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Tools at NAR Step Up the Desperate Propaganda



January 14, 2008 – Comments (7)

Here's their latest pile of hip-wader-necessitating "fact" about real estate.

Gotta love gems like "homeowners benefit from the power of leverage."

Yeah, they sure do, especially when they can't afford their mortgages and they borrowed 98% on an inflated bubble asset because some troll from the NAR told 'em they had to get their foot in the door. Then they can benefit by watching their losses magnify so quickly that they go bankrupt.

I really hope this disreputable propaganda agency gets what it so richly deserves, and lawmakers stop letting these industry heels call the policy shots. We've paid 6% to this gaggle of serial fibbers long enough.

7 Comments – Post Your Own

#1) On January 15, 2008 at 12:01 AM, dwot (28.80) wrote:

Leverage works both ways...

They don't include all the extra money you pay for a home as part of your investment...

For me what I don't pay on housing now pays hubby's rent and my rent and there is about $6k a year left.  

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#2) On January 15, 2008 at 12:49 AM, QualityPicks (79.00) wrote:

Its all facts Seth. They say the value of a home doubles every ten years average. Since homes cuadrupled in the last ten years, they are admiting we are going to have a 50% correction to get back to the average. :))

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#3) On January 15, 2008 at 4:16 AM, saunafool (< 20) wrote:

I think the "houses double in value every 10 years" is awfully suspect. Looking at Schiller's Irrational Exuberance, he talks about a 300 year study in a premier neighborhood in Amsterdam showing appreciation of only 0.2% above inflation, so maybe 2.5-3.0% annual (non-inflation adjusted) appreciation.

Even looking at the S&P Home Value Index from 1987 to 2006, we find 5.6% annual appreciation (and that is with the data series ending at the climax of the biggest bubble ever). Factor in the annual expenses of about 2-3% for taxes, insurance, maintenance and we end up with an "after expense" return of about 3% in a best case scenario.

So, QualityPicks, I like your comment. The NAR has just admitted that the best case scenario is that housing prices either stagnate for an entire decade or they get cut in half before they can return to their whopping returns of 3% per year.

This is going to be so ugly for so long. 

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#4) On January 15, 2008 at 1:53 PM, FourthAxis (< 20) wrote:


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#5) On January 15, 2008 at 2:02 PM, leohaas (30.11) wrote:

"Factor in the annual expenses of about 2-3% for taxes, insurance, maintenance"

You obviously do not live in New Jersey ;) 

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#6) On January 15, 2008 at 5:03 PM, abitare (29.49) wrote:

To answer NAR Propaganda: 

To answer their MLS:

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#7) On January 16, 2008 at 8:49 AM, TMFBent (99.16) wrote:

Yeah, I love how the shills at the NAR never bother to factor in the way houses suck cash out of your pocket while you own them, meaning you are often spending all of your "gains." They also, of course, don't adjust prices for additions, etc. To them, if you spend $70K on a new kitchen, then sell your house for $50,000 more than you paid, you've "earned" $50,000.

I owned a home in the Chicago area, because it was cheaper than renting. It took a lot of work to make it that cheap -- sometimes it seems like we spent every weekend at Home Depot charging a hundred bucks worth of stuff. In the end, it was the right financial decision, but in the DC area, we'd be crazy to buy instead of rent. Here, the buying premium (before maintenance, etc.) is 30-50% over renting, and prices have already fallen. (Not nearly far enough.)

People are still asking $400K plus for 1950s, 800-square foot crapshacks near us. They've either been lived in without renovation by the original seniors, or they've been rented to large crowds. In either case, they're usually suitable for nothing but knocking down. So, you spend $400K or more, and you've got a minimum $100K more to spend just to get the place live-able. This in an area where you can rent 1200 to 1400 sq feet for 1500-1800 a month.

Yet the Realtors want people to believe that buying one of these would be better. The NAR is simply one of the most dishonest, greedy, self-serving organizations I've ever encountered.

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