Women's Wear Daily recently ran a piece on real estate broker turned author and TV personality Barbara Corcoran: "Barbara Corcoran, the Jim Cramer of the Real Estate Business."
These days, being likened to Cramer is never a good thing, and the WWD piece could best be described as gently scathing.
It recounts a 2007 "Today Show" appearance where Corcoran, in response to a viewer question, suggested that prices would likely be 5% to 7% higher a year from then. WWD helpfully points out that "Since then, housing prices have plunged 30 to 40 percent, foreclosures have gone through the roof, and unemployment has skyrocketed to 9.5 percent."
But before we start beating on Barbara Corcoran too hard, let's keep in mind the totality of the record. Corcoran has been preaching the benefits of homeownership and real estate investment since she founded The Corcoran Group in 1973. By the time she sold it for $67 million in 2001, it was the biggest player in Manhattan's pricey real estate market.
At virtually anytime since 1973, real estate -- especially New York City real estate -- has been a fantastic investment, with the exception of the past couple years. Given that Corcoran has been singing its praises for so long, is it really fair to trash her for one bad prediction leading into the worst financial crisis since the Great Depression? I seriously doubt it -- especially when she qualified her prediction by noting that she "might not be" right.
Barbara Corcoran is larger than life and perhaps overzealous in her praise of real estate. But from a long-term perspective, most people would be a lot richer if they'd followed Corcoran's advice.
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