More Whining from the National Association of Realtors
Where's a meteor when you need it? Here's the latest (smallish) pack of lies from the NAR.
...the housing industry has long been the engine that drives our economy and recommended extending the tax credit until the end of 2009 to encourage aspiring and qualified home buyers to come off the sidelines and significantly reduce the nation’s high housing inventory...
Let's start with the first lie.
Since the mid 1960s, residential investment as a percentage of GDP has been in a range of 3-6%, only heading above 5% a very few times. It was, of course, WAY above the norm (6%) for the past half decade. As such, it probably needs to spend some years down around 3% or so.
It is thus hardly the engine of economic growth. It's a part of our economy, and an overinflated, cyclical one at that.
Now, on to the more common lie. The lie about the "buyers on the sidelines." This is just a made up term that the 6% housing shills use to pretend that there's pent up demand just ready to snatch up all those homes, if only the government would find some way to put money into Realtors' pockets (by pretending to put it into buyers' pockets first).
Pent up demand is a myth. With interest rates at historical lows, and the only increases in sales coming because of foreclosures, short sales, and other distressed markedowns, it's clear there is no pent up demand. There are no "buyers on the sidelines."
There are only people out there who are newly cognizant of the need to actually be able to service a mortgage before taking it. And there are far fewer people to whom banks are willing to lend. Buyers will move into the market when prices adjust to reality -- not before.
The National Association of Realtors is a national disgrace for not simply telling the truth, which should, I think, read as follows:
We, the National Association of Realtors, misled, dissembled, cajoled and swindled the public into the belief that house prices could rise indefinitely without regard to underlying economic growth. Through misleading monthly press releases, lobbying, and shameless media campaigns, we pretended that the unprecedented rise in home prices was justified. We lied about that. The incredible, unsustainable increase in home prices was actually a consequence of a flood of easy money -- dangerous easy money poured into the housing market by irresponsible lending.
We are now seeing the explosion of that bubble, and the only thing that will lead to normalized home purchase volume is for prices to reset to historical rent/own and income/price ratios. In many parts of the country, that day is still far off. In the mean time, many of you will lose the place you live because you couldn't actually afford the home we Realtors put you in. There's nothing really that can be done to help you. Tough luck, that. You should have done more homework, and relied on us a whole lot less.
In order to try and line our own pockets (Hey, many of us have overpriced mortgages to support too) we are trying to get the public to pour more cheap money into bad, overprice home loans. We're also lobbying the government to steal a few thousand dollars from your neighbors, (or future generations, depending on how you like the math), to try and trick people into the housing market before prices fall as far as they need to.
If you would-be buyers do the math, you'll see that the "free" money we're hoping to take from your neighbors won't help you at all, though it might help us. The piddly sum will disappear within months of your home purchase as the "equity" in the home continues to decline with house prices. But by then, we'll have skipped away with our 6% of the sale price (much, much more money, by the way, than you'll get for a tax credit).
That's just the way it works. If you don't like it, you should hire your own expensive lobbyists to make sure democracy works for you.