The dumbest guys in the room

    In the movie "As Good as it Gets," Melvin Udall, the obsessive-compulsive and acerbic author played by Jack Nicholson, is asked how he is able to write about women with such accuracy.  "I think of a man," says Udall, "and I take away reason and accountability."
    He could have been talking about the spin doctors at the National Association of Realtors.  Earlier this week, in issuing yet another blast of hot air across a frozen landscape, the NAR's public relations geniuses reported the disastrous December housing results with the half-heaven, half-heartache headline, "Existing-home Sales Down in December but 2007 was Fifth Highest on Record."
    Yesterday we learned that home sales last year dropped 13%, the largest decline in 25 years.  With the effects of baby boomer relocations and the simple momentum from a growing population, 2007 should have been the highest on record.  "Fifth Highest" is faint praise indeed.  The rest of the press release piles on the excuses for the performance.  I have never quite understood why the economists at the NAR force themselves to be so relentlessly positive, all logic and expert commentary by others to the contrary.  Do they think the realtors they represent as well as the rest of us don't read the newspapers?  Does the housing market operate in an alternate reality we mere mortals just cannot understand?  It's embarrassing, and dangerous, for those making potential buying decisions based on the junk the NAR puts out.
    Here's NAR Chief Economist Lawrence Yun's brilliant (not) analysis of the current situation.
    "Home sales remain weak despite improved affordability conditions in many parts of the country, but we could get a quick boost to the market if loan limits are raised in combination with the bold cut in the Fed funds rate."
    I am certainly no economist, nor do I play one on this blog site, but here is my own alternate reality.
    "Home sales remain weak because people can't afford to sell their primary homes, or are bumping up against foreclosure, or are just simply scared to make any move with the market in such turmoil.  The bold cut in interest rates which could artificially buoy home sales in the short term, but quite possibly won't, may have unintended negative consequences for the general economy down the road, thereby perpetuating the housing crisis."
    Yesterday's Wall Street Journal indicated that formerly strong markets like Charlotte and Portland are starting to see much higher inventories of unsold homes, a sign that we are likely in for more pain before relief.  Yet Yun is virtually alone on the planet in predicting a modest turnaround during the second half of 2008.  
    I defer on esoteric matters of economics to my brother Bob, who runs  the investment advisory firm Seasonal Strategy on the west coast.  Bob predicts a two-year bear market in housing.
    "Look at what Goldman Sachs said in the last few days [about the continuing housing woes].  Now who do you trust?" Bob asks.  "A bunch of yutzes with an ax to grind, or arguably the smartest investment bank in the history of the planet, one of the only financial institutions that actually profited from the sub-prime debacle, with a massively ballsy trade?"
    Those contemplating the purchase of a piece of property or home in the more stable areas of the southern U.S. might want to keep their powder dry for at least a few months more and keep an eye on relatively strong markets like Charlotte.  If inventories continue to rise, be careful.  And, we beg you, do not take seriously anything you read from the NAR (you can read their press release by clicking here if you dare).  They are masters of deceit and insult.  After emphasizing lower housing prices, lower mortgage rates and higher incomes (guess he didn't look at the latest unemployment figures), the NAR's Yun concludes, "but [my emphasis] many potential buyers are delaying a purchase."  In other words, those of you out there who aren't rushing to purchase a new home are stupid.  
    You have to wonder who these jerks at the NAR think their customers are?  They are certainly not doing their realtor members or the rest of us any favors.