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Excuse me NAR...that is a cart you put in front of the horse....

nar

I have once again had the opportunity to peruse the latest initiative from the NAR. It is a program dreamed up in a think tank far removed from reality and conceived by a group of people totally out of touch with the world around them. By the way, we pay for this sort of nonsense.

"Home Values" demonstrates the long-term value of housing as an investment, and encourages buyers who are on the fence about making a home purchase to contact a REALTOR® who can help them make a smart investment in their future." from the NAR website.

Memo to anybody at the NAR that can read and comprehend common sense.

YOU HAVE PUT THE CART IN FRONT OF THE HORSE..........AGAIN !!!

I will try to keep this simple for you. There is natural progression Americans make as they mature. They are educated, attending the finest universities. They socialize. They bond. They marry. During this process they learn the pain of accumulating enormous debt. College loans can take years to repay. They discover the magic of credit cards and they also discover the angst of repaying for nights on the town and constantly updating your wardrobe. They enter the workforce and are shocked to learn that they do not know everything and they can be replaced at the whim of management. They realize that they may be faced with entering a profession that has no resemblance to the job of their dreams. We share with the the sweet phrase.."Welcome to the real world."

They capture the heart of another and often become man and wife. Most of these unions produce a bit more than one child. The census bureau pegs the average family at 3.1 persons. My guess is that either half the married people are always 3 months pregnant during a census or most folks have one child but every third family has two. It is a math thing.

family

Once they have been saddled with the debt and they find a suitable spouse and they produce one offspring, then they have to discover the art of budgeting income against expenses.

budget

These are the people that you are suggesting need to view their home purchase as an investment. These are the people that you have determined will listen to that rediculous message.

Stop it!!!!!

Any parent worth their salt will tell you that a home is not an investment opportunity. A home is where you share your life with your spouse and children. A home is your personal place in demanding world. A home is a home.

Now, I believe that the majority of people that accumulate wealth own a home. I am sure that a great deal of the investment wealth Americans enjoy is real estate based. The value of anything is intrinsically tied to supply and it is evident that there is only so much dirt, brick and block. That being said...buying a home is not investing. Buying a home is buying a HOME. (I am trying so hard to keep this simple)

Owning a home does create a sound environment for preparing to invest. Home ownership requires paying a mortgage. Paying a mortgage usually requires budgeting your money. Budgeting your money creates the opportunity for saving money. Money saved is available for investment. The home comes first...investment comes later.

Stop pushing home ownership is a great investment. There are literally thousands of empty condos created with that thought in mind. There are close to a million foreclosures and many of them are the result of "this is a great investment" mentality. Before the dollar falls much farther, you might be better suited to promote the value of a home and the value of a dollar. A market that was built on the fragile dream that buying was a good investment has left millions of Americans broke and renting.

I think it is time you promoted Realtors and let them share the benefits of home ownership with their clients. Realtors actually live in these neighborhoods. Realtors drive these streets. Realtors have bills to pay. Realtors feel the same pinch at the gas pump. Realtors understand the value of a home. Realtors know the true meaning of "Home Sweet Home".

Me thinks you have the cart way in front of the horse. If you truly wish to see the market turn around, stop preaching self serving crap and start promoting those of us that live in the market you are attempting to influence.

Agree or disagree, you will always hear it from the heart from me. My name is John MacArthur (some call me JMac) and I thought, wrote and approved every line of this message.

Posted by John MacArthur on 03/14/2008 12:20 AM

Comments (10)

home ownership, home buying, investing, nar, cart in front of horse, value of a home

This post has been included in Maryland Information Montgomery County, MD Information

10 Comments on Excuse me NAR...that is a cart you put in front of the horse....

MAR

2008

Hi John,

I've got to tell you I could't disagree with you more. I think you've missed the operative words, long-term. How many folks do you think that purchased 20 years ago aren't glad they did?

Lynda - I think it depends on where the home is and WHEN you buy it. If you are buying in a heavily appreciated market that has not had a significant downturn - there is a limit as to how much you can make in appreciation on a home.

I am in an area that has not had much downturn - if any. Parts of my area prices are up. But appreciation is minimal to flat and will be for quite some time to come. I emphasize that it IS cheaper than renting when you factor in tax benefits and amortization. You are ahead of the game within 3 years of purchase with no appreciation and it stabilizes soaring housing costs. (Rents are crazy) But I can not tout it as the investment of the century right now.

Lynda - It is time for you and the "ivory tower" folks at the NAR to pull your head out of the sand. I did not miss the operative words long term. You and the pin heads that created this campaign placed all your chips on the wrong marker.

Only an idiot would disagree that the value of real estate will increase over the long term. Of course, I think only an idiot would feel the fact that it will increase over the long term is a short term sales stategy.

You are marketing to a large group of people that do not indicate long term plans are operative. They watch t.v. shows that last maybe one or two seasons. They are facinated with "American Idol" and the NFL which brings every thing to a conclusion annually.

Their marriages do not last about one half the time. Statistics indicate that a marriage has a good chance of surviving after 7 years. Investing in the relationship to make sure it grows and becomes strong is a focus of many newly weds.

I will not bore you with the current attitudes in the market. Consumers do not bombard us with post cards telling us we are dopes. They don't cold call us telling us they don't have a pot to piss in. They don't come knock on our door to let us know they have no savings. They treat us a lot better than we treat them. Of course, with NAR being our image maker, we rank a little above whale shit on the public perception poll.

You and the rest of the "we know how to bull shit america" crowd would be better served to shut up and listen when dealing with the public. They want sound fiscal advice, not some contrived plan that will put a commission in your pocket sooner than later.

Ruthmarie - There is not one economist (sorry Larry Yuo, you are not an economist...you are a talking head with all the credibility of Bhagdad Bob) that will stand up and tell anyone that housing prices have actually reached bottom. The jerks that created the program at the NAR had no where to go but sell the long term value of real estate. It is sad to watch a campaign put together to cover past bad advice.

Homes are for living. Once purchased, they do represent a safe haven where one can find security from the ills outside the door. Investments by their nature go up, down or remain stagnant. To suggest that just one person should consider their home an investment is really almost mozzilla like criminal.

Part of the problem stems from the fact that people are not putting a lot of money into the home. NAR still continues to support the minimal investment, no equity,just wait for the money to come piling in mentality that has driven our market and are economy into it's current condition.

John, I have commented so often over the past couple of years that part of our problem is a lot of folks are no longer buying HOMES, they are playing real estate as if it were the stock market. The problem is, they don't want long term gain, they want instant equity (like their neighbors all apparently got a few years ago) and they don't want to take losses. They are willing to gamble, but when the investment goes bad, they look to the government or someone, ANYONE, to bail them out. Furthermore, with 100% financing and sellers paying closing costs they are truly playing with other people's money, so it's not real to them. Your points are well taken. NAR is not doing anyone any favors and while I don't disagree there are tax advantages and long term benefits to owning a home, the timing of this campaign is embarrassing.

I agree 100%. While "real estate" as expressed by investment in REITs, rental properties, land holdings in certain areas targeted in master plans for development, etc. may be investment grade assets, the home is not an investment grade asset.

When was the last time anyone heard a consumer make the statement "I love my 401K"?

When was the last time anyone heard a consumer make the statement "My home is a good investment"?

An investment is the purchase of an asset for the purpose of realizing a capital gain, income or appreciation in value. That could include residential real estate, but it's not the primary reason folks buy residential real estate.

A home is a place to live. You can either buy one or rent one.

That doesn't mean that the home owner, after several years of mortgage interest deduction (which the government is working many man hours daily to eliminate), maintenance costs, improvements and cost of living increases is not going to realize a net gain over their original purchase price when they sell.

However, while I can show the home buyer the advantages of the mortgage interest deduction when showing them their monthly out of pocket expenses, that is not why folks buy homes. They buy homes to live in.

A home is shelter. What type of shelter a person wants for themselves and their families is unique to each of us. When the shelter is a home, we may be fortunate enough to help someone find their new home.

I have always cringed when I see or hear the NAR ads that focus on the "investment" value of buying a home. They tout "over 10 years". Geez. Don't they know that the average homeownership is about 7 years. It's 2.5 years in the DC area. It's a wrongheaded campaign and worse, it will give the average agent freedom to tout the investment value of one property over another, a risky behavior at best.

Until the NAR and real estate agents get back to the "Hearth and Home" themes for which the consumer buys shelter, they aren't doing anything that will help me sell real estate.

Fabulous post John. I love it.

J-Mac - so glad you are here! I wanted to simply put on of those silly clapping emoticons, but can't figure it out for the life of me... So, consider your post applauded :-)

Ya know - JMac really suits you...I have to figure out something equally catchy......Ruthmarie is a PAIN for people to remember. Maybe with the Ph.D. I can do something original with "Doc." Dunno...just thinking out loud.

MAR

2008

John: Great post... I love my investment! That's hilarious and just plain stupid. You hit the nail right on the head. NAR needs help.

MAR

2008

John, my personal opinion of NAR is that they are trying to sell everyone a bill of goods. Latest news out of their offices is that real estate sales are on the uptick because sellers have finally begun reducing their prices. Well butter my butt and call me a biscuit! Had any member of NAR, that is all our local realtors, advised their clients to properly price their homes in the first place, maybe we wouldn't have had such a terrible past two years! I listen to NAR like I listen to bu$h. If they say the market is on an uptick, I figure its not, if bu$h says were not in a recession, I figure we're in a deep recession.

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