Despite a Nationwide Meltdown, Industry Says Now Is the Time to Buy
SAN FRANCISCO (AdAge.com) -- 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.
"We believe there's a psychological block" to buying a home due to negative media coverage of the subprime crisis, said Frank Sibley, senior VP-communications and conventions for the National Association of Realtors.
The campaign features two spots, "Open House" and "Moving In." In one, a woman who appears to be a real-estate agent walks through a well-appointed home declaring that home-buying "opportunities have never been better." For those "on the fence" about buying a house, the National Association of Realtors "wants you to know that a home isn't just a great place to raise a family; it's also the key to building long-term wealth," she says.
Selling homes
In the second spot, which shows a family carrying boxes from a van into a house, the agent says that those who have bought a home are "making a good move for your family and toward building long-term wealth." Ads include claims that, on average, the value of a home nearly doubles every 10 years, and 60% of the average homeowner's wealth comes from home equity. The ads drive viewers to the website, HousingMarketFacts.com.
On the site, an "equity estimator calculator" suggests a $20,000 home down payment turns into $124,600 in 10 years for a 623% return. The website includes the same claims as the two spots and adds a few more noting, for example, that that prices have risen an average of 6% every year. Like each of the spots, the site does come with a small warning -- that local market conditions can vary and consumers should seek counsel from a local real-estate agent.
However, in the light of the current market the "housing-market facts" could also be read as a historical look at an overheated market rather than a good predictor of what's to come. 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. While without patently false statements or data, Mr. Brenner said the ads "are misleading and not especially forthright and, in a way, the way we got into this situation [the subprime-mortgage crisis] in the first place." He chided the association for not producing a campaign more befitting its station. "They're not some [real-estate agent] on the corner," he said.
Betting the farm
Others were concerned about the premise the Realtors put forth in the ads that housing values are going up. 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."
Greg Daugherty, executive editor, Consumer Reports, said he understood that the Realtors are trying to make their case to stimulate business for their members. But "generally speaking, we don't think people should look on their house as an investment," he said. "Even if you double your money over 10 years, it's not a huge return compared to the stock market," he said, citing Consumer Reports studies that back up that point. "If you need a home, it's always a reasonable time to buy one. But consumers should not look at buying a home as a get-rich-quick, or a get-rich-ever, scheme," Mr. Daugherty said.
Jeff Lancaster, a wealth-management adviser in San Francisco and Silicon Valley, said the ads are sweeping some important facts under the rug. "I don't think, in general, advising people today to buy homes for financial reasons is good advice. There's very good reason to believe the price of residential housing in most communities in this country will be lower a year from now than it is today," he said. "You could lose money."
Next pitch
Mr. Lancaster, a principal in Bingham, Osborn & Scarborough, also noted some practical problems with the wealth-growth claim: As soon as a home appreciates in value, the bank holding the mortgage starts an ad blitz for a home-equity line of credit, oftentimes leading consumers to spend that money. "We know a lot of homeowners are not responsible because they've been encouraged [to be less than fiscally responsible] by their bank," he said.
Mr. Lancaster, Mr. Becker and other critics of the commercials thought the association should give some thought to placing a warning in the ads similar to those for pharmaceuticals or financial-investment companies, or a responsibility message similar to those from beer and alcoholic-beverage companies.
But a National Association of Realtors spokeswoman said the ads don't need any disclaimers. They emphasize the growth will come "over time" and advise consumers to consider local markets and seek advice from a real-estate agent. "They're there to help," she said, adding the organization also can find houses to rent.
CAREIF Seeks PM\'s Intervention
CAREIF Ltd., in its continuing battle with the Financial Services Commission has sought the intervention of Jamaican Prime Minister, Rt. Hon. Bruce Golding in protecting it from a violation of civil liberties. Details of the correspondencies are included below:
Belgian firm propose sky rises for HWT
Developers of the Half-Way-Tree Transportation Centre, Besix has proposed to build two 20-storey buildings across from the new transport hub. Estimates place the cost of the proposed development at close to J$27 billion.
The Belgian firm on Monday presented its proposal to construct a commercial and office complex to Prime Minister Bruce Golding at Jamaica House.
Golding welcomed the proposal, reasserting government's stance on establishing Jamaica as an international financial centre, which the new administration believes will be pivotal in creating economic energy.
He said a project of this nature could serve as a catalyst for further economic development, adding that every new investment must be used to leverage other investments, according to a press statement issued by Jamaica House.
Construction of the commercial and office development is estimated to cost approximately euro 250 million (US$372 million; J$26.8 billion). It will accommodate two levels of parking for 2,000 cars, shopping and office space, and a 120 room hotel.
The PM noted that special attention would have to be given to the possible impact the planned commercial and office development would have on the existing urban space in Half-Way-Tree and what additional infrastructure would be required.
Clarifying The Issues
The Financial Services Commission (FSC) has made some unqualified comments about CAREIF Ltd. as a part of a list of New Investment Opportunities.We take this opportunity to clarify the issues: [ Read more ]
CAREIF Responds to Financial Services Commission (FSC)
CAREIF LTD is legally registered with the Office of the Registrar of Companies and the Real Estate Board to carry out the business of Real Estate investment and development under the laws of Jamaica. The Act of registering legally was the first line of action taken to ensure that there was legitimacy as well as transparency with our operation. As early as 2004 BEFORE OPENING OUR DOORS IN JAMAICA, the company approached the Financial Services Commission (FSC) through its Company Secretary and eventually through its CEO for guidance as to the regulatory framework within which our new model of business falls. Several FSC representatives stated then that the FSC does not regulate Real Estate and it was declared in our February 13, 2007 meeting with George Roper himself; that, when the Real Estate ends up in the ownership of the participants, then that certainly is not a securities matter. The inclusion of CAREIF Ltd on a list of ‘alternative investment schemes’ unregistered as Securities Dealers, unwilling to deal with the FSC and whose ultimate aim is to ‘separate the investor from his/her money’ is viewed with grave concern and will be treated as a deliberate attempt by the FSC Officials to mislead the public into thinking that CAREIF has been operating in contravention of the Law. CAREIF Ltd has never declared itself to be a Dealer in Securities in any publication, has taken repeated, voluntary, documented steps to have dialogue with the FSC and takes deep offence in being paraded as illegitimately operating. Read more
CAREIF has embarked on a "BUY BACK JAMAICA CAMPAIGN". Read about the details and get involved by clicking this link!
RIC is on a mission to improve and protect the lives of every member of its Club. to do this we must protect the greater society. when this is done that all mankind will lean to love an respect each other. To ensure that Jamaicans and Caribbean people along with our future generations, continue to enjoy our beaches and have primary development properties in our countries owned and controlled by US, CAREIF has embarked on a BUY BACK JAMAICA CAMPAIGN. read about the details and get involved by clicking on the BUY BACK JAMAICA LINK; For our people in other islands contact us and let CAREIF show you how and how you will also benefit financially From our extended buy back the CARIBBEAN PLAN.
"RICH IN CHRIST THEN YOU SHOULD BE REGISTERED IN RIC". Christians and God fearing people often fall prey to poverty and jobs that compromise them in their beliefs, CAREIF THROUGH ITS REAL ESTATE INVESTMENT CLUB IS OFFERING TO CHANGE ALL OF THAT.
"RICH IN CHRIST THEN YOU SHOULD BE REGISTERED IN RIC" Christians and God fearing people often fall prey to poverty and jobs that compromise them in their beliefs, CAREIF THROUGH ITS REAL ESTATE INVESTMENT CLUB IS OFFERING THESE SAME GOOD PEOPLE AN OPPORTUNITY TO CHANGE ALL OF THAT. God doesn’t want Christian to be poor or suffer. He wants us to take charge and show the world that we have His blessings to empower ourselves and each other in a most positive way.
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