Thursday, 1 September 2011

Affirming the Credibility of Baghdad Bob

[Here's another one from August of 2008 when the housing bubble was in full-burst mode but the wheels had not yet fallen off the global financial system. In this item that originally appeared on August 13, 2008, the National Association of Realtors sought to affirm their credibility after being the subject of ridicule for contributing to the housing market excess. I wonder what David Lereah is doing these days. The last time I heard anything about him he was trying to get a consulting business off the ground. It looks like even the David Lereah Watch blog has lost interest and - ouch! - this is entry #4 on a Google search. (BTW - If you're reading this, it means we're having a pretty good time in Glacier National Park, this post being prepared in the event that we stay longer than even our most optimistic plan.)]
It’s probably fair to say that, if you have to devote a full page to “affirming your credibility” in your new promotional campaign material, you’ve got a pretty serious credibility problem.

Such was the case with the recently released Surround Sound Campaign from the realtors’ trade group the National Association of Realtors (NAR).

It’s also probably fair to say that, when your former chief economist has a reference to Baghdad Bob in the opening paragraph of his entry on Wikipedia, you likely have an enormous credibility problem (the image of former NAR chief economist David Lereah in Baghdad Bob attire appears courtesy of the Marin Real Estate Bubble blog).

Apparently this image is still fresh in the minds of those who put the latest campaign material together:
There. Credibility affirmed.
Now onto the details of the new campaign which comes as potential home buyers have become increasingly skittish.


Amid sluggish home sales, soaring foreclosures, and a year-long credit crisis that shows no signs of letting up, buyers are understandably worried that home prices may tumble further. Most of them appear to be more than happy to sit and wait, unless perhaps they can get a sweet deal on a foreclosure, which still carries the distinct possibility of looking overpriced in a couple years.

The NAR has seen fit to assure potential buyers that they should fear not – that housing remains a “solid long-term investment”.

From the “Talking Points” section of the promotional material come these items, apparently part of being “committed to giving buyers and sellers the facts about the market today and over the long term”.
Current market conditions won’t last long. NAR research shows that prices are beginning to stabilize and price declines are near an end. A modest increase in property values is expected in 2009.

Some reports have turned consumers sour to the idea of buying a home. The truth of the matter is that now is an ideal time to buy—prices in most markets won’t go any lower and inventory is abundant.
Looking back at the NAR promotional campaign in November of 2006, while it may not have been an “ideal time” to buy then, in the minds of the NAR’s promotions department, it was certainly a “great time” to buy a house.
In the almost two years since that last campaign, home prices have fallen precipitously in many parts of the country – a whopping 18 percent, according to the S&P Case-Shiller 20-City Home Price Index which, incidentally, the NAR’s Surround Sound Campaign dismisses because it is too new, too narrow, not timely enough, improperly weighted, and poorly labeled with “flawed methodology” that produces “skewed results” in what is generally a “weak measurement tool” designed for hedge funds.

Seriously, they said all those things about the Case-Shiller Index.

A more detailed review of the NAR’s predictions over the years can be found here:
The last item contains the image below from Investech Research that puts everything into proper perspective when it comes to credibility.

There. Lack of credibility restored.

by: Tim Iacono


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