November 14, 2007

Honorary HP'er Seth Jayson at Motley Fool absolutely destroys the liars at the NAR


Here's Seth. I'm not going to add anything. This is perfect. Well done. We need more MSM and columnists to go HousingPANIC.

Housing Worse, Despite Yelping NAR
By Seth Jayson

Sometimes you have to wonder what's coming out of the water cooler at National Association of Realtors (NAR) headquarters.

The past week has seen the trade group issue a slew of misleading press releases, all intended to jump-start a withering housing market and earn those Realtors a 6% commission. The latest is a prediction of a "modest recovery" for existing home sales in 2008. If you believe that, you need to review the NAR's hilarious history of ineptitude in predicting future home sales.

On the heels of the ridiculous kid-on-a-swing campaign, the Realtors, partying in Vegas, claimed that 2007 is a great year for housing, despite copious evidence that home prices are tanking at unprecedented and accelerating rates. The fire sales and lousy margins at homebuilders such as Hovnanian Enterprises (NYSE: HOV), Pulte Homes (NYSE: PHM), and D.R. Horton (NYSE: DHI) provide more proof that prices are crashing.

How can the NAR make such a bogus claim, then? Because by their (unsophisticated) measurements, home prices are still near record levels. That's like saying 2000 was a great year for JDS Uniphase.

Memo to the commission-addled non-thinkers at the NAR: We're on the back side of a bubble. It takes a while for home prices to drop, but they are dropping.

The folks who bought in at the top, based on the NAR's constant stream of "now is a great time to buy" propaganda are now looking at major, leveraged losses in equity. Many will lose everything in foreclosure and bankruptcy.

21 comments:

Anonymous said...

EXCELLENT!!

Anonymous said...

Damn that's an ugly REALTOR bubble

Or was I should say

Princess Mononoke said...

NAR has absolutely NO shame! Whatever happened to integrity, ethics and principles????

They have lowered their standards to be compared to a used car salesman! Way to go NAR!

NAR apparently live in their world of delusion. Having to continue lying to themselves and their colleagues in order to be able to send their troops out to lie to their clients!!!

Anonymous said...

Let them eat houses!

Anonymous said...

I bought a condo in LA in 1998. I bought a second home out here in Las Vegas in 2002 as I thought we were in a bubble even back then and house prices were too high.

Anyways, as I took a couple of my clients to the Spearmint Rhino Gentlemen's Club on Monday Night. I was talking to a lot of the girls there, and most of them had flown in for the Realtor's convention expecting to make the big bucks off them when they came into the club for dances.

The place was empty (as far as the guys go) and packed with dancers. I'd say there was four dancers for every patron in the club.

I guess the realtors didn't have money to blow this year!!! And from what the girls were saying, the ones that were in the club were being "such &%^$^% rude cheapskates!"

There you have it, straight reporting from the field. Gotta love the blogosphere.

Bitterrenter said...

We've probably seen the same growth in baristas or WalMart workers. It's because good jobs are a shrinking lot in this pisspoor near South American-style capitalist nightmare. There's no barrier to becoming a RE agent and the rewards can be great, though there are few stars and lots of strugglers. Other jobs have barriers (as in hiring managers) which prevent people from getting them.

People becoming agents are just doing what they need to to survive. It's really not their fault that this bubble happened, that Wall Street decided to tap into the housing market with it's poisoned tentacles. The agents were simply there at the right (or wrong) time.

I've been hard on agents myself but am beginning to realize they are simply a product of the system we all supported. Well, many of us anyway.

resisting husband said...

I have quite a few friends who became realtors. Not because it is what they wanted to do as a career or anything, they just saw all these other knuckleheads collecting $30k here and there for hardly any work.

The only problem is that there are now more realtors in my town than houses...so even if you get that easy $30k it will be your only sale of the year....thats if you can even get a sale.

Anonymous said...

This is the type of regulation we have in the securities industry here in Ontario Canada. We need the same thing for the REIC.

Money managers are misrepresenting their performance track records in marketing materials for investors, the Ontario Securities Commission says.
The OSC reviewed materials prepared by portfolio managers - including managers of hedge funds and pooled funds, as well as portfolio managers who cater to institutional investors and private clients.
The commission said in a report issued yesterday that it found documents that exaggerated favourable points while omitting unfavourable information.
The OSC found many of the managers gave hypothetical performance data for their funds, and did it in misleading ways.
"This is significant over all, because at the end of the day so much of the marketing material is regarding the performance of an investment strategy or an investment fund," said Christina Forster Pazienza, assistant manager in OSC's compliance department.
"And often, potential investors are relying on this type of information when making a decision about whether they actually want to deal with that portfolio manager or not."
In some cases, portfolio managers published hypothetical returns based on a particular investment mix or strategy that was applied in retrospect over a period of time in the past. Some managers use the strategy to attract investors when they don't have a long track record.
The OSC said this approach gives the managers the benefit of hindsight to pick investment strategies that fit the historical data, but did not occur in real market conditions.
As well, the commission said there was often no disclosure that the data were hypothetical, how it was calculated or what underlying assumptions were used.
The OSC also warned portfolio managers about presenting hypothetical performance data based on "model portfolios" that in some cases were not actually held by any of their clients. The commission said it's difficult to know if any existing clients actually achieved those results, and said key details are omitted in the disclosure, such as whether transaction costs were deducted.
There are no specific rules for marketing by hedge funds, but the OSC said they should follow the principles of disclosure rules for mutual funds.
The review includes a summary of suggested practices the OSC says funds should follow.
"Failure to follow these practices may result in inaccurate and unfair marketing materials, which we consider misleading to clients," the report said.
For example, the OSC said if portfolio managers want to compare their results to other benchmarks, they should use benchmarks that are comparable to the fund and are widely recognized or available.
The OSC said more than half the portfolio managers it reviewed were deficient in their presentation of benchmarks.

Country-Wide CRAP said...

It's ugly, it's multiplying daily and it's rotten to it's very core.

Was just laid off from my job today--(Good old Countryfried Financial)--and I am going to drown my sorrows with my good buddy Jack Daniels.

This country is in big, BIG trouble, and I do hope CFC gets downgraded to junk status, because truly, that's what they are.

Angelo--You have it coming.

SoaringUnemployment said...

Wow that means there could easily be about 1 million realtors with no income. I have a few friends who became realtors. I wonder what they will do next?

TM said...

Perfect article.

SimiSteve said...

It would be interesting to see construction job creation against those. Oh wait, never mind, we dont have that data, unless you assume illegal immigration is 12 mil or 40 mil. You know, Realtors are sheeple too!

Andrew Hac said...

Realtor is a non-productive profession in a society. They need to be exterminated.

Anonymous said...

Unfortunately, the REIC bandits will just walk away with their loot to participate in the next ponzi scheme.

Anonymous said...

The graph reminds me of the roller coaster video.

Life's short... Enjoy the ride!

JC said...

succinct and damning! Right on

Lizzy Borden said...

It's a great time to buy in Stockton,Ca,that is if you are a movie producer looking for a cheap ready made 'Mad Max' senario backdrop for your next movie!

Peter T said...

> They (the NAR) have lowered their standards to be compared to a used car salesman! Way to go NAR!

Used car salesmen make you loose some money on a lemon - used house salesmen make you loose your shirt.

Toby said...

The graph says it all. The "natural" number of REALTORS should be about 700,000 +/- 100,000. That low number in the mid 1970s is telling. That was a deep recession with a very deep housing slump. And of course the years 2000 to present were boom and bubble years. So if we have another housing recession (can I get a oh yeah), then the projected number of REALTORS should decline to 500,000 or so. Thats a big drop from the current level.

FYI The REALTOR board dues for Central Florida which were due in October are down 20% over last year. I think this graph will be updated soon. :)

Anonymous said...

Andrew Hac said "Realtor is a non-productive profession in a society. They need to be exterminated."

Realtors will never be exterminated because the average buyer does not want to deal face to face with the average seller. There is too much emotion involved in housing transactions.

Additionally, a Realtor is available to make appointments and show houses during the day, when a lot of sellers have to be at work. And since it's believed that the seller pays the Realtor, buyers have no motivation to deal directly with sellers.

And on top of that, house-buying is a big expense with a lot of legal ramifications that the average buyer and seller probably don't understand. I'm not saying the average Realtor understands any better, but there is a sense of having your legal rights protected when you use 'professional' Real Estate companies.

For those reasons, as well as the Multi-List, I think Realtors will always be with us. What needs to change is their amount of compensation. With house prices what they are these days, 6% of the sales price is just too much for the amount of work involved.

Anonymous said...

The NAR and all their state entities, CAR, WAR, FAR, etc. arejust criminal organizations that are allowed to lobby politicians and push their criminal agendas through.

When's it going to stop?