Rah, rah, sis boom (or sis bah)? Too much happy talk from grown-ups.
Why do professionals in the real estate brokerage world feel compelled to spin all data toward price appreciation, rather than trying to be honest brokers of information and balanced analysis?
It is probably unfair to select any specific speakers on such a broad indictment, but Corcoran’s chief volunteered with this quote from the New York Times about Q1 06 data: "It shows that the New York market, after having a lackluster fourth quarter, is back in full swing with strong numbers across the board." [the article continued “She said recent transactions logged by her firm suggested that the stronger sales trend would continue into next quarter’s figures as well.”]
Does Booster-ism Have a Price?
Leaders of other firms (including mine) have probably been guilty of the same kind of booster-ism. These leaders run the risk of alienating anyone who pays attention to the numbers, which are certainly not uniformly positive for price appreciation.
Jonathan Miller in his wonderful blog has made a similar point about the Stream of Positive-ness emanating from the Chief Economist of the National Association of Realtors®, David Lereah about three weeks ago and again this week with the lovely title Waking Up AT Sunset / NAR Declares Housing Boom Over (lamenting “another missed opportunity [by NAR] to reconnect with the public [that] does more damage to [NAR’s] credibility. Leadership on this issue would have been a whole lot cheaper than a new ad campaign.”).
I noted this whopper from NAR’s President, Tom Stevens, just before Memorial Day, which made me want to gag: “Inventories levels have come up to balanced levels between home buyers and sellers, so the pressure has come off of home prices and most owners can expect steadier gains in home values for the foreseeable future.”
Forecasting the Future (continuing sunshine)
While this may be a defensible general proposition based on past national housing value trends and reasonable forecasts of future national economic trends, but “most” owners own a single home, for whom national and general trends may not apply. To suggest that Joe and Mary Apartment-Owner should comfortably expect to see steady gains for the foreseeable future strikes me as (a) unlikely to assist Joe & Mary if they are unsure about their local market, and (b) invite ridicule from anyone paying close attention to local data that suggests that maybe – just maybe – the near term trends in inventory, employment and pricing portends a possible rough patch ahead.
The boosters seem like reverse Chicken Littles, running around shouting “the sky is not falling for the foreseeable future, the sky is not falling for the foreseeable future.”
Consumers will stop paying attention, at best, and may count the boosters among the sleazy salespeople of ill-repute, at worst.
Tagged with: Psychology Of The Market