, of course for "creativemind" who posts here but does not display such)

    "Never confuse activity for achievement" I like that. So true. Good luck in your endeavors!

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  40. I know how Lance feels! There are WAY too many mean people that do not know what they are talking about. I am the Chief Economist of the National Association of Realtors. I use really good mathematiks and I see that real estate is strong, the economy is strong, and you can all get rich if you just stop whining and get into the market! Seriously, time is money and you are here reading and writing posts that are not doing you any good. Think about it...

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  41. VA investor,

    that was a good one...:)

    creative...

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  42. "The opportunities are limitless for those with creative minds. "

    Bravo. You get it.

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