The National Association of Realtors (NAR) has
launched a $40 million ad campaign promoting the long-term benefits of homeownership.
Advertising Age says the ads blow a lot of sunshine on the housing market.
Here are the two television ads with the National Association of Realtors'
descriptions:
"Building Wealth"
emphasizes the importance of homeownership in creating long-term
wealth. Using data from respected third-party sources, the materials
demonstrate the effect that homeownership has on household wealth.
"Home Values"
demonstrates the long-term value of housing as an investment, sharing
NAR housing data that shows home values nearly double every 10 years.
The ads are linked to a Web site that touts the advantages of owning a home.
Advertising Age notes, however, that home ownership isn't a sure thing:
Ads include claims that, on average, the value of a home nearly doubles
every 10 years, and 60 percent of the average homeowner's wealth comes from
home equity. ...
On the site, an "equity estimator calculator" suggests a $20,000 home
down payment turns into $124,600 in 10 years for a 623 percent return. The Web site includes the same claims as the two spots and adds a few more
noting, for example, that that prices have risen an average of 6 percent every
year. Like each of the spots, the site does come with a small warning
-- that local market conditions can vary and consumers should seek
counsel from a local real-estate agent.
However, in the light of the current market the
"housing-market facts" could also be read as a historical look at an
overheated market rather than a good predictor of what's to come. Gary
S. Becker, a Nobel Laureate, author and economic professor at the
University of Chicago, said the ads leave out important information
that consumers need about home ownership. "It's a risky investment --
unless borrowers recognize that, they could be misled," he said.
...
Others were concerned about the premise the
Realtors put forth in the ads that housing values are going up. Patrick
Newport, an economist with Global Insight, an economic-forecasting
firm, said: "In a lot of markets, housing prices are dropping, and in
some markets -- such as Florida and California -- they are dropping a
lot. If you buy a home, you take on a big risk," especially if national
housing prices drop 10 percent, as some predict, or if you lose your job and
are unable to make mortgage payments, he said. He added that in many
cases, "renting may be a much better deal than buying a house."
