Friday, August 25, 2006

Cooking the books at the NAR?

After reading the following story my bullshit detector rang...the reason? Read this:
"With mortgages rising and home prices at such a high level, people who might have considered purchasing a home a few years ago may now be turning to the rental market, particularly in big cities like New York," says Richard Levy, a senior research analyst at the National Multi Housing Council, an industry association based in Washington, D.C.

But much to renters' chagrin -- and landlords' delight -- greater demand has led to higher rents. In fact, NAR expects rents will rise an average of 4.1 percent this year, compared to a 2.9 percent increase last year.
The key phrase here is "turning" to the rental market. The question this all begs is what exactly people who are "considering" purchasing a home are doing if they aren't renting. If they are already renting, then how could there be an increase in rentals? It's not just counterintuitive, it's completely illogical. When you realize it is the housing industry who is generating this study or the statistic, it all begins to make sense. The recent argument presented by the real estate industry is that the "psychology" of the situation is what is causing people to flee. Note that it wasn't the psychology of the situation that created what I call the bubble, according to these same folks. That means that when the market is increasing, it's due to sound economics, and when it is decreasing, it's because people just don't understand that the only place to go in the housing market is up.

All I can say is that these are really grievous people.


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