More Realtor Propaganda

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It just doesn’t stop. The NAR (National Association of Realtors) has launched what they call a Surround Sound Campaign. The idea is to talk up the real estate market by making sure that consumers get the same message from all sides. We got an email explaining that:

The key is for REALTORS® to say the same messages about the market and why “it’s a good time to buy” using many different tactics including radio, print, digital media, networking via professional organizations and word of mouth. When asked at the grocery store, church or a school function, be positive and informed about your local market.

As part of this campaign the NAR has engaged professionals to train spokespeople for local Realtor organizations in media and community relations. In addition, they have made available for download a thick Surround Sound Toolkit document to make sure we all stay on the same page.

Of course, the NAR has been broadcasting variations of this message now for 2 years and has lost tons of credibility in the process. This is the equivalent of “pumping” stocks on the message boards.

Many of these talking points are simply recycled myths, lies, and distortions of facts that we have examined before but there are a few that we haven’t looked at yet:

Current market conditions won’t last long. NAR research shows that prices are beginning to stabilize and interest rates are creeping up. A modest increase in property values is expected in 2009. Well, as a cheerleader for housing, the NAR isn’t exactly an unbiased source of this kind of information are they? There are plenty of economists out there who differ on this point and the NAR has had to downgrade their forecast several times over the past few years.

Home ownership continues to be a wise investment. FHA market share is expected to triple over the next three years, from an estimated 4 percent in 2007 to 12 percent in 2009. Aside from the fact that their date range indicates that this is an old prediction what does FHA share have to do with the wisdom of owning a home?

Americans on average still believe buying a home is a good investment. Nine out of 10 consumers consider home ownership to be a sound financial decision. We’ve seen variations of this appeal to popular opinion before. If everyone believes something it must be true, right? I think the only thing this proves is that most people in this country still believe a house is an investment rather than a place to live – which is how we got into the current mess in the first place.

Homeownership is how many American families begin to accumulate wealth. According to data from the Federal Reserve Board, a homeowner’s net worth is 46 times that of a renter’s. While the statistic may be accurate they’re clearly trying to trick you into mixing up the cause and effect here. Most likely, it’s the net worth that drives the rent vs. buy decision as opposed to the other way around.

Humorous  side notes:

As an aside, under tips for buying a home the NAR says: “Commit yourself to your new home for at least a couple of years before making your next move.” Wow! A couple of years? Wouldn’t they love people to move every 2 years! I can guarantee you that if you are planning on only staying in a house for 2 years you are better off renting on average – that is if you insist on looking at your home as an investment.

Gary Lucido

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