Desperate Realtors

From Nouriel Roubini:

I was this morning on CNBC's Squawk Box facing off the president of the National Association of Realtors (NAR). The NAR is becoming so "desperate" that is now wasting $40 million in an advertising (call it spin) campaign - the first ever in its history - that is titled with the Orwellian slogan "It is a Great Time to Buy or Sell a Home" (sic!).

More realistically, as David Rosenberg (the sober chief US economist for Merrill Lynch) has titled one of his most recent studies of the US housing market we are now at the "D" level for the housing market where "D...is for Desperation" as he put it. Realtors and home builders must be reall desperate to waste $40m in an double-speak orwellian campaign of spin, lies and non-sense. The reality is the "It is A Lousy Time to Buy or Sell a Home". It is a lousy time to buy as prices are falling - at an annualized rate of 10% for new homes - and they will be falling another 20 to 30% in the next two-three years as the glut of housing and the bust in the housing market unravels: which fool would buy a home now when a 20% down-payment and the entire equity in such down-payment will be altogether wiped out by a fall in home prices in the next few years? Anyone buying today at the still stratospheric prices will destroy his/her home equity in short order. Since buyers are not fools - in spite of the NAR spin - they are sharply reducing home purchases unless they get huge discounts. It is also a lousy time to sell as there is a massive glut of housing - both new homes and existing homes - on sales and demand is now well below a glut that is becoming worse as the completion of high housing starts at the beginning of the year will be soon dumped in the markets. Thus, expect more "ghost towns", the expression used by SF Fed president Janet Yellen. The sellers are becoming so desperate that they are now relying on Divine Providence to help them sell their homes: as reported in dozens of press items, sales of statues of St. Joseph are skyrocketing; it is has been a long-time popular belief that burying a statue of St. Joseph in the basement of your home helps you sell your home when housing is in trouble. Those statues sales skyrocketed in the housing bust of the early 1990s and they are going through the roof again today.