Friday Flashback: “Home prices will not go any lower.”

NAR, September 2006: It's a great time to buy or sell a home.

Flashback to September 2006, when the 20-city Case-Shiller index was nearly 30% higher than its latest reading. The National Association of REALTORS® launched a “Public Awareness Campaign” titled It’s a Great Time to Buy or Sell a Home. The primary flier for this campaign is pictured at right.

Here are the highlights from the flier:

Right now may actually be one of the best times to buy a home. Consider these facts:

  • Interest Rates Near Record Lows
  • Large Inventory Won’t Last
  • Prices Overall Have Stabilized
  • Positive Outlook
  • Real Estate is a Great Investment
  • Don’t Delay

Gosh, those talking points sound familiar, don’t they? The campaign also included another delightful PDF, ironically titled “buy_now_fact_sheet.pdf.” Here is the best part of that one:

WITH THE MARKET CORRECTION NEARING AN END, HOME PRICES ARE EXPECTED TO RISE AGAIN.

  • Research indicates that home prices will not go any lower. While certain local markets may see limited price declines, the national picture remains bright. Pending home sales were up 4.3% in August, an early indication that buyers are returning to the market.
  • The national median home price will rise 1.6% in 2006 and prices are expected to rise again in the first quarter of 2007. As prices begin to rise again buyers who do not act now could be making a costly mistake.

If we throw around fancy-sounding words like research enough, maybe people will believe our total BS? I mean seriously guys, Suzanne reasearched this.

In light of the current REALTOR-aided media panic blitz over today’s rising rates, I thought this portion was also pretty amusing:

The time for prospective buyers to enter the market is right now; and here’s why:

MORTGAGE INTEREST RATES ARE CLOSE TO 40-YEAR LOWS.
The average 30-year fixed rate mortgage rate remains near 40-year lows. Currently at 6.4%, this is more than an entire percentage point below 2000 levels.

You can still download the materials for this campaign directly from the NAR themselves. I was thinking that this was an amusing oversight on their part, but then I realized that their message never changes, so why wouldn’t they still want people to download the “Buy Now Fact Sheet”?

The purpose of our Friday Flashback series is to remind people why it’s never a good idea to base your home purchase decisions on the word of someone with a vested financial interest in selling as many homes as possible for as much as possible, no matter what. If you’ve got a good example of local home salespeople or other industry shills on record making fools of themselves in the years before the bubble burst, shoot me an email.
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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

24 comments:

  1. 1
  2. 2
    anonymous says:

    Great last point there. This isn’t much of a flashback since I wouldn’t have been surprised if they released an identical paper this morning. The only thing they could change is 6.4% to 5.4%

  3. 3
    Dr. Zhivago says:

    Not surprising that Olympia ignored the situation considering that our state governor is on board with the UN plan for bringing down the US economy in slow motion… wouldn’t it be nice to pretend to represent the people and then also get paid by the people? Wow, I wonder if these politicians are going to ask for a cherry on top, too.

  4. 4
    LA Relo says:

    I’d love to hear what the NAR has to say about this ad now. On a side note, can someone explain (assuming this chart is accurate) how the NAR more than tripled campaign contributions last year vs 2006 when housing peaked nationally?

    http://www.opensecrets.org/lobby/clientsum.php?lname=National+Assn+of+Realtors

    They are 3rd all time since 1989 for total contributions: http://www.opensecrets.org/orgs/list.php?order=A

    Makes you wonder…

  5. 5

    Even $120K Incomes Face Foreclosure(s) in Seattle Area

    Article in part:

    “…They only know this: Their monthly mortgage payments have skyrocketed over the last four years. When they initially took out their mortgage, they were paying $1,574 a month. Joseph, 46, a lumber salesman, was pulling in $120,000 a year. They could afford for Charlene, 45, to stay home with their children.

    But by 2008, the payment had reached $3,125 a month…”

    http://seattle.bizjournals.com/seattle/stories/2009/03/09/story1.html

  6. 6
    The Tim says:

    Sadly, this crap totally works.

    The National Housing Survey and the real estate bear market

    …people still believe in housing as an investment, and that the enormous nationwide housing crash has done much less to alter Americans’ attitude towards homeownership than we might have hoped.

    Americans think now is a good time to buy a house, largely because they think it’s always a good time to buy a house. And they reckon — even now — that house prices are going up, or will at least stay stable.

    It seems that just like the DeBeers campaign to infiltrate the national psyche with their artificial notion of diamond engagement rings being the only real way to propose, the realtors’ have succeeded in basically brainwashing the entire nation to believe their advertising no matter what.

  7. 7
    anonymous says:

    RE: softwarengineer @ 5 – Did he really make $120K as a lumber salesman or was it a liar loan? Notice that the payment climbed due to refinancing to pull out equity.

    On the bright side, the odds are much better than before that the house will go to someone more responsible with their money. Someone who won’t get foreclosed on and won’t get our federal reserve stuck with bad mortgage backed securities (you know that is probably who owns the mortgage).

    And yes, I am a heartless bastard.

  8. 8
    HappyRenter says:

    RE: anonymous @ 7

    It’s also surprising that with a 120,000$ salary you cannot afford a $255,000 home. I mean, assuming he had been in that job for a while and that he tried to save money, he should have almost been able to pay it cash or at least half of it. It’s a very strange story and the circumstances around this family are of course not made clear in the article.

  9. 9
    Sorven says:

    Problem is a lot of folks were pulling out bubble “equity” for cars, etc. Marketing 2nd mortgages in nice sounding words like “line of credit” was enough for folks to ignore that they might actually have to pay for what they bought vs. thinking it would be paid for by appreciation.
    Remember when it was all about “leveraging”? Oh, I forgot, that was so 2007.

  10. 10
    anonymous says:

    RE: HappyRenter @ 8 – It said they had just come out of chapter 7 bankruptcy (liquidation), their 2nd bankruptcy, so they had nothing when they bought the place. Whatever he was earning, they were spending more.

    I do kind of feel sorry for the family, but this is also a family that should not be trusted with a six digit loan or a six digit house. They should be renting with a large deposit. Those resources (house and loan) should be entrusted to someone with a little more foresight and self control. Hopefully, that is the eventual outcome.

    If they had rented the same place, they would still be paying maybe $1500/mo, living happily within their means (OK, maybe not), and no resources would have been wasted on equity withdrawal or subprime rates. The family and the rest of society would be better off.

  11. 11
    Packet says:

    RE: anonymous @ 7 – If he’s making $120k, he should be pulling in north of $6k/mo after taxes. I would think they’d be able to live off of $3k/mo after their mortgage payment.

  12. 12
    HappyRenter says:

    RE: Packet @ 11

    But if you have a $3k/mo mortgage, can’t you refinance? With today’s “low” interest rates they could get a better loan.

  13. 13
    CCG says:

    “On the bright side, the odds are much better than before that the house will go to someone more responsible with their money. Someone who won’t get foreclosed on and won’t get our federal reserve stuck with bad mortgage backed securities (you know that is probably who owns the mortgage).”

    Not in this country, comrade. The responsible ones merely get to foot the bill.

  14. 14
    CCG says:

    By The Tim @ 6:

    Sadly, this crap totally works.

    Americans think now is a good time to buy a house, largely because they think it’s always a good time to buy a house. And they reckon — even now — that house prices are going up, or will at least stay stable.

    All the proof needed that we’re not at the bottom. I want people to laugh in my face when I suggest buying a house. I wonder what they say in Japan at this point?

  15. 15
    Packet says:

    RE: HappyRenter @ 12 – Yeah one would think they’d be able to. All I’m saying is there has to be something missing from the financial picture there. Either they lied about the salary or they have some serious debts elsewhere. You can’t tell me that someone can’t live off $3k/mo when housing is covered.

  16. 16
    EconE says:

    RE: softwarengineer @ 5

    Wow. That story demonstrates all kinds of stupid.

    After two BKs “Hey honey….let’s buy a house!!”

    Wife doesn’t even remember if they put any money down?

    HELOCs, Cash out refi’s.

    Sadly…I’ll bet that their pining away for another 0% down mortgage because “rates are sooo low”.

    I know people working at my apartment building parking cars who HELOC’d and Refi’d their $100k homes to over $300k.

    They all “can’t wait for the economy to improve” so they can “refinance to pay off their credit cards”.

    No shortage of stupid in the world.

  17. 17
    Mark says:

    RE: Dr. Zhivago @ 3
    Seriously, everyone knows that the Bilderbergers run the world!

  18. 18
    CCG says:

    By EconE @ 16:

    No shortage of stupid in the world.

    If only stupid were an investment. Now there’s a bubble that really will never bust.

  19. 19
    BillE says:

    I recently read in the newspaper that realtors are versed in which homes are a good value in the current market and that they are obligated by law to protect your interests. It must be true.

  20. 20
    Jonness says:

    Is this a sign of things to come? Are we heading the way of Las Vegas? When the foreclosure storm hits, will we be able to buy high-end homes way cheaper than it would cost to build them?

    http://www.redfin.com/WA/Olalla/3034-SE-Chickory-Ln-98359/home/2136641

  21. 21
    Jillayne says:

    Welll this (from the puget sound buz journal article) explains a lot:

    “Still, the Binfets, who had been renting, didn’t have to look hard to find a mortgage. Pierce Commercial Bank was their first stop.”

    There was an LO who worked out of PC Bank who had a reputation in that part of town as the go-to guy who could get a loan for anyone, even people turned down by other lenders. I’ve been told he had to, uh, leave the country and is now in Canada.

  22. 22
    Jillayne says:

    Oh! The story goes on……:

    “But sensing the bubble, Pierce Commercial got out of the subprime loan business two years ago, just as the market for risky loans dried up. The bank currently has assets of $274.5 million and churns out between $25 million and $35 million worth of mortgage loans each month.”

    Right. And guess what PC Bank did after subprime dried up? They KEPT MAKING BAD LOANS and sent them right to FHA.

    Go to the “early warnings” section of this website:

    https://entp.hud.gov/sfnw/public/

    and do a keyword search on Pierce Commercial Bank.

    almost 19% default rate on their FHA loans.

  23. 23
    Scotsman says:

    RE: The Tim @ 6

    It’s more than sad, it’s run-away greed on one side and unmitigated stupidity on the other. Unfortunately, both are more than happy to go out and play together with no thought or regard for the consequences.

    I used to have great faith in capitalism and it’s ability to “lift all boats” at a relatively even rate. But for the last couple of decades it seems to have gone haywire. The two great constraints previously counted on to balance out capitalism’s weaknesses, an educated, accurately informed population and a strong sense of morality, are no longer players. Anything goes and everyman for himself. It’s really starting to piss me off- pumpers, shills, media hypers, blind PMA spouters, the whole crew can go rot in hell for the immediate betterment of mankind.

  24. 24
    CCG says:

    What is this “capitalism” you speak of? We don’t need no stinkin’ capitalism here in Wall Street Bailout Federal Reserve Interest Rate Suppression War on Savers Currency Debasement FDIC Fannie Mae Freddie Mac FHA HAMP PPT AIG Maiden Lane Too Big To Fail Community Reinvestment Act Squatter Stimulus Land.

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