An Air of Desperation in This Realtor Ad
Huge props to my sharp-eyed husband for spotting this one. He was watching T.V. the other night when this National Association of Realtors T.V. ad came on. We always pay attention to those ads, because we marvel at how the N.A.R. manages to put its “it’s always a good time to buy” spin on everything, no matter what’s going on in the real world. For example, one commercial puts lipstick on the unprecedented inventory of unsold homes by asserting that “buying opportunities have never been better.”
Anyway, this ad — part of the N.A.R.’s “public awareness campaign” — focuses on what a smart investment homes are. Here’s a portion of the voiceover:
“If you’ve purchased one of the millions of homes that will be sold this year, the National Association of Realtors wants you to know that you’re making a good decision — for your family and for preserving long-term wealth. In fact, 60% of the average homeowner’s wealth is from their home’s equity.”
The first time I saw that commercial, I wondered where that home-equity statistic came from. People who are losing their homes or owe more than their homes are worth don’t have any home equity. Many buyers this decade treated their homes like ATM machines, spending their gains faster than you could say “Home Equity Line of Credit.” And just a few weeks ago, the Fed announced that Americans’ home equity was at an all-time low.
Anyway, my husband noticed that the commercial included the source of that home-equity statistic, in tiny print at the bottom of the screen. Here’s what it says:
“Homeownership and Its Benefits,” Urban Policy Brief #2, 1995.
That’s right: The National Association of Realtors is basing its message about wealth-building via real estate on a 13-year-old report.
Times are lean for Realtors right now, and I’m sure it’s alarming to the N.A.R. But trying to get people to buy homes by putting a 13-year-old statistic out there is misleading and disingenuous.
If the N.A.R. wants to gain credibility, it needs to stop feeding us self-serving messages under the guise of a “public awareness campaign.” The truth is, it is not always a good time to buy. The mantra it has relentlessly pounded into us for years — that we should all have the goal of buying a home — has been effective. But homebuying at any cost has been the source of ruin for many families this decade.
Realtors are salespeople whose goal is to sell as many homes as possible. In that regard, these ads may be doing their job. But the public would be better served with a true public-awareness campaign — for instance, “Responsible Home-Buying 101.”
Recent Redfin posts:
Looking Up at Rossmoyne
Spring Fever Dreams
The Ideal Redfin Homeseller or Homebuyer
Franklin Hills aka Skunk Hill
grayxray said:
All I know is that I have made more money from the homes I have bought and sold that I have ever made in the stock market or other investments.
If you are counting living for the next 10 years or so then I believe real estate is the best investment, but I am not a professional so what do I know? Also, renting vs buying; I have always perferred to buy a home. There is just something about owning your own home and as near as I can tell rents are going up in the OC — anyway NAR has their interests, just like any organization — the real question is if their interests, creating value in home ownership overlaps with your interests in home ownership or real estate investment. I know Redfin bad mouths the NAR, at least they did on 60 minutes, but the RE agents I have used in the past have been very helpful, knowledgeable, etc.
I truly believe that if you are buying a home you need a knowledgable person to help you through the process.
Just my opinion.
March 25, 2008 9:26 AM
Cindy Allen said:
Grayxray, I have worked with some excellent agents myself. Every agent should be judged on his/her own merits. I agree that a good agent can provide a valuable service.
I am taking issue with the relentless “it’s never a bad time to buy” message the NAR puts out there. I fear that that message has been pounded into people for so long that lots of (mostly younger) people feel like losers if they don’t own a home. Renting vs. buying is not one-size-fits-all. That decision depends on market conditions, individual circumstances, and so forth.
If people buy a home they can afford and live in it for 10 or more years and don’t pull home equity out of it, they can build wealth with their homes. But today’s buyers haven’t been doing any of the above.
March 25, 2008 9:35 AM
eternal summer said:
you go cindy!
is your husband tired of talking about real estate? my husband is! he just tunes me out now, but i find this whole spectacle fascinating & am really enjoying your posts. keep it coming!
March 25, 2008 12:16 PM
silly rabbit said:
I agree with you Cindy, I saw NAR’s advertisement myself a few weeks ago and was similarly surprised by the bold language intimating that it is always a good time to buy a house.
But, at the same time, brokers are salespeople, as you point out. Their job is not to make their clients rich, but rather to sell homes. So, they are always interested in selling homes. Some are totally unscrupulous and unhelpful, others are knowledgeable and helpful, but it is the rare (and arguably foolish) broker who would actually argue against any home purchase (and commission).
Everyone should know that a broker’s interest is not in line with his/her client, so buyer beware!
March 26, 2008 10:45 AM
Cindy Allen said:
Hi, Summer: Nah, he likes talking about real estate. We’ve both through several homes together ( and just about lost our A** on the last one), and we are united in our desire not to own until we can get a place we can afford, which looks like that’ll be…never.
And thanks very much for the kind words. It’s nice to know folks are reading.
March 26, 2008 2:11 PM
Cindy Allen said:
Hi, Rabbit:
You know, some people who don’t like Realtors compare them to car salespeople. But one good thing about car salespeople is, they don’t let you buy the car unless you can pay for it. Imagine what a different world it would be if agents suffered consequences if their clients failed to pay.
March 26, 2008 2:15 PM
A Realtor We Can Trust | Redfin Los Angeles Sweet Digs said:
[...] been pretty hard on the National Association of Realtors in this blog, mainly because of its relentlessly upbeat messages about home-buying that can mislead [...]
April 1, 2008 8:21 AM
Matt said:
“60% of the average homeowner’s wealth is from their home’s equity”
That’s precisely the problem. You wouldn’t want 60% of your wealth in a stock. Why would you want 60% of your wealth in a house?! Diversify.
May 8, 2008 10:35 AM
DansDeepCreekBlog said:
I noticed this slight of hand as well (though I obviously have not been watching much TV so I’m a little behind) and was going to blog about it, but in searching for a link to the ad I found your posting. Great work.
December 3, 2008 7:29 AM