Monday, March 16, 2009

NAR Continues to Amaze

Or perhaps I should say, the NAR continues to deceive?

NAR stooge, Walter Molony said,
"You are looking at the best affordability conditions since we have measurement back in 1970"
Am I missing something? Did prices drop 40% last night? Last time I looked, at best prices were in the 2004 neighborhood. Is there some even more unbelievable loan type out there that makes pay option ARMs look expensive?

Oh wait, read a little further, he picks one of the most deflated and over supplied markets in the country to apply his hyperbole to. Someone once told me that there were three kind of lies ... lies, damn lies and statistics.

Once again, we see the NAR behaving in an unscrupulous manor. Basically, they will put someone out there as an expert and have them say something positive about a market that is 90% lousy. They will say anything to help one more fool buy a house at an inflated price.

Based on the Mr. Molony's comments, I have to wonder why the NAR president, Charles McMillan is upset about potential changes to the mortgage interest deduction proposed by President Obama. In fact, I have to wonder why, if these homes are sooooooo affordable, why they aren't flying off the market. Please note, my tongue is placed firmly in my cheek. Perhaps we don't need Congress and the President to be bailing out foolishly over extended homeowners.

Once again, the NAR proves itself to be less trustworthy than my dog when I leave a hamburger unattended on the table.


flora said...

It's obvious who the NAR represents. They ONLY represent the monopolistic MLS/Realtor cartel and its 6% commission scam.

I know a simple way to bring the whole house of cards down without ever having to have the FBI cart them off by the carload.

1) Get rid of ther home mortgage interest deduction.

2) Encourage a policy of allowing mortgage interest rates to resume to 8-9% or more.

3) Seriously restrict the underwriting of ALL SFR loan requirements to a maximum of 20% of gross documented income (three years) AND, minimum 20% down payment and maximum 20 year mortgages.

4) Require a minimum of a BA degree for any associate position.

5) Make it a federal felony for anyone involved in a SFR real estate transaction to lie by ommission or commission about ANY FACT concerning the property. No more pretending ypu didn't know about all the building defects or pending or planned zoning problems.
If we can do these things the NAR will implode

Markus Arelius said...

Like your blog very much.

Aside from the NAR's anti-competitive practices, Omissions insurance B.S. and free-reign to openly lie in the American media about the state of the housing market, the 6% commission racket job has to be placed at the top of the list for reform.

The very idea that a Realtor receives more for selling a $500K home vs. a $180K home makes absolutely zero financial sense when you consider a Realtors true work load in either case. Realtors are in business because of this commission schedule. Consumers would be better served (and there would be no conflict of interest) if realtors would be paid a flat fee or hourly rate for their services. That I could agree with.

But 6% of the home sale price. That is bullshit.

As far as the NAR's comments on the housing market, yes,we have sub-prime in the rear view mirror to some extent, but I'm telling you right now that the United States of America has not yet observed the tsunami of high-value home foreclosures that will commence this year (2009) with Alt-A and Prime loans. California (Southern California) is going to be hardest hit by this without a doubt.

Tom said...

As an addendum to the very well spoken comments above:

ALL of California (not just southern) will experience massive grief as this wave of option-ARMs, I/O nonsense and other toxic death goes ballistic in the next 1-3 years.

Northern California is always lauded as being "special" and "immune" due to its seemingly high ratio of impressive wealth in relation to the remainder of the country. But in all actuality, it is all relative.

With prices being what they are (even after already dropping by 30%), the fact of the matter is: prices are still WAAAAY more than median incomes for the area. So despite the fact that pay is given at a premium here, for all intensive purposes, Silly-con Valley pays at most 30-40% more than other areas of the country for equivalent work. Yet housing prices here are almost 5-6 times median income!

The secondary correction that is coming is going to be another wake-up call to an area that often swims in its own excess hubris. I should know, I live here.

J said...
Here's the chart on mortgage resets. Anyone that thinks this is done isn't aware of the scope of the problem. Compound these resets with the cascading dilemmas that are to come. The shrinking job supply that demands flexibility for companies to utilize its workforce will run headlong into the shackled homeowners who are underwater and can't afford to move without catastrophic ramifications. The limited financing avenues and increased requirements will render most people unable to swing home purchases. The increases in foreclosures will compound the oversupply of homes-driving values down. All along the way, wave after wave of resets will happen triggering an increasing number of swamped 'owners' with no good alternatives. This will continue to be an exponetial mess going forward for as far as the eye can see.

Sylvia said...

It's bullshit to take the easy way out and vilify real estate agents in this mess. Pull your heads out and face the reality that consumer greed is to blame.

I don't recall twisting anyone's arm to take an 80/20 or 90/10 interest only product. Hell no. Buyers were more than happy to ride the wave of double digit appreciation. In fact, some of my clients were savvy enough to buy a home with little to no money down and refinance right after construction to pull even more money out. That decision was made long after my job was done. It was a personal, financial decision.

There are, in fact, great buys on the market right now. They are indeed "flying off the market". These homes may be under most people's radars. I work with investors every day and can assure you it's happening.

Unfortunately, these great buys are due to, and a part of, the nasty feedback cycle Patrick nails on the head.

On the other hand, the prices on these homes can allow a person who has saved frugally, to buy a home with cash.

Dead End said...


Spoken like someone defending their 6%.

All I was doing was vilifying was the misuse of statistics to create a more rosy picture than there actually is.

Markus Arelius said...


I don't think you're wrong to redirect attention to consumers here. I agree with caveat emptor as much as the next capitalist swine does, and that nobody put a gun to the buyer's heads between 2001-2008. They broke it. They bought it.

But....let's not pretend that the NAR is some benign organization that distributes objective economic data to the benefit of consumers.

Let's not pretend that realtors have the buyer and sellers interest at heart and that this is why they have "E and O" insurance, giving them legal freedom in our courts to lie at will.

Let's not pretend that Americans, no matter how dumb they are or how low their reading-comprehension skills, have free and easy access to reliable information on real estate market values and rights.

It's getting a lot better, but the MLS must be smashed. Realtor pay should be a flat freaking fee or an hourly wage. The entire home buying process should be made easier and cheaper, not more expensive.

A powerful sales organization is spending millions of dollars in the media and on capitol hill to spread lies (false forecasts and misleading reports) about he real estate market, upon which many financial decisions have been made by investors, businesses and even Joe-Sixpackers.

You are a realtor and saying that houses are flying off the shelves. Well, it depends where you are. In SoCal, the median home price is about 9 times the gross income. You can't tell me that makes sense or that this is sustainable. You also can't lie about the pending Alt-A option arm loans set to recast this year which will utterly destroy the wealth of as many as 100,000 households in the state and perhaps many more.

But I do understand why you don't/won't acknowledge all of this, nor the role realtors played in creating the most collossal and costly ponzi scheme crash in human history.

Sylvia said...

Yes, I'm a realtor saying the houses are selling. Want me to lie?

Over 500 in Atlanta have changed to pending status in the last month. Prices range from $10,900,000 on down. Houses under $50,000 are indeed, flying off of the market.

Consumers don't squeal when they make money at these so called ponzi schemes....only when they lose.

I have no sympathy for Californians. They have put way too much emphasis on their housing as a source of wealth. I lived there for a time and was amazed at those Joe Sixpackers who insisted their wages outweighed the high cost of housing. Right.

Again, this is a much more complex economic issue than "the big bad realtors did it" notion. Take a harder look at the entire supply chain.

Dead End said...

I think if you have followed this blog, you'll find that for the most part I have managed to place blame on just about everyone, but lets face it, as a home buyer or seller, your not dealing with the people the who are the regulators of the industry. You’re not dealing with the investment bankers on Wall St. You’re virtually forced into dealing with a real estate professional. I find it objectionable to make a blanket statement and then bury the details further down in the fine print, knowing full well that many, perhaps most people will not read past the headline.

I would love to know which real estate pro told an acquaintance of mine that this house - - will be up $75,000 US within 2 years. If I could find someone to take the bet, I'd wager all I have on that not being the case. Bordering on DCs exburbs, Ashburn is not going to be treated well when the Alt As and pay option ARMs start coming home to roost in earnest in the next 2 years.

It’s that kind of behavior that I find detestable. And I see it over and over, from individual agents, from NAR spokesmen. Just like the person who works at the check in counter at the airport. You may not be responsible for the policy, but you’re the front line employee.

Dead End said...

Oh yea, and you have no sympathy for Californians? I'll bet there isn't a real estate agent working in a high density area that hasn't used CA's open space preservation policies to convince a seller to list a home at an inflated price or used those policies to justify an over inflated price to a potential buyer.

Sylvia said...

You give us way too much credit! The homeowner sets the price and more often than not, higher than the real estate pro suggests. It is so common that we agents have training on how to get our Sellers to adjust their prices.

I understand the need to place blame. I just don't agree with it.

Our marketplace allows for a very wide range of representation. It is commonplace now to be able to pay a flat fee for a sign, lockbox and listing. Perhaps more people should represent themselves.

As professionals, I believe most of us attempt to provide good, solid, information but we don't have crystal balls. I try to make it a practice to point this out.

I don't think anyone is prepared to say they understand what's happening in our world right now. Historically, our economy has cycled through difficult times in 18-25 year periods. It will be interesting to look back upon this period.

Dead End said...

Give me a break, NAR commercial tout the services of realtors and how they will insure that you price your home correctly. Don't stray from the party line.

Sylvia said...

In fact, I can!

Tell me about your industry, please. Do you have any cheerleaders?

Dead End said...

Sylvia, I am software contractor. I add value, as opposed to cost. My prospective clients call my past clients and find out what kind of job I did. I earned my "cheerleaders".

No please post one more time so you can have the last word, since I know its driving you insane.