You’ve probably seen those National Association of Realtors commercials insisting that it’s still a fine time to buy a home. Advertising Age, the leading trade publication for the advertising business, recently published this article [registration may be required] questioning the validity of the NAR’s “public awareness campaign.”
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.
The article includes a quote from an NAR official blaming the public’s reluctance to buy on the media’s ”negative” coverage of the subprime crisis. That’s an excellent point. The public does not need to hear about record foreclosures, unaffordable mortgages, and falling home values. How depressing! The media should keep that information to themselves.
Anyway, the article quotes industry experts weighing in on the ads:
Gary S. Becker, a Nobel Laureate, author and economic professor at the University of Chicago, said the ads leave out important information that consumers need about home ownership. “It’s a risky investment — unless borrowers recognize that, they could be misled,” he said.
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.
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.”
The truth is, for years Realtors have repeatedly chanted some form of “it’s always a great time to buy.” It’s been an effective message – almost everyone either owns a home or wants to. But at its core, it’s self-serving. If people stop believing in homeownership, Realtors are in trouble. So they have to keep the message alive, even in the face of overwhelming evidence to the contrary.
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