Jim Cramer's Interview with KB Homes CEO Causes Ruckus

NJ Realtors Scream for Cramer's Hide and Write Letters to the Today Show

David Jones
The wide open, full speed sometimes abrasive but very popular Jim Cramer of CNBC's show Mad Money got one of the country's largest business organizations mad today. His interview with Jeffery Mezger, CEO of KB Homes, left a very dim view of the US housing market. Mezger's statement about how bad the housing market is has caused a drop in the stock of his own company. He says, "We see no signs that the housing market is stabilizing and believe it will be sometime before a recovery begins."

This dismal look on the housing market comes from a man who owns over $9.5 million worth of stock in the industry he was talking about. Jim Cramer's own view of the industry was far more optimistic than that of Mezger and other housing industry insiders. However, with that said the National Association of Realtors is coming out on the other side of this debate as their stance is that real estate is regional and local and that they are seeing far greater signs of recovery.

Locally, here is southern Alabama, the real estate news and advertising is going gangbusters about how great the market is right now. But the statistics released for the month of August show an almost 60% percent drop in home sales over this time last year and the price of the same home sold last year for almost 2% higher. While 2% is not a large number the Alabama real estate market overall has not seen the giant leaps in value that many places have so this small decline in price is devastating to many homeowners who want to sell.

As I write this article, the news comes that Foxtons, a New Jersey based Real Estate Company, is closing its doors and laying off over 300 employees. It is ironic that the NJ Association of Realtors is leading the charge against Cramer and the Today show.

The NJ Realtors association called for an apology based on Cramer's overall view of the real estate industry. Of course he refused to retract the statements he made and as the day unfolds it appears that he was more right than the realtors believe.

Regardless of what the experts say buying a home is a very individual decision. The economics of a neighborhood means a lot more than economics overall. If you need a house and it makes more sense to buy that house than to rent it, they buy. But you must do your homework and remember that most people involved in helping you buy a house only get paid when you close the deal. This means that they will probably not have your best interests at heart since their mortgage payment is dependent on you buying a home.

Published by David Jones

Problem solving professional for several different areas. I spend my time helping others make a better life for themselves.   View profile

6 Comments

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  • Joe 10/1/2007

    Larry Stewart, How can you say that Cramer is painting with a broad brush when the NAR's slogan is "Now is a great time to buy". Talk about painting with a broad brush. Maybe they should say "Now is a great time to buy in this handful of markets".

  • Larry Stewart 9/30/2007

    Cramer paints with a broad brush. Each market will have issues related to the housing and mortgage problem. Let's remember that the mortgage industry is suffering from a self-inflected wound that should see some peoplein jail. Cramer should realize that his comments might not cover every market, every seller, or every buyer. Home buyers and sellers should read www.sanantoniorealestatenews.com for my reply to Jim (Mouth With Legs) Cramer. The comic finance whiz should realize that his general comments can be more destructive than educational. If it is time to buy (for the right reasons) waiting might see interest rates go up then what good is Cramer's advice. Sellers need to either pull out or get real about the asking price.

  • Larry Stewart 9/30/2007

    Cramer paints with a broad brush. Each market will have issues related to the housing anf mortgage problem. Let's remember that the mortgage industry is suffering from a self-inflected wound. Still, Cramer should realize that his comments might not cover every market, every seller, or every buyer. Home buyers and sellers should read www.sanantoniorealestatenews.com for my reply to Jim (Mouth With Legs) Cramer. The comic finance whiz should realize that his general comments can be more destructive than educational.

  • Dan 9/28/2007

    Fred, I'm sorry but your argument is full of holes. So many in fact that I won't even list them. Just try to play devil's advocate with your argument, and if you are honest with yourself you will realize it doesn't stand up. Cramer is right, and if you actually look at housing data you will see he is correct.

  • Anonymous 9/28/2007

    Cramer's got a point. Almost signed a contract on a new home. Think I will wait for now...

  • Fred Sanchez 9/28/2007

    KB Homes and Toll Brothers would love for all homeowners to pull their homes off of the market so they can sell their inventory of new homes at hugely discounted prices (looking forward to the massive lawsuits that will follow). These homebuilders wish all those suckes they old homes to would just shut up, get their house off the market and GO AWAY. Cramer is looking more and more like a bagman for these companies and shame on him. "Don't you dare buy", clue to Cramer stick to stocks because in real estate investing.... YOU KNOW NOTHING!!!!!

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