After running through all the things in a buyer’s favor in today’s market — low prices, low interest rates, and government incentives — Genie Birch, president of the Chicago Association of Realtors, has just one question to ask: “What more would it take, working in your interest, for you to buy?” For serious buyers, now’s a good time to make a move, she says. For those who lack the “maturity” to commit to a home for the long term, however, she has different advice: “This is not for you — continue to rent.”
She’s a moron with conflicting interests.
hmmm, $8K tax incentive goes away….what will happen? Think house prices might drop on average by $8K maybe? They should call it the home-seller incentive.
Interest rates go up…….what will happen? House prices will drop again.
Its called free markets. The gov’t incentivising sales is pushing prices up. once the are gone, prices will reflect the new realities. Think this woman was telling people not to buy in ’05/’06? I doubt it.
RK,
This venue is not hospitable to contemptlble creeps.
If the above is your idea of acceptable discourse I suggest you head on over to CribChatter. Your approach is welcome there, but not here.
Is that why almost every article has no comments? cause you call your website visitors creeps?
One day I wish I can have a website so i can go on a power trip as well. With me though, I hope that there are people around to listen.
Steve,
I call an anonymouse who refers to a thoughtful, knowledgeable person as a “moron” a creep. What would you call it?
But seriously, has she ever said it was not a good time to buy a home?
Prices rising –> better buy now to lock in the price!
Prices falling –> better buy now, rebound is imminent and its never been more affordable!
Prices stagnant –> better take advantage of the stability and buy now!
Isn’t it more mature to wait to see where prices are going, especially when the median house price to median income is historically high (I would think this would be a good indicator of bottoming-out), rather than follow to some (sorry to say) obviously self-serving advice. Anyway, the maturity she’s talking about is really financial means, and to conflate the two is misleading.
br_add,
But seriously, have you ever listened carefully to what a Realtor’s had to say?
As to housing affordability – you’ve got the numbers exactly upside down. The median house price to median income is far nearer historic lows than highs. Far nearer.
The NAR Housing Affordability Index, which measures the relationship between median incomes and median home prices, was 107.6 in 2006 and 167.7 in Novmber of 2009. A higher number equates to greater affordability.
Readers should weigh your inability to understand so simple a concept when evaluating the rest of what you have to say.
People just dont understand the economics involved with housing construction, especially housing construction in the city. I literally think that there are people out there waiting for the price to go down to zero before they buy. It will not get cheaper construction is done for the foreseable future. Maybee there will be a lot of inventory for the next few years but after that the only thing that will be available is the undesirables in bad locations. No bank is going to lend to a developer for a new highrise in the city for a long time. Prices have nowehere to go but up because the value of hard assets is going to go up because of all of the money that is being printed, if you want to see the future of real estate prices just look at the price of gold.
“Readers should weigh your inability to understand so simple a concept”…..wow, so its guaranteed that home prices will raise? Joe Z sounds 100% confident. I would like to align myself with him as he’s bound to be the next Trump.
Why are you comparing the affordablity index with the absolute extremem buble figure of 2006. I believe br_add said ‘historically” and then you chose 2006. How stupid do you think the readers are? Are you just oblivious?
Congrats, Joe! You continue to alienate the few readers of your crap, all in an effort to generate income from shill developers. Not only is this woman a moron, but the ciggies and gin are taking a toll. What’s your excuse?
SImon……correct nominal home prices may rise due to inflation. But real prices will surely continue to fall. Better to be in any other hard asset (gold included) than real estate
Kramer,
I had 278,000 readers last year.
One of the ways I keep those readers is by not allowing demented losers like you to savage people in the industry who put themselves on the line to share what they know with those readers.
No one – no one – who’s interested in buying a home or learning about real estate wants to hear from you or your ilk.
You’re banned. It’ll take a while for the spam filter to do that on its own. In the meantime, I’ll simply delete your comments from here on out.
No soup for you!
Foreclosures are still going up… what do you think that will do to house prices?
http://www.calculatedriskblog.com/2009/08/mba-forecasts-foreclosures-to-peak-at.html
Additionally, rates will (probably) stay as low as they are right now (or there about) since the situation in the Eurozone is causing a flight to quality of sorts to dollar denominated assets (more demand for dollars –> lower rates).
Besides, the realtor’s statistic that you published is inaccurate because it looks at the first year mortgage payment relative to income (but ignoring inflation).
Rents keep on going down:
http://www.usatoday.com/money/economy/housing/2009-12-30-rent-bargains-discounts_N.htm
Wouldn’t it be a mature decision to told off on buying a place and rent a nice, cheap apartment while the market sorts itself out?
Granted, my speciality is more in law/finance… so I don’t earn my keep driving people around and charging them 6-7% of a purchase price merely for the privilege of accessing some computer records (and the aforementioned driving). Therefore, you can decide for yourselves whether what I am saying has any value at all. Or you can just look at what every other non-biased authority is saying:
http://www.calculatedriskblog.com/2009/12/are-homes-now-cheap.html
Something is only worth what people can afford and are willing to pay for it. 2006 is not a bubble figure because people were paying those prices. Most people were not fiscally irresponsible and were paying for what they believed they could afford and were paying it because they believed the price would continue to rise. Just because people are not buying right now does not mean they don’t have the means to pay a certain price, they are just scared of overpaying, as soon as the first hint of a bottom is in place all of those vultures will flood the market. Just look at the feeding frenzy every time there is an auction. People want instant equity and a high likelihood of higher future equity.
br_add,
Unbiased authorities are saying many different things – often flatly contradicting what you say. That’s why we link to 100s of different sources on our Chicago Real Estate News page.
You still completely misunderstand the Housing Affordability Index – which you clumsily call “the realtor’s statistic.”.
Perhaps you’ll have a different perspective on all this whern you finish school. People’s views often change when they enter the working world.
“Something is only worth what people can afford and are willing to pay for it.”
During a bubble, there are many people who will pay more than they can afford because they believe that the price will keep going up so that they can resell the property to a greater fool who also will pay more than he can afford because he believes the price will keep going up, etc., etc., etc.
Alternatively if they intended to stay in the building and could pay more than could afford because they got a low teaser rate, they expected to be able to refinance before the rate reset because the building would be worth more at that time.
For both of these reasons, we had a bubble. The jig was up when the prices of houses stopped going up, making both of these strategies failed strategies that led to foreclosures and bankruptcies.
Both of those points are assumptions. Not everyone intednded to resell in a short amount of time and not everyone got teaser rates. All assumptions.
There were also many people who bought apartments and houses without ever intending to live in them. They also only bought them only because they believed their price would go up and they could resell them for more. A significant part of the demand consisted of such people and was also an important part of the bubble. When the prices stopped rising, this demand dried up.
“Both of those points are assumptions. Not everyone intednded to resell in a short amount of time and not everyone got teaser rates.”
Not everyone has to be doing this. Just enough of them to dominate the movement of the prices.
Joe,
There seems to be a dearth of non-realtors saying the market has cratered. On the other hand, there is no such quiet on the “house prices have a way to come down” front.
Regardless of peoples’ opinions, I would very much appreciate an explanation of my error(s) regarding your cited index. It does not include inflation and only measures affordability by looking at the first year of mortgage payments. It is the realtor’s statistic because it is assembled and published by the National Association of Realtors. Where am I wrong?
As an association of realtor’s, their obligation is to their members and not to consumers, and therefore we all have reason to be skeptical whether this statistic is relevant, useful information. Please tell me who thinks this ratio is useful other than realtors?
http://www.ritholtz.com/blog/2008/08/nar-housing-affordability-index-is-worthless/
It was also my impression that NAR changed the calculation of the index during the boom to include ARMs (and thus make the data indicate homes were more “affordable”).
Joe, I’m not sure I understand your “once you finish school” comment… it seems very much along the lines of Ms. Birch’s poorly chosen “maturity” comment. Of course, I have indeed completely finished school, so what does that even mean? Nothing. I suppose according to you I now have to suspend my disbelief about so many things. Thanks for the advice!
br_add,
I misread your school status, and my apologies for that. Congrats on the 2009 graduation. You do, however, have a lot more learning to do.
You’ve got so much wrong it’s almost impossible to address all of it. I’ll tackle just a few of your errors.
Who thinks the NAR index has value? The 1,000s of newspapers and respected Web sites (start with The Wall Street Journal and New York Times) that report on the index every month and the millions of people who read those newspapers and Web sites. You link to a know-nothing blogger who criticizes the index for what it isn’t but fails to take account of what it is. Your blogger keeps referring to “mortgage principle” – which tells you a lot about his intelligence and attention to detail.
You say that the index “only looks at the first year of mortgage payments.” Reflect, for just a moment, on how stupid that point is in the context of a 30-year fixed rate mortgage. The index doesn’t take inflation into account because there is none on this component. Nor does it account for rising wages. The assumptions are clearly stated.
Note that it’s an index, not a statistic. You can look up the difference.
Your impression aside, NAR expanded the index by separately stating a value for ARMs, not by changing the index. You relied on your bias for your impression and disregarded the plain facts you’d see from looking at the index. You have looked at it, haven’t you?
Did you really mean to say a “dearth of non-realtors?” Do you know what that means?
Joe,
I looked at the NYT and WSJ. The HAI is mentioned only once by the NYT (and it wasn’t a ringing endorsement, they described it as the “so-called affordability index”) and the WSJ just once in the past two years (and it looked more like a newswire type thing, not an actual article with analysis). Thousands of other periodicals might cite it, sure, but that doesn’t mean it has any value (other than to fill up space and try to convince people to buy homes). To me, and this may just be my youthful just-graduated naivete, the fact that the HAI is so criticized in the blogosphere is reason to suspect it.
Barry Riholtz is a very well respected blogger, and you would do well to follow his example of independent, critical thinking, even if every single detail isn’t perfect and it isn’t easy/convenient to do so:
http://www.ritholtz.com/blog/media-review/
It would be very obvious to you, if you took what you were supposed to learn in law school and give a charitable reading, that Barry only referred to “mortgage principal and interest” once, and what he meant was quite clear – the amount of money available to pay principal and interest. Please do not feign denseness.
My point was that the index/statistic/whatever (sorry I was so reckless with my words that you lost any sense of what I meant) is so simplistic it is useless.
I admit my bias against the National Association of Realtors as providers of unbiased, useful information, and therefore am more skeptical of this statistic than is perhaps warranted – but I at least have provided reasons for my skepticism. Indeed, one of the posts I cited was Calculated Risk, a blog that appears on the Chicago Real Estate News page. Have you provided reasons for your belief or explicitly stated your biases?
I did mean “dearth of non-realtors.” There is an acute absence of people (who are not realtors) who say the housing market has hit bottom. Only realtors say it has hit bottom. Very few others say it has hit bottom. There is a dearth of people of this opinion.
We all have a lot of learning to do. There is hope for us who give the other side a charitable reading and examine their own and others’ biases.
br_add,
I don’t know what law school taught you. I know that law school, and the practice of law, taught me to do accurate readings rather than charitable ones.
Who would have guessed that when you said “cratered” you meant “hit bottom?” Who would have guessed what you meant by a “dearth of non-realtors?” Not I. Not anyone who has a clear grasp of the English language.
The HAI is cited more than once in the NYT and anyone who can search an index and read the results can see that. Only one of the articles uses “so-called” – and a byline search reveals that the reporter who wrote that had only a brief tenure at the NYT. You can also find more references in the WSJ with little difficulty.
Your blogger misspells “principal” twice, not once. And he’s a virtual illiterate. And he deliberately or ignorantly misrepresents the NAR data.
You say, without seeing the contradiction, that “only realtors say it has hit bottom” and “very few others say it has hit bottom.” In the language I speak, if it’s “only realtors” there are no others.
If you see no value in an index that consistently measures the relationship between incomes, interest rates and housing prices over time, and expresses that relationship as a single, easily-understood value, so be it. I think the value’s obvious to many people, especially those who have an open mind.
I’ve explicitly stated my biases on this site countless times.
Perhaps I’d give you a more charitable reading if I were running a remedial reading or writing program. I’m not.
If you and others want to hear what knowledgeable Realtors and other people in the industry have to say, then have the simple courtesy and decency to avoid gutter-sniping those people from the peanut gallery of these comments.
If you have so little self-control that you can’t behave in a civilized fashion toward them, then at least man up and do it under your real name.
Joe,
In law school you’re supposed to do accurate readings of law but charitable readings of the various positions taken and associated reason. As you have taken pains to point out on numerous occasions, I have the benefit of graduating more recently than you, so I can assure you this is clear in my mind. It is quite a shame that you forgot such a valuable lesson.
As for “crater” – I suppose my young-gun lingo is perhaps too much. Regardless, the usage is correct:
http://en.wiktionary.org/wiki/crater
Again, Barry isn’t perfect – but you and I both know what he means when he talks about “principle.” Please walk us through how he is misrepresenting the data instead of merely asserting so. I assume you can build a case (towards which I will promise to give a charitable reading).
Yes, I used “only realtors” for somewhat of a rhetorical flourish. If you’re that hung up about it, I’ll change my assertion to “substantially only realtors” and admit my error. Apologies.
Please tell me about the people who find this index value. Or link to a couple of them. I am interested in who they are and why they value the index/statistic/whatever so much and how they defend it.
I re-reviewed the NYT, and there was only 1 reference in the past year (there is one Economix post and one was a comment on a Paul Krugman post, neither of which were published in the NYT).
http://query.nytimes.com/search/sitesearch?query=%22housing+affordability+index%22&less=multimedia&more=past_365
As for the WSJ, there is only one reference for the past two years:
http://online.wsj.com/search/term.html?KEYWORDS=%22housing%20affordability%20index%22
I am surprised that you think a critical discussion of what a realtor says and the indices/statistics/whatever their organization puts out is gutter-sniping. Do you not believe in constructive criticism? And to imply I have little self control when I am not the one researching and then taunting commentators on the (incorrect) basis of their educational status or banning those who disagree with me is quite a laugh.
Personally, I value your website for the news, and the occasional building tour – not for the interviews of realtors telling people they aren’t mature because they’d like to see where prices are going before making the biggest purchase of their lives. Especially when such name calling quite easily seems self-serving.
Finally, anyone who wants to find me can, as you have so ably demonstrated.
br_add,
The clarity and eloquence with which you express yourself, the breadth of your knowledge, the keenness of your insights, and the depth of your research, lead me to conclude that further disputation is pointless.
Whoa! ~grabs the popcorn~ This is great!!
Joe,
RK’s reply was not very civil, but he/she, had some interesting points.
I am currently considering buying a house in the Chicago area.
Rather than just calling RK a creep, you might have simply refuted RK’s arguments as a more eloquent response.
The NAR housing affordability index, while interesting, is not very meaningful to individual buyers because it reflects median numbers for the market as a whole, not the particular circumstances of prospective buyers. In other words, while real estate may now be much more affordable for people who were always well-positioned to buy property, it may not necessarily be affordable or adviseable for those who are interested or need to buy homes at present. Let’s face it, the economy is still pretty dismal.
RK has a point that realtors are always telling us it’s the right time to buy. That’s their job, isn’t it?
It is equally interesting for readers to hear contrary views on why it might not be the right time to buy. And simply deleting or banning reader comments every time they are in disagreement with the views of your contributors is not a great way to encourage readership.
RK called a very accomplished woman a “moron.” People who do that are creeps, and worse.
RK doesn’t have a point about this particular Realtor because he badly distorted what she said. Making stuff up is not a point.
You’re very badly misrepresenting what goes on here: reader comments are very rarely deleted or banned.
We bring our readers – over 278,000 of them last year – a wide variety of viewpoints. Do you think that people in the industry will take the time to share their views if they’re exposed to being called names by people who don’t take the time to understand what they’ve said?
ttj,
Let me move on to your wondering about whether this is a good time to buy.
My view: that’s a decision that can only be answered at an individual level.
When smart people in the industry say this is a “great time to buy” I believe they’re simply stating their view of the market rather than trying to bias any particular individual in any particular direction.
Inventory is high, giving buyers a wide selection. Many sellers are motivated – or desperate – giving buyers great bargaining power. Interest rates are near historic lows, giving buyers great purchasing power. That’s the “great time to buy” argument.
Now, if you were to engage one of those smart, professional Realtors on your behalf, she would take the time to learn your personal circumstances in detail and help you determine whether or not it’s a great time for you to buy. It might not be.
She would respect whatever decision you make without pressuring you. She would work with you for a long period of time – perhaps several years if that’s what it takes for you to determine when it’s right for you to buy.
Take the time to source out one of the best people in the industry. You’ll be pleasantly surprised by the experience of working with one.
I am no expert in the real estate business but I do find this woman’s video quite funny. “if you aren’t mature enough” to buy real estate. She should know better than any of us that the main reason there are so many foreclosures, short sales, people too far upside down to short sell is because people thought they were “mature enough”. What you think doesn’t matter. If you cant put down at least 5% and find a place that costs 2.5-3 x your income, then you shouldn’t be buying.