Checking the Media Track Record, Posted by Dick

As you know, NAR has been criticized in the news media for our “rosey” outlook for the real estate market. More often than not, they say we are too positive about the prospects for housing values in the future.

Well, Terry Forsberg, a REALTOR® from Scottsdale, Arizona, decided it was time to turn the tables. Terry gave his clients and agents a look at how accurate the news media has been about previous housing cycles. Below is the e-mail he forwarded to me, which shows how various media outlets have consistently predicted a long-term decline in home values since the 1940s. Yet, every time, the so-called decline was short-lived. Many thanks, Terry, and many other REALTORS® who are putting the current headlines in perspective. This is exactly what we need!

As his e-mail points out, homeownership has always been one of the best financial and personal investments a person can make. With pent-up demand growing, there is no reason to believe that’s going to change anytime soon.

Likewise, REALTORS® have always been the first and best source of real estate information. That’s not going to change anytime soon either. – Dick Gaylord, 2008 NAR President

From: “Terry ”
Sent: 02/29/2008 09:05 AM MST

The Media’s Attack on the Real Estate Industry

The Media’s attack on the real estate industry is nothing new. For decades they have practiced doom and gloom tactics and in some cases have actually caused real estate prices to decline short term. The good news however, is each and every short term decline has been temporary and has been followed by long term price appreciation.

Today we are in the middle of a window of opportunity to purchase attractive real estate at the best prices we may see in our lifetime and to receive “incentives” on our purchases on top of it! The incentives, which are being offered by builders and developers, will not last any longer than they need to. Once the market begins showing signs of a rebound, these incentives will dry up.

Sit back and enjoy some of these dire media projections from yesteryear and allow them to mirror the wide variety of “fear factor” type “media” comments that exist today.

“The prices of houses seem to have reached a plateau, and there is reasonable expectancy that prices will decline.”
– Time Magazine, 1947

“Houses cost too much for the mass market. Today’s average price is around $8,000 – out of the reach for two-thirds of all buyers.”
– Science Digest, 1948

“The goal of owning a home seems to be getting beyond the reach of more and more Americans. The typical new house today costs about $28,000.”
– Business Week, 1969

“You might well be suspicious of ‘common wisdom’ that tells you, ‘Don’t wait, buy now… continuing inflation will force home prices and rents higher and higher.'”
– NEA Journal, 1970

“The median price of a home today is approaching $50,000… Housing experts predict price rises in the future won’t be that great.”
– Nations Business, 1977

“The era of easy profits in real estate may be drawing to a close.”
– Money Magazine, 1981

“The golden-age of risk-free run-ups in home prices is gone.”
– Money Magazine, 1985

“Most economists agree…. [a home] will become little more than a roof and a tax deduction, certainly not the lucrative investment it was through much of the 1980’s.”
– Money Magazine, 1986

“Financial planners agree that houses will continue to be a poor investment.”
– Kiplinger’s Personal Financial Magazine, 1993

“A home is where the bad investment is.”
– San Francisco Examiner, 1996

“Home prices experience historic drop.”
– CNN, 2007

Each and every negative prediction by the Media was short-lived. At the time such predictions made it appeared real estate would never go up again in value – similar to the way it feels for many now. The good news is found in the few lines below. This time is no different than times past!
FACT: National real estate values have appreciated
• 88% since 1996
• 340% since 1977
• 685% since 1969
• 2650% since 1948

Best Regards,

  1. But you have to admit that 5 or 6 quarterly reports that say “the worst is behind us” each time… while the market continues to erode is a little tiring.
    We all know that the media’s market readers keep preaching that whatever is happening in the short term will last forever. But the NAR hasn’t been too realistic about the short term. Instead of telling people that the market looks challenging, the NAR message has been “Prices are up, it’s a great time to buy.” or “Prices are down, it’s a great time to buy.” The truth is that it is a great time to buy for some people. It is a lousy time to buy for others. Consumers should consult with THEIR REALTOR(R) to find out which camp they are in.

  2. K Crawford

    Mr. Gaylord,
    I have come to the NAR website several times to get its perspective on the housing situation. I am person preparing to buy his first home but waiting. Here is why I’m waiting to buy and feel that NAR is slightly out of touch.
    1) For many of us under a certain age a realtor is not the first source of information, the internet is. I can visit more than a dozen different government and commercial websites and find out actual sold prices, foreclosures, historical rates, etc etc and plug them into a spreadsheet and know that (a) the “local” market is too high,(b) the realtors have not coveyed to the sellers that their prices are incorret, and (c) I can wait for the foreclosure/pre foreclosures to bring prices down. The point is as a buyer, I feel there is a disconnect between what realtors think buyers/sellers have in terms of information and the realty. Which is we have at least access to alot more information, specifically detailed information. Whether buyers actual use it is another issue for another blog. Therefore I know I live in a broadly inflated market(Chicago) and will wait for prices to drop further.
    2)NAR still has the “buy now fact” sheet listed on its website saying hurry a buy agains quote “prices are expected to rise again in the first quarter of 2007…buyers who do not act now could be making a costly mistake.” Yes, an upside-down mortgage. How are sellers/buyers (particularly) supposed to trust NAR or realtors when old “fact” sheets and outdated information is allowed to persist?
    As another example the only NAR article about telling sellers to reduce price in a declining market is from Walter Sanford in 2001, that I could find.
    I understand that NAR is a professional association and I understand that realtors make money from the sale of homes, the bigger the better the commission. But realtors also represent buyers.
    I’m not going to say I represent all buyers or all markets, because I don’t.
    But in my eyes, NAR would gain credability if it did a campaign that said hey, there are markets that were inflated and the housing prices are out of line with reality and NAR recognizes that. So NAR is going to help its realtors work with sellers to adjust their prices to 2008 market conditions.
    I understand this blog is about the media track record, which I conceed to be negative. But I have found the NAR publications to be “its a great time to buy” leaving me with no middle ground of reduced prices are good b/c they get 1st home buyers into starters, and get the sellers into another reduced price home.