NAR flip-flops on cuts, asks for bigger taxpayer bailout instead
It's the monthly pig lipsticking for the National Association of Realtors, and there's no way to make this look good.
Where to begin? Existing home sales continue to plummet, nearly 20% below last year. Prices now show a crash of 7.7%, which the NAR wants to blame on mix, though Case-Shiller information shows this to be on the happy side of reality.
Craziest is this, from Lawrence Yun, who inherited David Lereah's position as minister of bad information for the NAR. Check it out: Yun offered a caution. “With elevated inflation, the Federal Reserve should be extra careful about further rate cuts,” he said. “Mortgage interest rates, which do not move directly with Fed funds rates, may rise measurably and hurt the housing recovery if inflation gets out of hand...
Interesting. Even the 6-percenters at the NAR seem to realize that they've got a tiger by the tail, and are officially flip-flopping on their months worth of begging the Fed to keep rates at inflation-baiting levels.
Here's what Yun said in December, 2007: Lawrence Yun, NAR chief economist, said the market is experiencing uncharacteristic weakness. “Home sales remain weak despite improved affordability conditions in many parts of the country, but we could get a quick boost to the market if loan limits are raised in combination with the bold cut in the Fed funds rate,” he said.
And here's what this industry mouthpiece said in January, 2008: NAR also encourages the Fed to make a single lump-sum cut in the Fed funds rate to 3.5 percent at the January Federal Open Market Committee meeting, rather than a series of modest cuts throughout the year. “Consumers are also looking to market-time interest rates, and the expectations of further rate cuts are pushing some home buyers to delay. Monetary policy will be much more effective with a one-time large cut, rather than a series of small cuts,” Yun added.
But don't get too excited. Yun has found religion far too late, and he's not really in the choir. Instead, he figures it's a lot easier to pressure congress (something the NAR has been doing for years, with shameful success) to figure out ways to pad Realtor incomes than to try and push Bernanke around -- and Ben's out of bullets anyway.
So, Yun is giving up on monetary policy, since that hasn't worked, and he's asking for another taxpayer-funded homedebtor tax giveaway to try and entice a new generation of real-estate bag-holders. See: what is needed more at this point is a home buyer tax credit to get buyers off the sidelines and prevent the market from overshooting on the downside.”
Of course, home buyers already get tax-givebacks a-plenty, and in fact, this idiotic policy bears some of the blame for the current problems. (Realtors and lenders have for years been telling potential buyers to relax when examining their finances... Several have tried to talk me into bad prices and bad loans by giving me the "you'll save a lot on your taxes." line.)
And as for "overshooting on the downside," this guy has obviously not looked at the facts. The market is still far too expensive by any measure (especially rent vs. mortgage) and it has a long way to fall before it even reaches the appropriate "downside." And as a note, neither Lereah nor Yun ever seem to have had much to say as the bubble was shooting prices way past the logical "upside." Why not? Because it wasn't in their personal financial interests to do so.
Note to Lawrence Yun: You are wrong. You have been wrong for months. Wrong about the facts and wrong about your ethics. You work for an organization that clearly puts its members' pocketbooks ahead of its customers. When most people are in a hole, they quit digging. Put down the shovel, Lawrence.