Snuggie success: Can infomercials save real estate?

Posted by Annalisa Burgos | May 27, 2009

I never bought a Snuggie. I saw the informercial and laughed at such a ludicrous idea. A year later, Snuggie’s creators are the ones laughing, having sold more than 4 million of those things. Everyone I know has one and raves about them.

I didn’t see that coming.

So it dawned on me, if an infomercial can sell blankets with sleeves, chopping devices, a metal bar you hang on your doorway (Iron Gym) and other random stuff, it can sell houses.

Now bear with me, I’m going somewhere with this.

I was up late one night and one of those “make millions in real estate” commercials came on. You’ve seen these ads — some self-proclaimed millionaire investor goes on TV to hawk their book about how to strike it rich. This particular night a guy named Dean Graziosi was on. I had never heard of him before, but he claimed to have the secret to cashing in on our turbulent housing market. Normally I would have changed the channel. But he must have said something right cause I ended up listening to what he had to say.

What struck me about Dean’s pitch was that he didn’t approach it like “Hey! This is your chance to make money off of people’s misery. Go buy a foreclosure now!” Instead, he talked as if the viewer was a homeowner in financial distress or in danger of losing their home. Sure he’s an investor trying to make a buck, but his testimonials were from people who had major debt and were able to overcome it. I did some research on him, and he generally got good reviews. In a market like this, where so many are frozen with fear, it was nice to hear a positive message of empowerment.

Okay, no, Dean wasn’t actually selling homes on his infomercial, but he was selling a strategy for buying bargain-priced homes that most people are unaware of. And doesn’t that help reduce inventory? The National Association of Realtors (NAR) says housing inventories are up 8.8 percent to nearly 4 million units. Normally, you should have no more than a six-month supply of inventory. At the current level, it would take more than 10 months to sell all these houses.

This week’s batch of housing data shows things are not as bad as they could be, but we’re in no way near recovery. (A few “positive” reports and some economists are throwing that word around again). NAR said April’s existing home sales rose 2.9 percent, with distressed properties, including foreclosures and short sales, accounting for 45 percent. That’s still putting pressure on home prices, which according to NAR, are down 15.4 percent year-over-year.

Meanwhile, the S&P/Case-Shiller National Home Price Index says home prices in March fell 18.7 percent from a year earlier, in the 20 major cities it tracks. Furthermore, home prices have fallen 32.2 percent since the market began its decline in mid-2006.

Oh and did I mention that a new wave of foreclosures are expected to hit the market through the end of this year? More ARMs are about to reset and more properties are moving through the foreclosure process, so expect the number of foreclosures to continue to rise.

Bottom line: There are so many houses for sale out there and not enough buyers to buy them. So maybe an infomercial isn’t such a bad idea. If more people knew how cheap a house can be, more people would buy one, especially if there’s an $8,000 tax credit and tax benefits. I mean if it worked for the Snuggie, maybe it’ll work for real estate.

And yes, I did buy Dean’s book. I’ll let you know how it is after I read it.

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