I've spent the past few months casting a hairy eyeball at a lot of the pro-housing hypesters out there, the folks I feel have cheered on a dangerous bubble with little regard to the potential dangers to consumers' pocketbooks or the economy at large.
So I want to be sure to offer a golf clap to one of the outfits that's been in my crosshairs, the National Association of Realtors (NAR).
This organization exists to promote the well-being of all those folks out there who collect 6% every time we sell a home. Despite this obvious self-interest, the press out there in TV Land puts great -- to my mind, undue -- faith in the monthly pronouncements on the health of the real estate market that emanate from the NAR's head office. For the past couple of years, these have been positively bubblicious, to put it mildly.
I offer the golf clap because yesterday, for the first time that I can remember, it appears to me that the NAR came clean on the housing bubble, right out in public.
In this press release, David Lereah, the endlessly quoted chief economist for the organization, finally acknowledged openly that sales are tanking and prices going down. He used uncharacteristically firm language, tossing out lines such as,".people who purchased last year with the intent of flipping are likely to get burned." Good on him, and good on the NAR.
Unfortunately, this may be too little, too late. After all, the NAR has been quietly admitting, for a few weeks now, that things are getting ugly in a lot of markets, and that a correction was necessary. This presentation on the NAR website shows the kind of candor the organization musters, at least when it's not sending out PR to the entire country.
But hey, baby steps. At least the NAR has snapped out of the Kevin-Bacon-in-Animal-House-squashed-flat-on-the-sidewalk mantra: "All is well!"
It's about time the rhetoric from the existing home-swap camp matched up with the straighter talk we've seen from new-home providers -- builders like Beazer Homes (NYSE: BZH ) , Lennar (NYSE: LEN ) , Toll Brothers (NYSE: TOL ) , Hovnanian Enterprises (NYSE: HOV ) , DR Horton (NYSE: DHI ) , Pulte Homes (NYSE: PHM ) , and KB Homes (NYSE: KBH ) . Management at these firms has been sounding the alarm for months now, and this week's rash of guidance downgrades is yet more proof that the good times are gone.
For how long? That's the key question. I'm not so sure the evidence in that NAR slide show supports the conclusions in yesterday's NAR press release: that prices will dip temporarily. I still think there's a lot more pain to come. This great article from BusinessWeek talks about the nexus of accounting gimmicks, greed, fear, and euphoria that have made for some very precarious financial situations for a large number of our neighbors. And if things get too tough for them, the entire economy will feel the fallout.
For related Foolishness:
- Homebuilders Get Comical
- Eyes on the Wise
- No Housing Bust Here!
- Behind the Bubble Babble
- Do the math yourself with our online calculators.
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