From the Chicago Tribune:
On his way out the door, the housing industry’s self-described “cheerleader” is making one last economic forecast — a sober one at that.
“We’re in a real estate recession,” said David Lereah, chief economist for the National Association of Realtors, who surprised many this week when he announced he would leave the Chicago-based trade group on May 19.
“I’m projecting the first [nationwide] price drop since the Great Depression,” he said. “We’re going to have negative home prices in 2007.”
His comments seemed uncharacteristic for Lereah, whose mostly blue-sky forecasts have long been criticized for stoking the fire as home sales bubbled to stunning — and unsustainable, even by his own account — levels. He had been the public face for the Realtors since the housing boom began in 2001.
“The media regularly turns to him for real estate quotes,” said David Jackson, who created the hypercritical David Lereah Watch blog because he believed the economist was churning the housing market. “Lereah tells half-truths and manipulates facts and figures. He cannot be trusted, as he is a paid shill.”
Most critics are less incendiary, though frankly uncomplimentary.
They often cite as Exhibit A his 2005 book, “Are You Missing the Real Estate Boom?” subtitled “Why home values and other real estate investments will climb through the end of the decade.”
“He promotes housing,” said Washington economist Dean Baker, an outspoken housing-market bear. “Certainly, people who were making decisions to move, they either heard David directly or from someone who heard from David that home prices will never fall, don’t worry, the market will stay strong. So they paid too much for a house.”
Lereah, in an interview Wednesday, shrugged off the criticism. “I feel confident I did a very good job forecasting and reflected what was happening in the marketplace,” he said.
…
Lereah said the market overheated primarily because of lax lending practices and record numbers of speculators who bought houses at inflated prices to flip for profit, though others share the blame.“It’s easy to say with 20-20 hindsight,” he said. “We’re all partly guilty. But the lenders and the speculators, they had the most in it. Making zero down payments with no documentation, that’s just irresponsible.
“But the Realtor, the lender, the title attorney, they all got wrapped up in the frenetic pace of the boom,” Lereah said.
He said the market’s current inertia surprised him.
“Just four months ago, it looked like we were on the road to a very nice recovery,” Lereah said. “Then the subprime [mortgage] market blew up, and that has substantially inhibited lending.
“It was a monkey wrench that was thrown in; no one would have predicted it two years ago, no one.”
…
But first he has one more public appearance, at a Realtors’ conference in Washington. He warns that his speech will not be cheery.“I am going to say, look, guys, we all have to face the music,” Lereah said. “We strayed from [economic] fundamentals, and we’re paying for it. It’s not an all-out bust, not a crash in real estate, but it is a recession. This is going to cleanse the markets and in the long term this is what we have needed.
“We’re going to scrape this bottom for the next quarter or two. [The market isn’t] going to come roaring back soon. It will take a couple of years to get back to the heat.”
Nonetheless, he said housing’s long-term prospects are good. “I am the cheerleader for real estate,” he said. “I will always be the cheerleader. I think it’s the best investment anybody can make.”
D’ya think from Lereah’s changed tone that NAR might’ve opened the back door, taken him by the shoulder and said: “there’s the door…you know what to do next”?
This sounds more like Lereah’s parting shot at NAR than any sort of epiphany. When you’re the poster child for utter, abject denial, what else can you expect? Once the machine has no more need for you, you’re the easiest person to jettison, because you’re the most public face.
I’m scared silly over what Move.com has planned for him. The best I can hope for is that he’s kept well-away from cameras and reporters. If he is such a great “economist”, do some statistical work, some market study…something.
BTW, if you want to read some great stuff from NAR’s Chief Economist before Lereah, check out anything written by David Tuccillo. Night and day difference…
Can he or the NAR be sued for some of the statements he’s made in the past?
Class action attornies smacking lips.
MASSIVE MISERY 2008.
ACCEPT IT OR GO DOWN WITH THE SHIP.
HEHEHE (2)-
Sued? For statements of opinion? About as likely as somebody suing Jim Cramer for making a bad pick on Mad Money. Trade associations all have mouthpieces; it’s a big stretch to call an industry cheerleader a crook.
These people who are into the Lereah-as-criminal thing seem to have about a 10th-grade education. What industry do you expect to just throw up their hands during challenging times and say, “that’s it…we’re done…nobody should buy what we’re selling…please do not patronize our business any longer”.
Agree. No lawsuit. As much as Lereah might deserve it, there is no legal basis for it. Other industries do however, have boundaries as to what they can claim.
The makers of herbal remedies cannot claim to cure a disease and must include a statement to that effect on their packaging. Publicly traded companies must include disclaimers when they make statements about future earnings. The makers of cigarettes and alcohol must include warnings with their products. Why should the RE industry get away with outrageous claims like “RE never goes down”?
I would like to see some reforms come out of this for the real estate industry. Whenever the NAR or any licensed agent makes a statement about RE as an investment or any prediction or claim as to future appreciation, they should be required to include a disclaimer similar to the “safe harbors” statement. That disclaimer should also include a reminder that agents have a parochial interest in selling you a home.
Just watch these videos: http://www.paperdinero.com/BNN.aspx?id=171
Sued? For statements of opinion? About as likely as somebody suing Jim Cramer for making a bad pick on Mad Money. Trade associations all have mouthpieces; it’s a big stretch to call an industry cheerleader a crook.
I know Cramer has to have that quick-scrolling disclaimer (discramer?) before he opens his yap on TV.. Does DL have disclaimers printed on his business cards?