I’m frankly amazed every time I see another report from the National Association of Realtors given their recent track record (also here). You’d think they would throw in the towel and get out of the prediction business.
That said, the latest headline “Sales to Stabilize before Upturn in Second Half of 2008”, might not be that far off – but probably not for the reasons they cite. To be clear, I see increasing foreclosures, rising inventories, and other ugliness ahead. But many that hang in there will find a silver lining. During the boom, folks like David Leraeh said that affordability was a “growing concern“, while simultaneously forecasting future price increases. These two views, of course, are diametrically opposed. As we learned in economics 101, you can’t increase price when people already can’t afford the product.
The NAR needn’t have perpetuated this fallacy. For while many Realtors cling to the idea of homes as investments, in reality they are far better served by affordability. People want to be homeowners. Even as I saw the housing market disaster coming and sold nearly 20 properties, I couldn’t bring myself to sell my own home though I was certain it would decline by 25% or more. Why? Well, I didn’t buy my home as an investment, I bought it as a place to live — one that I happen to really like. So while everyone is focused on the very real and serious pain that this correction is causing, the reality is that it has also created new, and more sustainable, opportunities for buyers, investors, and, yes, Realtors.