The NAR has recently released their newest (and totally unbiased I am sure) advertising campaign. The main message of the radio, TV, and print ads is that buyers shouldn’t wait to buy a home. In one of their TV ads, below, they point out that 8 out of 10 economists believe that home prices will appreciate over the next 5 years.
There is some kind of small print in the ad that I can’t make out but I suspect it tells us that this statistic comes from the Keller Center at Baylor University, which is mentioned in a similar 60 second radio ad. Hmmm. Keller sounds an awful lot like Keller, Williams, the national real estate brokerage. Oh, yeah, he started the Keller Center with a $5MM donation.
You can find a copy of the entire study here. It has some other interesting statistics not mentioned in the ad. For instance these same economists concluded that the gains would be modest. In fact, here is the breakout of their forecast:
| Table 2. Compared to today, home prices in five years will be . . . | ||
| Percent of Responses | ||
| At least 10% lower | 5% | |
| 0% to 10% lower | 16% | |
| 1% to 5% higher | 24% | |
| 5% to 10% higher | 25% | |
| 10% to 20% higher | 23% | |
| 20% to 30% higher | 6% | |
| More than 30% higher | 1% | |
| n = 803. | ||
Funny that the ad didn’t mention this. The other interesting fact that is not mentioned is that this survey was conducted in July 2008. Well, I’m sure that the NAR didn’t feel that it was necessary to mention this since nothing has really changed since July of last year.
Actually, there is a set of questions that the economists responded to in this report that I thought was really good and deserves special mention (seriously):
| Table 3. Reasons to Buy a Home | |||
| Percent Responding | |||
| Statement | Agree or Strongly Agree | Neither Agree nor Disagree | Disagree or Strongly Disagree |
| In choosing a time to purchase a house, buyers should primarily focus on whether they are ready for such a purchase from a financial and life-cycle perspective. | 94% | 4% | 2% |
| In choosing a time to purchase a house, buyers should try to “time the market” in an attempt to obtain the greatest possible financial gain. | 26% | 23% | 51% |
| The primary reason that individuals should purchase and own a home is as a place to live. | 79% | 14% | 7% |
| The primary reason that individuals should purchase a home is as an investment vehicle. | 9% | 20% | 71% |
| A person can increase their long-term wealth by purchasing a house rather than renting. | 58% | 32% | 10% |
“In addition, 89 percent of the economists agree that people should closely evaluate the benefits and costs of owning versus renting before buying a home.”
You know, these economists must be pretty smart since they tend to agree with me. People shouldn’t buy homes for their investment potential but rather as a place to live. Perhaps if the NAR hadn’t emphasized the investment potential in the past and again today we’d all be in better shape now.