Thursday, July 17, 2008

NAR's Public Awareness Campaign: Thanks for a Good Laugh

Agent/Blogger Jim Duncan will be on WINA AM 1070 on Thursday, July 16, from 5-5:30 pm--perfect for your walk or drive home.

While we were clicking around REALCentralVA this evening, we came across this link to NAR in the "Sideblog." We of course clicked on the link, because it was prefaced with the statement, "NAR should apologize for this."

Public Awareness Campaign: It's a Great Time to Buy or Sell a Home

"Conditions are ideal for home buyers in today’s real estate market, with interest rates near 40-year lows, and inventories higher than they have been in decades. Conditions are also improving for sellers. This year will be the third best on record and prices are expected to rise modestly next year."

Additionally, there are a couple of PDFs that one can download to distribute to one's own clients.

The above is a laughable, reprehensible statement that is misrepresentative of the economy and local and national markets, besides being misleading to uneducated buyers and, well, just downright pathetic.

But what is NAR supposed to say? Something like this?

"Spend your savings for a downpayment on a house that's been overvalued typically by at least 49% (in areas of Charlottesville/Albemarle, this number varies from 49% to 300+%). Sign yourself on to a mortgage that at 6.4% will equal interest payments of hundreds of thousands of dollars. In our current economy, the property is more likely to lose value the minute you buy it* and continue to do so for the next one to two years" (God willing, this all starts recovering by 2010).

And for Sellers? "Expect to give away the house that was your piece of the 'American Dream.' Good luck finding a buyer who believes it's as charming, functional, and "updated" as you do. And if you do find that buyer? Expect the buyer to lowball you--if s/he can even get a mortgage."

Be sure to read the PDFs available for downloading. It's perfectly understandable why NAR is now trying to get its--mostly honest, hardworking, diligent--Agents to disseminate information that is shockingly misleading. Nevertheless, it's deeply troubling.

*Unless you're extremely savvy, and make an offer like it's 2004, or earlier.

12 comments:

Jim Duncan said...

Thanks for the mention!

In fairness to the NAR, the campaign was from the end of 2006, but that doesn't excuse them by any stretch. It was stupid then, and is stupid now.

(not to mention wasting Realtors' money)

Real C'ville - The Bubble Blog said...

Thanks for clarifying that, Jim. We were looking for a date of origin. If you read their downloads, the campaign material is eye-popping.

But hindsight is also clearer: the material is more surprising given what has happened to our economy in the past year. It's a good example of 'irrational exuberance.'

Dave Phillips said...

Just curious, where did you get this "fact?"

"Spend your savings for a downpayment on a house that's been overvalued typically by at least 49% (in areas of Charlottesville/Albemarle, this number varies from 49% to 300+%)."

Also, was that before the significant price drops of the last 18 months (at least on correctly priced properties), or currently?

Elizabeth M. said...

Conditions are ideal for buyers AND improving for sellers? It's the free market capitalism dream come true!

Anonymous said...

Dave -

Are saying there are NOT properties overvalued in this MSA by 49 to 300%?

You can't think of even ONE?

Real C'ville - The Bubble Blog said...

Dave,

You've gone Vladimir Nabokov on us, who thought there was one particular word that should always be in quote marks: "Reality." We like this.

As for our "facts"--and where we got them?

You can of course argue these aren't "facts"--we're merely using "observation" and offering "opinion."

But scroll through some older posts and you'll see a trend. Do a little online research to discover sales info (actual facts) and you'll see that there are properties whose "value" has "soared" just since the turn of the Century.

For examples of "overvaluing" just on this blog, we're thinking of all the "cottages" in Belmont, 833 Locust, 708 Park, and Seven Oaks. These properties cover low-high price points on the MLS. Sometimes, we've even done the math on the post. (708 Park of course recently sold, after a "price" "reduction" of $400,000.00+.)

And just because something sells? This doesn't mean it doesn't remain "overvalued." We think it means that a seller has been fortunate to find a buyer interested in the property for reasons other than just as an "investment"--the buyer clearly believes the property to be "home." This is a great reason to buy a house.

Anonymous said...

Bubble Blog--I always thought the "value" of something was based on what someone else would pay for it. If someone is willing to pay a certain price for a home, aren't they in fact establishing its value?

anonymous #2 said...

anonymous,

if someone pays an inflated price for a house, are they establishing its "value" or their own stupidity?

Anonymous said...

They are establishing how desperate real estate agents are to sell something/anything.
Get a great buyer's agent!

Dave Phillips said...

Anon, there are some properties that are significantly over-priced, but I question a number like 300%. I even question 49%. I'd buy 30% which is still a significant number.

Bub, "love" your reply and appreciate the education on Vladimir Nabokov. I've read most of your posts from the very beginning and certainly understand your perspective. The 300% number just seemed high (even for you guys). A home on Park Street that has seen a price reduction of $400,000 was still not over-priced by 300%. You are probably better at math than me, but that doesn't add up. If you had said "30 to 40" I would not have blinked.

Montpellier said...

So, just to add a little something, at this late stage in the game, 'cause there's lies, damn lies, and then statistics

If I had owned a Belmont "cottage" which I paid $80k for in 1999, and Roosevelt Barbour (who takes his cues from other 'optimists' in this town - not without some personal or professional incentive) told me it was worth $160k in 2004, a Real Estate professional and investor would have said I'd made a 100% return on my investment.

If I got really desperate to sell this spring, because I'd been transferred out of town, and I hadn't HELOC'ed the hell out of my cottage to 'upgrade' it with granite counters and buy a new SUV, and I had to let it go for $80k, my same hypothetical Real Estate Professional would have called that a 50% price reduction!

So, which is it? 100% or 50%? In keeping with Nabokov, I suppose it's all in the eye of the beholder!

Dave - there are, without a doubt - many properties which have more than tripled since 2000 in this town - my name is on the deed for two of them. Those are nominal and based on what the City Assessor claimed, but the most recent sold comps (March) suggest the number holds...for the moment - the several unsold current listings suggest that's about to change.

NAR knew what was coming in 2006, the problem with a Ponzi scheme or musical chairs is that it must keep going, faster and faster, or it all blows up. Why not try to kick the can down the road? It's like the frog complaining to the scorpion (who stings him mid-stream) - the scorpion is really just being a scorpion.

Real C'ville - The Bubble Blog said...

Montpellier,

Speaking of Belmont "cottages"--have you noticed that 903 Rougemont has a new MLS?

And a "price reduction."

We've been "delayed" in getting out our June & 2008 "market report," but this is part of the info.

Couldn't wait to share it with ya.

And one of us over here in Bubbleville has a property that has "increased" in "value" by 300%. But we can't really be specific about this with Dave, now, can we?