Barbara Corcoran: Then and Now

There is something about Barbara Corcoran that is both lovable and maddening at the same time. Well, maybe lovable isn't the right word. Maybe harmless is a better word to go along with maddening, but then anyone taking her advice regarding the future direction of real estate prices last fall would surely object to the selection of this word as well.

To be sure, she is [fill in your adjective here] and maddening.

Her most recent appearance on Cavuto on Business was a demonstration of why this is so.

Regular readers know that the only real reason to watch Cavuto on Business is to see Jim Rogers. Viewing this program normally consists of fast forwarding past the introduction and news update to see if the familiar mug and bow tie show up, and if not, quickly dismissing the recording to the virtual trash can inside a Tivo that has been faithfully recording and playing back countless hours of programming for what seems like ten years now.

[It's hard to believe that Tivo still exists as a company these days given all the competition from cable companies amid the growing popularity of HDTV. Tivo now has an $800 HD Series 3 recorder available and they are wished well.]

Anyway, on this past weekend's program, there was a full house - Jim Rogers, Ben Stein, a couple of other regulars, and occasional guest, real estate expert, and subject of ridicule at this blog, Barbara Corcoran.

Spotting Barbara's smiling face was cause for immediately tightening the grip on the Tivo remote as palms grew at first clammy, then sweaty, in anticipation of the words to be offered up by Ms. Corcoran.

We'll get to that in a minute, but first some background.

In the Beginning

Barbara first appeared in the pages of this blog last November when she introduced a tiny part of the blogosphere to her Super Bowl Real Estate Sales Theory, which seemed to leave both Jim Rogers and Ben Stein dumbfounded.

Corcoran: It's funny what's happening right now - there's so much uncertainty in the market, and everybody's been spooked by all the media coverage that's out there that it really is a great time to buy. It's a great opportunity right now, and I don't think it's going to last very long.

I think come January, everybody who doesn't buy the house right now for the price that they could afford is going to wish they had because they are going to be paying more in January.

This "bubble babble" is baloney, and it's scaring people away and making buyers "think about it", and while they're "thinking about it", the house prices are going to go up, and I truly believe that.

Rogers: But Barbara, what's going to make them go up in January? Why are buyers coming back in January?

Corcoran: In January, you can count on it. You can set your watch to Super Bowl Sunday.
[...]
Stein: And as to why you can set your watch to Super Bowl Sunday, I'm totally mystified. Usually, people have to have a reason for something. I'm not quite sure what Barbara's reason is. Are interest rates going to suddenly turn down on Super Bowl Sunday?

Corcoran: Can I address that? First of all interest rates are not high, they're low. Even though we've had five big hikes by the federal government, what has it done to mortgage rates? Barely nothing.

But about Super Bowl Sunday, what I mean is by Super Bowl Sunday, this whole media "bubble stuff" that's out there is going to get old, boring - the media is going to move on to something else, and guess what? People are going to be back in the market in droves.

Shortly thereafter it was learned that the Superbowl Theory was meant to explain the rush back into the real estate markets in early February, immediately following the Super Bowl, after the full effects of holiday shopping and merriment had worn off.

This year's rush occurred right on schedule, however, it was dominated by sellers.

Hope Springs Eternal

Just before winter turned to spring, after the media had latched onto the new hot real estate topic of "bubble sitting" (selling your house and sitting on the bubble waiting for prices to go down), Barbara was at the ready for Charles Gibson when Good Morning America investigated this trend.

The obvious benefit of selling real estate in March of this year was that you could have locked in real estate gains at still lofty prices during a period when inventory was high, but not yet freakishly high. But still the optimist, after detailing the penal transactions costs associated with selling real estate with no guarantee of lower prices in the future, Barbara was ready with a list of more reasons not to exit the market six months ago.

Corcoran: And, should I mention one more? I have my whole list here. Is that OK? I'll keep going? Interest rates typically go up, they typically don't go down. So everytime, when you're sitting on the sidelines and interest rates go up by one percent, your mortgage payment is going to go up by 11 percent. That's what it translates to. And so you've got to factor that 11 percent loss into your profit idea as well.

After a few heart-felt words about being happy in life and not spending too much time worrying about the value of your home, viewers were once again urged to forget the whole bubble idea and just be happy with the house that you have.

The Fall

It's been a while, but once again Ms. Corcoran showed up on Cavuto on Business and she didn't disappoint. In fact, when asked about the current condition of the real estate market, she got right to the point.

Corcoran: I don't think that people are aware that every housing statistic out there right now reflects closing prices. The deals being made now won't come out in the statistics for another three months. If you look at the actual sale prices, the deals that are happening now, prices have already come down, and they've come down by a lot.

This was stated in a very matter-of-fact way, as if she was doing viewers a public service by leveling with them - as if she was the voice of reason in an otherwise confusing media barrage of real estate statistics and opinion.

Little attention is paid here to the accusations leveled by the many housing bubble bloggers against the likes of David Lereah, chief economist at the National Association of Realtors (e.g., see David Lereah Watch).

After listening to Ms. Corcoran's about-face and having a look at the most recent entry at David Lereah Watch, maybe more notice should be paid.

"If you paid your mortgage off, it means you probably did not manage your funds efficiently over the years," said David Lereah, chief economist of the National Association of Realtors and author of "Are You Missing the Real Estate Boom?" "It's as if you had 500,000 dollar bills stuffed in your mattress."

He called it "very unsophisticated." (Los Angeles Times Aug 28th, 2005)

After writing today's post and thinking about how others may have been affected by the expert opinions of real estate professionals with such big mouthpieces in the mainstream media, many of whom were cheerleaders one year ago but who are increasingly level-headed pragmatists today, you can't help but feel sorry for those who heeded their advice when real estate was still booming.

Sometimes you have to wonder how these people sleep at night - both the real estate experts and those heeding their advice.