Debunking Another Real Estate Puff Piece

Came across an RE puff piece in the Daily Record, thought it might be fun to post up some counterpoint..

Housing bubble hasn't burst in Morris

Apparently, there is no bubble at all, so just shut down your browsers, pick up your checkbooks, and go buy two or three homes..

Dominick Prevete, regional vice president of Weichert, Realtors, believes that the market is getting back to normal.

Dominick, define normal for us. Is that when home prices fall in line with rents? Or is normal when median home prices fall back in line with median wages? Or wait, is it when home prices fall back in line with normal historic appreciation rates? Or is normal when affordability isn't at all time lows?

"It's still a seller's market, and there's strong demand," he said.

On the other hand, there are more homes on the market and more choices for buyers. That means that sellers should expect more modest gains from now on.

Dom, I don't get it, is it a sellers market with strong demand, or has supply built up to the point where prices should fall to compensate? We've been seeing a rather signficant increase in inventory over the past few months, which you seem to agree with. But, if this is the case, it would seem that demand is rapidly falling, i.e. not strong.. So which is it Dom, buyers or sellers?

Overall, Prevete called it a win-win market -- for buyers and sellers.

That's the ticket, you can't be wrong when you take both sides..

Other reasons for optimism that he mentioned:
• Interest rates are still attractive.
• The employment picture in the state is good.
• New loan products are available.

Dear Mr. Prevete,

You, sir, are a moron.

You have optimism over these new "Loan Products"? The new loan products that has the banking industry and the fed shaking in their boots? These new loan products that let underqualified buyers overleverage themselves to purchase overpriced homes that risk significant depreciation? You're optimistic?

"The only risk is that the underlying asset loses value -- and I don't expect home prices to quickly depreciate," he said.

Mr. Prevete, would you and your organization (Weichert Realtors) care to sign a contract that holds yourselves responsible for any depreciation or loss on any sales you broker? If prices don't go down, you've got nothing to lose right? Or is this statement just doubletalk? That you do indeed expect home prices to depreciate, just not quickly.

On to Mr. Blumenkehl, who provided us with these gems:

"God isn't making any more dirt," he said, "but he is having people move to New Jersey and buy houses."

Oh god almighty, is the NAR handing these guys pamplets of stupid things to say? Well Mr. Blumenkehl, it's a good thing we've got plenty of buildable land in the U.S. And if we can't build out, we've got enough room to build up.

His advice to buyers: "Buy. Come on in, the water's fine. The market's good."

My advice to buyers: Is someone with a vested interest in selling you real estate the best person to trust?

Caveat Emptor,
-Grim