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The following appears at my other web site, Golf Community Reviews.
No matter the condition of the housing market, count on the
National Association of Realtors to promote that there has never been a
better time to buy. Today, however, they are saying that there has
never been a better time for the government to rush in to stimulate
buying.
"We should extend the first-time buyer tax credit to all homebuyers
and People do not buy homes, no matter how much
incentive you give them, if they do not have a job or fear for the
security of the one they have.
The "We" he refers to, of course, is the U.S. government and "we"
taxpayers. And the "high-cost markets" he mentions are largely that
way because of the irrational exuberance the NAR fed to the media,
blithely ignoring all logic and warnings to the contrary from real
economists like Dr. Robert Shiller of Yale. Does the housing market
need more steroids?
Cracker Jack box economics
We cannot expect mea culpas
from the NAR, but the organization's continuing ignorance of logic is
disconcerting. Here's the NAR's chief economist, Lawrence Yun, piling
on today to his boss's warnings with his own set of the dire
consequences if the government doesn't pump the housing market full of
steroids.
"Falling home prices would lead to faster contraction in consumer
spending and further deterioration in bank balance sheets," Yun said.
"More importantly, falling home values would lead to higher loan
defaults, including those recently modified distressed mortgages."
Well, Mr. Chief Economist, thanks for the exquisite analysis. You are,
oh, about eight months late!
Leave it to the NAR Cracker Jack box economists to ignore reality
if itThousands of new agents joined the
ranks of realtors just in time for the irrational exuberance to get a
dose of rational reality.
Too many agents, too few houses
Of course, trade associations are supposed to argue for their
members and their industry, but not when it contravenes logic and adds
fuel to the fire. The NAR did no favors for its members when it fed a
lazy and ignorant media and the media in turn fed dreamers young and
old about how real estate prices would ascend forever, and how buyer
and seller and agent would be rich and live happily ever after. To
every dreamy eyed retiree with some time on her hands or the
hairdresser, mechanic or car salesman who bought the media's hooey
about the market, a career as a real estate agent seemed like an easy
way to mint money.
Thousands of new agents joined the ranks of realtors just in time
for the irrational exuberance to get a dose of rational reality. Now
we had way too many agents chasing fewer and fewer houses, and the less
veteran among them didn't hesitate to tell Joe Seller that, "Sure, I
can sell your $300,000 house for $400,000, no sweat." Irrationally
over-priced houses in a plummeting market exacerbated the problem.
Real estate agents have to put food on the table too, and with brutal
competition among them and just a few months of experience under their
belts, many ignored (or didn't see) the obvious consequences of their
buyer clients taking on debt they obviously could not afford to repay.
What's good (for the industry), or what's right?
We have all read about how the lenders, the ratings agencies and
Wall Street led us to where we are now. But the NAR too abrogated its
fiduciary responsibility, as did a relatively few unethical agents, by
not warning about the consequences -- personal and national -- of toxic
lending practices. Directly or indirectly, the NAR encouraged the
thieves at Countrywide Financial and other lenders to push sub-prime
loans on folks who had zero hope of paying them off. If the NAR had
its way, their behavior seems to suggest, the homeownership rate in
America would be 100%, even if 40% of homes were in foreclosure. (Why
not, since banks, after all, hire real estate agents to help them sell
the homes they are stuck with?)
No, don't expect to hear a mea culpa from the folks at the NAR.
Rather than confronting the current mess with an honest discussion of
how they can best serve their constituents and the national interest at
a time of crisis, they have taken their hand out of one cookie jar and
extended it toward a much bigger one.
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