The Real Estate Market & The Local Reality in Response to Jim Cramer's BS on The Today Show!

By
Services for Real Estate Pros
Earlier this week, Jim Cramer was on The Today Show bashing real estate and made irresponsible statements to consumers telling them not to purchase a house right now. Jim Cramer is NOT an expert in the field of real estate, and he is sorely misinformed and did not take into consideration local markets.

Two-thirds of metropolitan areas across the country are showing price gains and the national median home price in August showed a modest increase.

While some states are seeing increases in foreclosures - many states are seeing a decrease in foreclosures - Utah, Idaho, Oregon, New Mexico, Washington, West Virginia, South Caroling, Montana, Maryland, and Wyoming. These decrease in foreclosures in these states is due in part to strong job growth and continued appreciation of real estate.

Interest rates still remain low making home ownership possible for many first-time buyers and affordable for homeowners. Buyers still have lots of options.

In response to this outrage, the National Association of Realtors issued a press release to remind buyers that housing is a good long-term investment and that it's not a day trading activity. Owning a home is also more than an investment, it's also about building a community and having a place to call your own. And, according to NAR, the average homeowner has seen an increase of 50% in value over the past five years. NAR projects prices to rise about 2% next year, and in the coming years, average home price appreciation should return to historical averages, around 6%.

Jim's rhetoric negatively affects perceptions of local real estate markets when there is no need for a panic. Maybe Jim should stick to the stock market. What are your thoughts?

 

Comments (20)

Angela Roland
RE/MAX Austin Skyline - Austin, TX

The Austin Texas real estate market continues to be strong.  Our economy and job growth is stable and expanding.  I too get so tired of the media's generalization of the situation.  The good news is that there are enough savy people to realize it's a great time to make a purchase with interest rates still low. 

Here are the August stats for an area south of downtown.

August 
2007's average sales price = 15.2% higher than 2006
2007's average list price = 16.5% higher than 2006
2006's average sp:lp ratio = 1% higher than 2007
24 more units sold in 2006 than in 2007
 
  
2007
Average Sales Price $178,877 
Average List Price $181,479 
Average SP:LP Ratio 0.99 
Median Sales Price $176,000 
Median List Price $176,000 
Average Cumulative Days on Market 23 
Units Sold 77 
Average Year Built 1987 
Average Square Feet 1,590 

I just don't listen to the news on TV anymore. Aside from being merchants of chaos, I don't want to hear all the pharmaceutical commercials.

Angela Roland

 

 

Sep 28, 2007 10:40 PM
Kris Wales
Keller Williams Realty - Lakeside Market Center - Macomb, MI
Real Estate Blog & Homes for Sale search site, Macomb County MI
The NAR better do more than a press release.  I am so angry that they haven't been on the attack with the rebuttals.
Sep 28, 2007 10:51 PM
Diane Aurit
LKN Realty, LLC - Mooresville, NC
Lake Norman Real Estate
There has been far to much negative press from all major news sources.  I am constantly writing on my blog about our local market to try to calm the panic.
Sep 29, 2007 01:10 AM
Eric Mabo
Atlanta Houses, Miami Houses DOYEN REALTY, LLC - Decatur, GA
Atlanta Houses, Miami Houses Foreclosure

Kevin and Monica: I missed the show. I like Jim when he picks stocks, but he will probably be a terrible real estate expert. Did he tell the viewers that stocks are currently overpriced after the stock indexes have almost doubled over the past 3-4 yrs? Savvy investors are already pulling thier money out f the stock market now while stock prices are still very high (before the media bursts the stock bubble) and picking up Atlanta foreclosures at huge discounts. I guess scaring people from buying real estate now benefits him, because they will be buying his advice on stock. Hahahaha.

Melanie: When do you go shopping? Do you shop when there are great discounts, or when prices are going up? Some of us are more into hype than basic economics.

Sep 29, 2007 01:10 AM
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel
Thanks for the post.I did not watch the show. I just wonder why investors are not rushing to invest in real estate.
Sep 29, 2007 01:13 AM
Pamela STETSON
Berkshire Hathaway HomeServices Abbott Realtors - Mahwah, NJ
I would love to help you buy or sell your home!
I wrote a piece in my blog the day this hit. To espress your outrage to the powers that be...write to the exec producer of the today show at jim.bell@nbcuni.com . His mailbox will be full of outraged professionals and viewers. Pamela
Sep 29, 2007 01:57 AM
Anonymous
Anonymous
 I did not see it, but I heard about it. He got people talking, didn't he?  That's the good thing because people will now hear the other side of it and be fully informed.  Real estate is still one of the best  investments one can make.
Sep 29, 2007 03:03 AM
#8
Bill & Fran Jenkins
Nevada Realty Connection - Henderson, NV
Your Home Selling Team!

Jim Cramer is just another media darling riding the doom and gloom merry-go-round. He is entertainment. It is so much easier being on the perceived popular opinion. The last time I checked though I didn't see licensed Real Estate Consultant as his profession.

 Now more than ever we need to increase our skills as consultants. I personally LOVE this market. This current market shift has separated the pretenders from the professionals and I welcome it. We can choose to be victims of the market or step up and increase our skills. This is the best market environment for buyers in 16 years. Come on folks!! We have more inventory than ever pricing has dropped 50% or more in some areas and rates are still below 7% and look to be dropping since the Federal Reserve dropped the prime .50 basis points with more on the way in October. As far as sellers if homes are positioned correctly, staged well, and accessible they are still selling!

 I just had a consultation with a buyer who echoed the same concerns that the media keeps hammering to them and this is how it went. He stated "I want to wait for the bottom." I asked "How will you recognize the bottom?" "He said I don't know that's why I am asking you." I said "If knew how to pick bottoms we wouldn't be having this conversation." "I would be on my private island having a Mai Tai." This elicited a chuckle and I said "You will recognize the bottom when inventory drops by homes selling faster and prices rising." I then asked "at which side of the market shift will you have more leverage with an offer?" "When prices are rising and you have less choice or when you have an overabundance of inventory, prices correcting, and sellers motivated?"  He said "I never looked at it that way" "Great, now let's make the market and not wait for the market."

The next time someone asks you "How's the market?" Just smile and say "unbelievable!!" and give a compelling reason why.

 

Sep 29, 2007 03:13 AM
Kotambu "KS" Shabazz
Quality Real Estate Services - Renton, WA
Renton, Real Estate Consultant
Since I'm in the Seattle area and he gave a buy recommendation for Seattle, Cramer is alright with me. However, I do recognize that real estate is better analyzed at the local level. Even in Seattle there are declining neighborhoods that are cluttered with an abundance of listings and not enough buyers. Cramer had a VERY compelling argument and the President elect of NAR avoided the question and had a very generic response to the issue. Of course in any market if a person needs to buy a house, by all means they have to satisfy that need. In the long run, time will cure any immediate depreciation experiened while the market is correcting. But even in Seattle we are experiencing increased inventory and decreased pending sales with the wierd result of increased prices. How long will it last, we don't know but for now if you'd like to invest or buy in Seattle go for it! Thanks Cramer!
Sep 29, 2007 03:29 AM
Anonymous
bluechipbuyer

Real estate is a great investment. Just not so much right now.

 

I am a prospective buyer with cash in the bank, FICO in the mid-700's, a god salary and no debt. Yes, NO DEBT. I am essentially a blue-chip buyer. Know how I got that way? By knowing when things are overpriced and avoiding them until they are priced fairly. Prices are out of line all over the country. Maybe not in Enid, Oklahoma, but most of the metro areas are overpriced. I am not trading a lifetime's worth of savings to bail out someone's heloc, or their dreams of real estate riches.

Agents need to bear one thing in mind: People are not going to believe anything that NAR says to "calm" people or issue "rebuttals". Everyone knows that agents need to sell homes to make a living, and will see all such statements as spin.

HERE IS HOW you can become successful again:

1) Recognize that house prices are out of line with people's incomes.

2) Realize that buyers are your best friends - they bring the cash to the table that eventually winds up in your pocket. The seller pays the commission? Right. The buyer brings the cash. The seller brings a house. No buyer, no commission.

3) Realize that the PRICE PRICE PRICE is the thing standing in the way of a better market.

4) Get the buyer the house they want at the price they want.

5) Stop 'defending' the market or current prices, and ADMIT that the bubble occurred.

If you do this, you will make a lot of money.

The buyer is your friend, the price is your enemy.

 

 

Sep 29, 2007 03:34 AM
#11
Monica Bourgeau
Portland, OR
Business Coaching

Angela - glad to hear that the Austin market is doing well, spread the word.

Kris & Melanie - I agree, NAR should be doing more, we need to see some action and to be better prepped to go against Cramer.

Eric - I think you're on to something.. if Cramer can scare people away from real estate, maybe they will go back to the stock market!

Gita - I agree. I know several investors who are using the perception in the media to snap up some bargains.

Pam - thanks for the email address, we'll respond also.

Bill & Fran - great suggestion - "Unbelievable"!

Thanks Kotambu, I guess maybe there was an upside for some cities.

Bluchipbuyer - thanks for the input.

 

Sep 29, 2007 04:16 AM
Bill & Fran Jenkins
Nevada Realty Connection - Henderson, NV
Your Home Selling Team!

While reading your post bluechipbuyer I appreciate the advice you are offering on how we can become successful again and make more money. You sound like you have your debt under control, a good job, and pay your bills on time. I applaud you for that. I am aligned with your statement that NAR or any large organization are not going to allay fears that or "calm" people. Folks are going to believe what they want. That will never change. I wanted to go the 5 ways "we" can be successful again

1. Yes in parts of the country prices are out of line (in some places more than others) with incomes. That is an issue on an individual basis and not all buyers incomes. That is uncovered in the course of a needs consultation from a skilled professional.

2. A. During the course of an initial consultation we will discover if the buyer understands all the benefits our team can provide they choose to hire me.

    b. The buyer may not understand the benefits our team can provide they may choose not to hire me.

    c. We may choose not to represent the buyer in the purchase of their home.

It is a professional relationship that MAY lead to a personal relationship in the course of doing business. Buyers do not automatically become my best friend because they have the means to purchase a property.

3. PRICE PRICE PRICE is the thing that is offering opportunity to buyers who recognize value. Trees don't grow to the sky but real estate will not go to zero either. There is intrinsic value. Real estate goes up and it goes down but history has shown that over time it has always gone up.

4. I am in complete agreement with you on this statement.

5. As far as "defending" the market or current prices my response is the current market is what it is and what is done is done. However I will continue to consult individuals on what their specialized needs are and the market has nothing to do with that whatsoever. When I do my job as a skilled professional for my clients the money takes care of itself.

I have past seller and buyer clients that I have personal relationships that were developed in the course of helping them with their wants, wishes, and needs. The price is not the enemy but rather mindset.

Thank you for your post and when you are ready I would love to sit down with you for your personal consultation.

Best wishes,

 Bill Jenkins

 

Sep 29, 2007 04:22 AM
Bob & Carolin Benjamin
Benjamin Realty LLC - Gold Canyon, AZ
East Phoenix Arizona Homes
As long as people talk doom and gloom in the media then the listeners will think doom and gloom -- we need to somehow turn around the dialogue and focus on the positive.
Sep 29, 2007 04:52 AM
Monica Bourgeau
Portland, OR
Business Coaching

Bill - thank you for your great response. You're right - it's all about relationship.

Bob & Carolin - I agree, we need to focus on the positives. The doom & gloom scenarios just instills panic which may not be justified.

Sep 29, 2007 05:11 AM
Bob Wilson
Access San Diego - San Diego, CA

Bluchipper, you have a new fan. Too bad most here will dismiss your comments out of hand because you are not an agent or you would have bought yesterday, and as they will tell you, only agents are experts on real estate.

 

Sep 29, 2007 05:26 AM
David Thomas
HomeSmart Realty, Elite Group Scottsdale, Arizona - Gilbert, AZ
Phoenix,Chandler,Mesa,Gilbert,AZ
I missed the show but it sounds like the same  old, same old.  I guess that good news will never sell.  Urging people to rent and not live the American dream.  Not the best of advice.
Sep 29, 2007 11:55 AM
Gail Robinson
William Raveis Real Estate - Southport, CT
CRS, GRI, e-PRO Fairfield County, CT

Sometimes renting is the best solution.  Everyone's situation is different.  I had to deal with a young woman in her 20's ths week who decided she just had to buy a rundown mansion because the architecture was so cool.  I walked her through the repairs that were needed on the home (just from eyeballing it -- new roof including sheathing, new kitchen, new bathroom -- it only had one full bath) and the ongoing expenses of running a 4,000 SF home with two central air conditioning systems.  She has hardly any savings and has changed jobs frequently.  Both her mortgage broker and I sat down and walked her through the costs of owning this home and the impact on her finances.  She decided against buying it.  On the other had, I have a client who owns her own business and is paying $2,000 a month in rent and has a ton of money in the bank.  Here is someone who should own, not rent, but is afraid to make the wrong decision, so she continues to rent.  Buying a home isn't about the economy.  It's about the buyer's individual financial situation.  We all have to live somewhere.

Sep 29, 2007 03:26 PM
New Jersey Real Estate James Boyer Morris, Essex & Union County NJ Realtor
RE/MAX Properties Unlimited, Real Estate - Morristown, NJ
Jim Cramer is just doing this for the PR to his own shows.  He is no expert, and for that matter he is not really that good at what he mainly claims to be a expert at.  I have followed him for a while now and have noticed that more than half the advice he has given as of late has been ill timed or just plain bad.
Sep 30, 2007 05:18 AM
Laura Jecker
Prudential New Jersey Properties - Vernon, NJ
Jim Cramer is the 2007 version of Crazy Eddie! He is loud expects everyone will listen to him and should stay in his area of business. If he wants to start quoting facts or make comments on real estate he should get a degree in it or get his license and research before he speaks.
Oct 02, 2007 01:09 PM
Monica Bourgeau
Portland, OR
Business Coaching

Hi David - it might be a good thing that you missed the segment.

Gail - good reminder that you should also look at an individual's situation.

Cheryl - thanks for visiting our blog, fellow Montana Realtor!

Laura - I  agree! :)

Oct 02, 2007 02:43 PM