According to NAR I’ve got a whole new retirement plan!!

[sdrebear]

According to NAR, there is going to be an average 4% price appreciation forever!! All I have to do is buy a median priced home right now and in just 34 years they are predicting that my 3 bed 2 bath 1700 sq/ft house (about what the current median price get’s you) will have $2,389,751 in home equity!! Man, that’s easy! And I was worried. Ha!

They go on to say in the next paragraph that home prices have never gone down through stock market crashes, recessions, wars, oil embargos, etc. Never since the 1930’s. Let’s see… What happened just before the 1930’s? Something about interest only loans, right? Well, whatever, I’m sure that doesn’t have anything to do with today’s market!

Also, according to them as long as all those people who jumped on the “real estate job bubble” over the last 4 years don’t lose/quit their jobs, we’ll all be just fine. I’m sure that won’t happen even though most of their money is commission based. Really fun when the golden goose stops laying eggs (aka: Option-ARM’s).

Well, I’m off to go get my NAR guaranteed money box. Anyone coming with??? 🙂

[sdrebear]

Almost forgot to touch on the one stat that NAR considered more important than any other; The Mortgage Servicing Cost to Income Ratio.

They said it was a little high, but not as high as in the early 1980’s (like it was a GOOD thing!) Unless they were only referring to the one spike in 1981 when the Prime Rate was pegged at 20%+, then we are now in fact well above any other point on their nice little graph. We are well above even though we have historically low interest rates and loan points! Ah, but home prices are not too high. If rates and points (the other small factors in calculating the mortgage servicing cost) return to more “normal” levels, then I’m sure those home prices will hold firm, right? Not.

[powayseller]

If we eliminated interest only and option ARM financing, and compared our mortgage costs on the basis of the payment on a 30 yr fixed loan, then the mortgage servicing costs today would be much much higher.

Funny post.

I would write the NAR, but it would be just a waste of time. Think of it this way: if we worked for them, what would we say? If we spoke the truth, we’d be fired. Their job is promoting real estate, not being an economic forecaster. Unfortunately, they’ve done an excellent job of convincing us that they know it all. Each time I tell someone not to buy RE now because it’s overvalued, I get the question, “Are you a realtor?” I’m going to start saying, “No, I can’t. I know too much…”

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