Believe it or not

I pulled the covers down and flicked on CNBC this morning, just to catch trader, Mark Fisher being asked how he’d get the US housing market moving again. While I found his answer slightly odious, it was clear he’d nailed how to get anyone to buy anything.

Make them believe it will be more expensive tomorrow and they’ll buy it today – which let’s be clear, also pushes up the prices today.

Fisher’s plan was simple – hand out green cards to any foreigner who wanted to live in the US and intended to buy, and live in (no renting out), a house.

If people had no incentive or concern pushing them to buy today, they wouldn’t – especially if they thought prices would be cheaper tomorrow.

The idea green card would probably work – high net worth individuals having access to US residency on the purchase of a house, clearly there would be some house price pressure.

Yet, it’s the psychology behind the ‘more expensive tomorrow’ idea that the real estate and building industries understand and continually hammer. Think every sold off inch of column space, sponsored dollop of airtime, uncritically recycled  press release and fudged piece of data.

It’s the propaganda model in action, and it works well.

How else do you explain why otherwise sensible people begin to parrot ludicrous statements that property doubles every 7 years, or a warning like: if you don’t get in now, you never will.  

Make them believe anything – just don’t let them believe they could buy cheaper tomorrow. Occasionally, someone with a conscience, like this guy in Vancouver, strays from the herd:

A South Surrey developer “cornered” into offloading unsold inventory at below-market prices says consumers are being misled to believe the housing market is stronger than it really is.

“In contrast to this situation, which is clearly indicative of a sagging market, realtors… are blogging about how ‘hot’ the market is,” reads a statement issued Monday by Watermark Developments.

“Some realtors are putting the wrong perception out there,” explained Salome Sallehy, hired to help facilitate a sale this weekend at Watermark’s 2970 King George Blvd. project.

“Inventory is just not moving because the market isn’t willing to bear those prices. Developers aren’t really acknowledging that.”

Imagine, the real estate industry talking of a ‘hot’ market, in Vancouver – currently teetering on the edge of the cliff.

Now back to Tasmania, where the HIA has dropped their usual ‘shortage’ clanger to an uncritical media, who swallowed it like a Bangkok hooker. Unfortunately, some naive fool may well swallow that whole and think it’s time to buy.

So it’s time to look at what they forgot to mention - Sales in Tasmania are down 25%; listings are up between 20-30% depending on your market; there’s a new dwelling currently built for every 1.84 people added to the state population, and there’s now an unnerving amount of spec houses and units sitting on Domain, empty and unloved.    

Oh and a Devonport carpet factory and 150 jobs are about to evaporate.

A shortage of what? Only contrarians.