CEPR - Center for Economic and Policy Research

Multimedia

En Español

Em Português

Other Languages

Home Publications Blogs Beat the Press The Realtors are Not Always Honest

The Realtors are Not Always Honest

Print
Wednesday, 16 June 2010 04:53

Marketplace radio repeated the National Association of Realtors' (NAR) nonsense that 180,000 homeowners who purchased homes in April may not be able to qualify for the first-time buyers' credit if the original deadline that requires a closing by the end of June is left in place. The NAR wants the deadline extended to the end of September.

As noted earlier, this claim is absurd on its face. While there was an uptick of homes sales in April, this was from rather depressed levels. The April sales volume did not approach the sales levels at the peak of the boom in 2006. At that time, the vast majority of closings took place within 6 to 8 weeks. Therefore, there is little reason to believe that this should not have been the case with the April sales as well.

This is especially likely to be the case since new contracts plunged (as measured by mortgage applications) immediately after the expiration of the credit. This means that workers would be freed up to handle the contracts signed in April.

The main effect of the extension of the credit being pushed by the NAR is likely to be to promote fraud. Many contracts are likely to be backdated so it appears that they were signed before April 30th and therefore qualify for the credit. The NAR has likely exaggerated the number of people potentially affected by the June deadline by at least an order of magnitude.

Comments (3)Add Comment
...
written by izzatzo, June 16, 2010 9:03
This is a very disturbing attack on realtors. Any economist knows that realtors, like other labor, earn their living from producing real output. They don't just sign up multiple listings and wait for random jackpots like gamblers and bankers with no downside risk.

As for fraudulent backdating, this is what happens when the government interferes in a free housing market with a tax credit. If new contracts plunged to free up mortgage worker time for contracts signed in April, that means fewer buyers have been fooled into believing they get a discount off the full price of the house, when all that really happens is the price is raised in the first place enough to offset the discount and shift the gains to the sellers, including the realtors.

The tax credit is designed to keep house prices higher than otherwise, not to give buyers a discount lower than otherwise. It's like selling houses with four outside walls. Buy four walls and get the roof for free.

Stupid liberals.
...
written by LillithMc, June 16, 2010 11:31
As a Realtor for 35 years I was upset that the National Organization of Realtors went so far to the right.
By 2006 everyone knew massive fraud was taking place in addition to loans being funded that should have been tossed in the trash. But organized real estate kept quiet and made sure that members kept quiet as whistleblowers.
My early years in real estate were honest largely due to the members who would blackball those with poor ethics.
Time to shine a spotlight on not only organized real estate but the money-laundering Chamber of Commerce.
Principal Strategist
written by William Hurley, June 16, 2010 12:53
Mr Baker, you're doing yeoman's work. Thank you.

My point, or "take-away", from this latest correction to the record of yours is that the reckless, feckless laziness of the majority of press outlets allows and even encourages the proliferation of false information that time-and-again proves injurious on a societal scale. In the spirit of their reporting, as I characterize it, these very same gatekeepers of the disinformation distribution system are shocked and insulted when their culpability in creating an atmosphere that corrodes common-sense, self-interest and verity. Frankly, I'm amazed that the basic, legalistic principles of evidentiary "chains-of-custody" are ignored and/or denounced when, as you show Mr Baker, press outlets consume then uncritically regurgitate gossamer lies.

I'll spare everyone, myself included, the logical "next-step" connection to "hype" bubbles, contempt for the media and Huxlian aphorisms of Braver Worlds.

Write comment

(Only one link allowed per comment)

This content has been locked. You can no longer post any comments.

busy
 

CEPR.net
Support this blog, donate
Combined Federal Campaign #79613

About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

Archives