Saturday, February 02, 2008

What Housing Crisis? Realtors' Ads Defy Reality

Despite a Nationwide Meltdown, Industry Says Now Is the Time to Buy

SAN FRANCISCO ( -- The housing bubble has burst. Almost three-quarters of a million Americans are in foreclosure. The median price of a single-family home recently fell for the first time in at least 40 years, and many are predicting it'll drop further in 2008.

But none of that stopped the National Association of Realtors promulgating a $40 million ad campaign urging Americans to think of buying a house as a get-rich opportunity.

"We believe there's a psychological block" to buying a home due to negative media coverage of the subprime crisis, said Frank Sibley, senior VP-communications and conventions for the National Association of Realtors.

Ads include claims that, on average, the value of a home nearly doubles every 10 years, and 60% of the average homeowner's wealth comes from home equity.

Mory Brenner, a veteran consumer-debtor attorney who now writes
on debt issues from a consumer point of view, put it this way: "Were the ads trying to lead you down a road with blinders on? I thought so. I found it objectionable and a little offensive," he said. While without patently false statements or data, Mr. Brenner said the ads "are misleading and not especially forthright and, in a way, the way we got into this situation [the subprime-mortgage crisis] in the first place." He chided the association for not producing a campaign more befitting its station. "They're not some [real-estate agent] on the corner," he said.

Others were concerned about the premise the Realtors put forth in the ads that housing values are going up. Patrick Newport, an economist with Global Insight, an economic-forecasting firm, said: "In a lot of markets, housing prices are dropping, and in some markets -- such as Florida and California -- they are dropping a lot. If you buy a home, you take on a big risk," especially if national housing prices drop 10%, as some predict, or if you lose your job and are unable to make mortgage payments, he said. He added that in many cases, "renting may be a much better deal than buying a house."

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