Today's Insight....

...Brought to you by Carol Lloyd of SFGATE.com

'"It's a great time to generate a commission."'

"Last week, when I received an e-mail press release from the National Association of Realtors previewing its $40 million ad campaign with the slogan, "It's a great time to buy or sell a home," I had to read it twice. Was this a joke? Was there something I didn't understand about the current market that would engender this kind of overweening confidence?"

"This ad campaign seemed to come straight from the Mad Hatter's tea party."

"The full-page ad that appeared in the Wall Street Journal and USA Today last weekend (along with more newspapers this week and TV and radio broadcast spots in the coming year) does its darnedest to paint the perfect real estate storm. Below a classical drawing of a traditional home, NAR stacks the "facts." And although it invokes sellers in the first and last line, the ad obviously targets those infamous buyers who are waiting in the wings."

'"Actually, right now may be one of the best times to buy a home," the copy fairly purrs. "Consider these facts. ..."'

"What follows are all talking points that one would expect, with spin as thick as cotton candy on a stick. The ad's first claim that "interest rates are near 40-year lows" is true but, hello, this isn't news. Interest rates have been low for nearly five years, and compared to last year (when the 30-year fixed mortgage hovered between the high fives and low sixes), today's rates are actually a little higher."

"Ben Bernanke, the new Fed chief, hasn't shown a propensity for radical departures, and most analysts predict that relatively low interest rates are not in danger of disappearing any time soon. "

"The next point -- "Large Inventory Won't Last" -- suggests it's a wonderful time to buy a house simply because there are so many homes to choose from! Since the historically massive inventory of 4 million homes declined in September to a still massive 3.75 million homes, the NAR suggests that buyers should act fast before inventory shrinks even more."

"Expanded selection combined with low interest rates offers buyers an opportunity that may never be available again in their lifetime," says the ad. But many real estate experts admit that the glut in inventory won't disappear overnight. And some think that despite the recent inventory decline, it's just the beginning of seeing even more homes sitting on the market."

" The NAR presses on with a paragraph titled "Prices overall have stabilized" -- again, a statement that strains credibility. How do they know this? The NAR cites the 4.3 percent rise in sales in August as evidence that sales are picking up and so prices will follow."

"Since the ad first appeared, new data has come out showing that sales numbers again dropped 1.1 percent in September, amounting to 13.6 percent lower sales than September 2005. (The ads had to be rewritten for this week's publication.) The ad also trots out the fact that national home prices are expected to rise 1.6 percent in 2006."

"But since when is 1.6 percent good? An average real estate market makes annual gains of 6 percent. And since current inflation hovers above 2 percent, a 1.6 percent gain actually constitutes a net loss. "

"Harvard economist Robert Shiller has argued that current real estate prices are not sustainable, because they have long outstripped rises in rents and incomes. If the inventory grows in the coming year or even just stays the same, then prices may drop, making people who took NAR's advice this month feel like pawns in a chess game. "

"The ad assures readers that real estate is a "safe secure way to build long-term wealth."

"The problem is, as every real estate agent will tell you, the market is cyclical. The 88 percent rise represents a historically unprecedented up cycle. No one with any credibility is predicting that the coming decade will see real estate gains like the last -- so why reference it?"

" Still feeling confused, I called the NAR to get a more thorough explanation as to why they launched this campaign."

"'We believe people aren't aware of the realities of the marketplace," explained Steve Cook, vice president of public affairs. "There's been a lot of negative media coverage, and a lot of people are missing the boat."'

'"In the sense of buyers, right?"'

'"In the sense of sellers, too. They are related. Sellers need buyers and buyers need sellers. They both need to work together."

"Well, yes, that's true of all markets at all times, but it shouldn't be construed to mean it's an "ideal time" for buying and selling. Cook then suggested that since inventory is constricting, it will probably become a better market for sellers."

'"But then it will become a worse market for buyers," I ventured."

"There was a pause on the other end of the line. "Well, yes, but the most important thing is that interest rates are at all-time lows -- that's good for both buyers and sellers. Like the New York Times said, the stars are aligned."'

"Actually, it was the New York Times quoting an NAR spokesman, but let's not quibble."