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
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 it
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.