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Realtors buy big ad campaign

‘It’s a great time to buy or sell a home,’ says $40 million marketing push

It might go down as the “Got milk?” moment for the housing sector.

Just as dairy associations, with their widespread ads, have tried to convince Americans of the many benefits of milk, the National Association of Realtors will begin promoting the notion that buying a home is an unalloyed good. Their $40 million campaign boldly declares: “It’s a great time to buy or sell a home.”

The ads will try to counter the drumbeat of dour housing data and news by making the case that historically low interest rates, a large supply of homes on the market and the group’s forecast of rising prices next year make now an ideal time to buy a home.

The campaign, developed by the Most Agency, based in Newport Beach, Calif., starts today with full-page ads in The Wall Street Journal and USA Today. It will make its way into other newspapers, including The New York Times, over the weekend and onto television and radio networks early next year.

“In visiting our local associations and state associations, we were hearing our members saying, ‘We are getting beat up out there,’” said Thomas Stevens, president of the trade group that represents 1.3 million real estate agents and owner of a real estate brokerage firm in the Washington, D.C., area.

“We think we need to tell them that the stars are aligned right now, and the conditions are ideal for buyers,” he added.

Independent economists, however, are somewhat more skeptical. Many predict that sales and prices, as measured by the association, which fell in August and September from a year ago, might decline further because there are too many homes on the market and because the rapid run-up in prices has put home ownership beyond the financial reach of many people.

“You can make the case that prices will rise in areas of the country that did not have a bubble,” said Ethan Harris, chief U.S. economist at Lehman Brothers. But “in the hot markets, I would say you are in for a two- to three-year adjustment in prices, not a collapse but a steady drop in prices.”

So far, prices have not dropped in the Puget Sound area. In September, the median price in Pierce County was up 1.35 percent from a year ago.

Harris recommends that buyers base their purchase decisions on whether they intend to live in an area for a few years, not on the outlook for home prices.

(Vikas Bajaj, The New York Times, 11.03.2006)

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  1. 1
    trackbike says:

    The Puget Sound area ranks 16th out of 100 job markets studied by in a report that came out last month ranking the “hottest job markets.” They took into account job growth and unemployment rates. This area had a net gain of 65,000 jobs since 2000, and an unemployment rate of 4.6.

  2. 2
    john_law_the_II says:

    job growth means little if you can’t afford a home.

  3. 3
    PugetHouse says:

    Another reason the NAR is the arch nemesis to any ethical agent:

    They don’t commit on whether it’s a great time to buy or to sell. NAR doesn’t even recognize when their demagogy stops working. They just hammer away at the plea to the public to throw its resources into the industry.

  4. 4
    PepeDaniels says:

    Trackbike said: The Puget Sound area ranks 16th out of 100 job markets studied by in a report that came out last month ranking the “hottest job markets.”

    I hate to beat a dead horse but CNN’s latest Unemployment article may say something different. The State of Washington is 42nd in the country and has an unemployment rate %2 higher than Florida – one of the poster states for the housing bubble.

    (It’s all under the Business link/ Jobs and Economy section

    You might argue that the country on the whole has a Unemployment rate that’s low but Washington does not seem to be at the head of the pack in this category.

    I suspect that people are still consuming while getting more and more tapped out. If things were fine, foreclosure rates wouldn’t be climbing and late payments on credit cards etc wouldn’t be going through the roof.

  5. 5
    trackbike says:

    The State of Washington is 42nd in the country and has an unemployment rate %2 higher than Florida

    I’m really not clear on why you feel the state’s unemployment rate is such a significant figure in relation to the Seattle housing market – especially since unemployment in this area is rather low — but I won’t quibble.

  6. 6
    seattle long term owner says:

    I love the ads on the radio for quadrant homes…

    Now is a great time to buy a home…. (and next year will be even greater)

    Most buyer’s know that they can afford a bigger home than they think… (An option arm will get you more house than you can afford… but it will be your problem next year, not quadrant’s)…

    Pity the ignorant…. but with the media yelling bubble day in day out.. those who ignore this deserve what they get…

  7. 7
    S Crow says:

    I’ll argue till I’m blue in the face that incentives, interest rate buydowns, etc… from builders are price reductions. Any economist worth their Ph.D. should agree.

    Do you know how much it’s costing Centex Homes to offer a 5 yr fixed arm at about 3.375% (one of their incentives)in one of their communities? I’m guessing about $25,000. And that’s just Centex. Just keep the sales price up but pay thousands to offer rate buy downs and closing costs. Median Sales prices propped up in markets being hammered across the country is at best disengenuous and in my opinion appraisal fraud. Go ahead an lend money on a $500,000 sales price when there were 25,30,50K in concessions. When concessions don’t work anymore, then what? Builders, particularly small independants, WILL drop prices. The ramifications speak for themselves.

    Other tidbits:

    A fairly high-end home neighbor house just closed. Wanna guess the financing? I’ll let your imaginations run wild.

    Signed a refinance client a week ago that had about a $9,000 pre-payment penalty, thinking that took the cake for October. My wife says, no no, I had one that was $16,000.00.

    All that equity wiped out in one fell swoop. My borrowers just went from one pre-pay to another and casually mentioned “well that’s life, we’ll just do it again in two years.”


  8. 8
    cosmos says:

    Be cautious of government statistics. Here is an example about unemployment stats from John Williams “Shadow Government Statistics” site,

    “The popularly followed unemployment rate was 5.5% in July 2004, seasonally adjusted. That is known as U-3, one of six unemployment rates published by the BLS. The broadest U-6 measure was 9.5%, including discouraged and marginally attached workers.

    Up until the Clinton administration, a discouraged worker was one who was willing, able and ready to work but had given up looking because there were no jobs to be had. The Clinton administration dismissed to the non-reporting netherworld about five million discouraged workers who had been so categorized for more than a year. As of July 2004, the less-than-a-year discouraged workers total 504,000. Adding in the netherworld takes the unemployment rate up to about 12.5%.”

    What is the Seattle area’s real unmeployment number? And what about underemployment?

  9. 9
    cosmos says:

    Note: Go here to see the stats from the Department of Labor showing a bit more accurate picture of the national unemployment rate.

    Non-seasonally adjusted October 2006 “U6” = 7.6%

    Seasonally adjusted October 2006 “U6” = 8.1 %

  10. 10
    PepeDaniels says:

    Trackbike said I’m really not clear on why you feel the state’s unemployment rate is such a significant figure in relation to the Seattle housing market –

    I don’t think there’s always a strong link between housing bubbles and unemployment but many seem to. It’s a frequent refrain from some that Seattle is “bubble proof” due to its great job market. It doesn’t seem to hold up in other parts of the country where the bubble is undeniable.

    I didn’t elaborate and will keep it short – The unemployment rate, as with other stats, can be questioned and argued about.

    I suspect that the relatively high cost of living in Seattle has many who are fully employed scrambling some months. Just a guess though :-)

  11. 11
    trackbike says:

    But why look at the state’s unemployment rate rather than this areas? That part I don’t get. Also, I’m not sure how much unemployment rates really tell us. Keep in mind that the NW states tend to have higher unemployment rates for whatever reason. In the late 1990’s, during the height of the boom, Washington’s unemployment was in the bottom 15 in the nation.

  12. 12
    Matthew says:

    I have to agree with trackbike on this one (GULP)… Eastern Washington and Western Washington are like night and day. Looking at state wide unemployment really doesn’t give you much… Looking at unemployment for the Seattle area, and it is below the national average.

  13. 13
    Matthew says:

    Our Girl Kendra Todd is at it again! Check this one out…

    What to do when a market cools

  14. 14
    Matthew says:

    I apologize in advance if that article makes anyone vomit

  15. 15
    Matthew says:

    Sorry I realized I just posted those in this thread instead of the open thread.

  16. 16
    The Tim says:

    I agree that looking at state-wide data is not especially useful in taking the temperature (so to speak) of out local housing market. Here’s the most recent data I found about King County’s unemployment rate:

    At 4.4 percent, King County’s unemployment rate is solidly below the statewide average of 5.3 percent.
    The Columbian, 10.22.2006

    As was pointed out yesterday, the national unemployment rate is also right at 4.4 percent.

    So it would appear to me that we’re in decent shape, but not particularly better-equipped than the country as a whole (or other cities—like San Diego County which is at 3.9%)to stave off a housing downturn.

  17. 17
    dalas says:

    that centex shit has to have a catch, I am too lazy to play with the APR calculations and trying to find out their index for calculation. you simply can’t offer that rate on a wide scale, because it isn’t a market rate. that means only the portfolio lenders can do that, and centex is mainly a subprime lender…

    there’s gotta be some crazy catch…

  18. 18
    seattle long term owner says:

    the catch is its only 5 years, after which it reverts to prime+margin…

    basically they’re subsidizing your interest around 5K a year or so… the equivalent of a builder backed option ARM with a teaser rate for 5 years…

    This way, the comps don’t dive and orders don’t back out of the homes already being built…

    if it was 30year fixed… I’d buy that house….

  19. 19
    seattle long term owner says:

    I forgot one thing… if you end up refinancing or selling before 5 years, then the builder/finance company saves money…

    There’s another quadrant ad on how a family needs a bigger house to save their marriage… they needs space…

    I can see how it will delay their divorce… for a year until the option ARM resets… it’s downright unethical

  20. 20
    don't_know_nothing says:

    Cannot have your cake and eat it too. It CANNOT be a great time to buy and sell. If it is a great time to buy, then it is a shitty time to sell and if it is a great time to sell, then it is a shitty time to buy. Might as well say “It is a great time to spend money!” They did, blew 40mil.

  21. 21
    cosmos says:

    the tim

    I guess I don’t understand why you go back to highlighting 4.4% after I pointed out the misleading nature of the “unemployment rate” commonly quoted. The Dept. of Labor issues a number of stats on jobs and unemployment. As I noted, the current “real” national unemployment rate is closer to 8% than 4.4%. Perhaps you prefer the misleading figure because you can compare it more easily. My point is that the economy is in considerably worse shape than the powers-that-be would like us to believe. Look at the CPI core rate – what a joke!

    Anyway, I move on…maybe I’ll visit here again in a few months. Maybe not.

  22. 22
    dalas says:

    seattle_long_term, you don’t know mortgage, and that’s not the catch.

    the catch is that they are very unlikely to be able to offer 5 year ARM at that rate.

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