So let me see if I've got this right. After having to endure over the last few years the relentless lying, manipulating, shilling, and outright deception by the NAR, the vast majority of it geared towards making the claim that there was only a snowball's chance in Hell of the national housing market falling, we now learn that the NAR is admitting that the national housing market will fall for the first time since like forever. (Ripley expresses my thoughts the best on this one.) And yet the economy is supposedly doing great, jobs are a plenty, yadda yadda. What could it mean? The real estate industry disgusts me.From the Motley Fool:
You just know the housing situation has gotten bad if the six-percenters at the National Association of Realtors finally feel the need to reveal the awful truth: Prices are going to fall. The latest verbiage from the world's most vocal housing-bubble cheerleader, NAR economist David Lereah, actually predicts that home prices will drop by 0.7 % in 2007.
Of course, you wouldn't know that to read the headline, which, as usual, paints the fantasy that everything is always good for housing. In other words, it's exactly what you'd expect from a guy who's been shilling housing not only in press releases for his trade group, but in misguided books like the wonderfully timed (from 2005) Are You Missing the Real Estate Boom?, the failed broadside against the skeptics Why the Housing Boom Will Not Bust (from 2006), and the still later "oops-I-better-tweak-my-lousy-thesis" response, All Real Estate is Local. (By the way, this blog post tells a tale of Lereah's real estate investment prowess these days.)...
Fools, what bubbles up must eventually come down. It would just be nice if Lereah, the mortgage bankers, and the rest of the crowd would recognize the monster they've made and make real amends. But don't bet on it. Their paychecks depend on the myth of housing as an investment, rather than a sound living choice if purchased at the right price.
U.S. realtors are predicting that house prices will tumble this year for the first time since the 1960s...
And in sharp contrast to assurances from Federal Reserve Board chairman Ben Bernanke, the National Association of Realtors acknowledged yesterday that the subprime lending collapse is already causing banks to tighten lending standards, and that it will prolong the housing slowdown...
The value of homes in some of the country's priciest markets are now falling by double digits, easily overwhelming broader price increases in many more cities where homes cost less...the median price is being driven down by sharp declines in some of the hottest markets during the long housing boom...
"We've never seen a distortion of this effect. . . . This is a weird event," NAR spokesman Walt Molony said.
That's because house prices are rising in a vast swath of the country, including much of the mid-Atlantic, the Northeast, Midwest and Texas.
Mr. Molony said the distortion is so significant that the NAR is working on an adjusted median price to better reflect what's actually happening in most of the country.
NAR has also scaled back its estimate for the volume of sales, which will see an uncharacteristic retreat.
Clearly, the real estate industry's modus operandi is:
"If there is no way to spin the data in our favor, then change the way we calculate the data until we get the numbers that we like."Are you mad yet?
This has become a war. A war of perceptions. We have the lying, manipulating, corrupt real estate industry on the one side. And on the other side is the American buying public and our communities. Which banner are you going to rally behind?
And truly, how healthy can a market really be when it is highly dependent on belief and perception and the manipulation thereof?
People in Marin are not particularly religious, that's a fact, but they know all about militant blind faith.
*Thanks Chuck, Lander for the link.
13 comments:
Did you catch the show California Connected show on KQED last night? They did a piece about Real Estate. They came close to being honest but sold out in the end.
"It's a buyer's market"
http://www.californiaconnected.org/tv/
Gotta check out this new site www.hoodfacts.com Real Estate and More for all 50 states!
It doesn't matter how the CAR and NAR spin it, a decline is here.
Of course they would paint a rosy scenario. It's the nature of the job. "Real Estate Always Goes Up"
beebs
It is a sad fact that if you want to be part of the MLs and get a lockbox key,you are automatically signed up for NAR and CAR.Why?because the MLS wants to be sure its members are ethical.yup,ethical.I know several real estate brokers that can be described as highly competent,dead honest professionals,and the nicest thing they have said about the NAR or the CAR was "I don't pay any attention to those people".they can not stay in business without being part of the MLS...anyone who thinks these organizations are close to democratic is probably relieved that the republicans are in charge...so we don't have to worry about deficit spending,wild foreign adventures or government intrusion into our private lives.somewhere around one in five real estate brokers are both truly competent,and honest.(not salesmen,brokers)
Where do we go from here?
Home ownership has been slammed into our heads as the goal.
It has been pounded into our consciousness as the American dream.
I think I want to "own" a home.
I would like to be able to upgrade my current abode, but I don't want to throw money away.
My rent is about a third of the monthly buying cost.
I love my home.
I wish I could do stuff to it.
I guess these are the tradeoffs.
I'm saving as much as I can and waiting.
I hope prices come down so I can be a participant in the dream.
Beebs..
You beat me to it, because I was going to say the exact same thing. The CAR or NAR can whip up whatever math model they want for calculating median or mean, and, in the end, the results will be the same. A new model might buy them a little more time to lure in a few more buyers.... however, that's just a little more time as this snowball is on the way down the hill.
The amazing thing to me in all of this is the notion that the NAR or CAR actually feel it is in their long term best interest to hype homes only go up in value. They helped create the pickle they are now in with sales, their lifeblood, absolutely crashing. What were they thinking ?
Realtors, lenders and mortgage brokers have indeed created a monster. It's the perfect word.
NAR can spin this 'til the cows come home. Some people may fall for it. But the subprime sob stories are starting to get more attention. So are rising foreclosures. So are properties falling out of escrow because of tighter appraisals and lending standards. Soon, everyone will know someone who knows someone who is shafted. Folks who can't refi. Folks who are underwater. Folks who can't sell for months and months. Folks whose lives are a living hell.
There's no way to "undo" the monster without the necessary bloodbath. More foreclosures will put pressure on neighborhood prices. Fewer borrowers will be able to qualify for loans, and probably at lower amounts.
And I don't feel sorry for anyone in this mess. People have NO memory beyond the last few years. If you really believe RE always goes up indefinitely, and have made financial decisions accordingly, you deserve whatever you have coming.
Lisa, I do hope that your list of "tragic things to come" materializes. The problem is that I see so many jumping in at this crucial moment, right when the market is poised to plummet to try for a "save". It makes me so nervous. And the rising blood pressure is leading to what feels like explosive anger.
I think this latest push by the Democrats to try to make sure that the little guy is priced out forever (unless he sells his soul to the lender) is what has REALLY made me mad.
Having the NAR shove unhealthy debt levels down our throats was bad enough, having Congress do it makes me feel on the verge of going berserk.
It seems like there ought to be a large enough faction of pissed off people in this country who are ready to march in the streets over this nonsense.
Whose "American Dream" is it to go out and "buy" a home that's 5-12 x income?
Okay, I've had it. I wish the college kids of today would start rallying around this like the ones of yesteryear rallied around Vietnam.
This is the first generation that, realistically, has no hope of EVER (safely) buying a home and establishing themselves in a community. Do people care about that anymore?
It pisses me off that politicians would think of bailouts when these toxic loans STILL EXIST. Do they not get the connection between way too high home prices and these loans that lead families into foreclosure?
They DO understand the connection and yet they DO NOT CARE. They want to, in Senator Schumers words "protect home prices" (see his interview with Bernanke last month). We may as well read that as protect HIGH home prices.
Does this not piss your average 20 year old off?
Do they know that the standard, just a short while back, was 2-3 x income? Which would put the median all up and down the West coast at between (depending on community) 70K - 210K?
Think about it! These homes, as they stand now, are GROSSLY overpriced and deadly to your financial future!
I'm praying that the MBS and CDO markets just pull the rug out from under the whole mess.
If that doesn't happen, I'm praying for riots in the streets.
Tuesday's One-Two Punch at http://infohype.blogspot.com
"This is the first generation that, realistically, has no hope of EVER (safely) buying a home and establishing themselves in a community. Do people care about that anymore?"
And what about actually PAYING OFF your home completely so there's some hope of a comfortable retirement??!! That's the other crazy thing about these prices. There's no way for these mortgages to be paid off. People will be in debt for however long they live there.
I read somewhere recently, a good reminder, that if you can't afford a 10 or 15 year fixed loan, you're buying too much house.
But I am hopeful. When I bought in '96, it was absolutely possible to buy at 3x gross income. I bought a brand new SFH in Fairfax. As more of these suicide loans blow up, lending standards should get a little more traditional, and prices will have to come down. And banks won't hold out for "top dollar" for their foreclosures. Voila, the new neighborhood comp.
This boom was almost 10 years long, so be patient. It will take a while to unravel, but I believe it will. It's not like logging on to Schwab.com and dumping Global Crossing at the click of the mouse.
BTW, the Marin Heat Index stands at a whopping .68, that's down from .72 last week. And this during the Spring selling season, I mean non-Spring selling season this year. "Buyer's Market" is anything below .80.
Just like many of you here, I too look forward to the day that I can afford a home of my own. But where I differ from many in the Bay Area is that I would only want to buy if the following were true:
1: I can not only afford the home, but pay off a significant amount of the loan. So much so that I would have to rely less on having an absolute perfect and consistently high salary. In other words, the payment would be about the same as I pay for rent
2: I can save enough after the mortgage payments so that I can save large amounts of money for retirement so that I can be through with working by the age of 55-60.Also- if I am to retire, the cost of up
keeping the home wouldn't require me to move out of state.
3: If the old car finally bites the dust, or the roof needs replac3ment, I can buy these things without much of a worry.
4: The cost of property insurance and taxes are just a given and not a huge burden on my salary.
My conclusion is that acceptable prices for me are probably realistically too far out of center field mainly because most people in the Bay Area are so full of crap that they'll do ANYTHING to just squeeze into a mortgage: if they can JUST barely afford it, then that's all good. As long as this sort of pretentious, uneducated attitude fumigates the region, prices will likely not be deemed worthwhile to me.
Hope you saw "The Foreclosure Fighters" in yesterday's LA Times Real Estate. It gets into the "how" of proposals for borrows going under.
Hello all,
I can't see how liar's loans can be allowed. Like subprime, ALT-a's should be strictly limited.
My wife and I bought 20 years ago and it felt like we had to give blood samples on our finances to get approved for a 3X income 20% down home loan. We're fortunate because the market went up, but it didn't the first few years.
beebs
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