The National Association of Realtors on Tuesday lowered its forecast for U.S. home sales in 2006 and called on the Federal Reserve to stop raising interest rates because parts of the housing market are "vulnerable."Mr. 'soft landing' Lereah is saying that some markets are 'vulnerable' to interest rates hikes. They are vulnerable with or without the interest rate hikes. Other things being equal, the interest rate hikes at the Federal Reserve make housing markets even more vulnerable to price declines.
"Experiencing a slowing from a hot market is a good thing because we need a solid housing sector to provide an underlying base to the economy, and slower appreciation will help to preserve long-term affordability," said David Lereah, the group's chief economist, "But this is a time for the Fed to pause on rate hikes because we have some interest-sensitive housing markets that have become vulnerable.," he said
According to the National Association of Realtors, even the bubble markets will only experience price declines if 'extremely unlikely scenarios' occur. In their anti bubble reports, we have a stress test for Miami:
The local housing market will experience a price decline of 5% only under extreme unlikely scenarios. For example, mortgage rates rising to 8.3% in combination with 60,000 job losses could lead to a price decline.The National Association of Realtors is now in the comical position of telling the Federal Reserve to not raise rates. I smell desperation. Mr. Lereah needs to remember that interest rates on mortgages are still historically low.
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If you sold your house and are on the sidelines, then it does not get much better than this plea to the Federal Reserve!
ReplyDeleteWell done to link to those 'anti-bubble reports'. Lereah really needs to be called on what he was saying *just 6 months ago*.
ReplyDeleteIt can't be allowed to go down the memory hole.
If price declines are only going to be 5%, who cares? Isn't that a "soft landing"? Why bother trying to tell the Federal Reserve what to do? Unbelievable.
ReplyDeleteThanks. :-) He needs to be taken to task.
ReplyDeleteI don't think David Lereah is the only one....at least any fool can see who he is working for. The real crooks are the finacial talking heads taking money from the "realestate industrial complex."
ReplyDeleteNOVA Fence Sitter
But, but,...
ReplyDeletehttp://tinyurl.com/pm735
I'd like to know what housing markets Mr. Lereah thinks have become vulnerable?
ReplyDeleteThe Sacramento Anti-bubble report says a 5% decline could happen at 8.3% and -3,000 jobs.
where are all the "bubble non-believers" to put their spin on these headlines?
ReplyDeleteOny a few days now until MRIS releases May numbers! Whatcha thinking, David? YoY median and avg declines for DC proper? They normally release the numbers on the 10th of the month, but this month it falls on a Sat. Do they release early (on Fri) in that case?
ReplyDeleteYoY price declines and average price declines in some counties in the DC metro area. Yes for DC Proper.
ReplyDeletewhere are all the "bubble non-believers" to put their spin on these headlines?
ReplyDeleteIt's amazing how boring it gets when everyone agrees with each other.
Vulnerability? Back when the anti-bubble reports were prepared Lereah said there is "no possibility of a housing bust in any of 135 of our largest cities, or for the nation as a whole, and that there has never been a better time to buy a house than now."
ReplyDeleteI wonder whats happened since last fall?
David Lereah is a disgrace.
ReplyDeleteI couldn't figure out why these Realtor folks are blaming "higher" interest rates for the imminent downturn, since the 30 year rate hasn't really risen much at all yet. And why lobby for a lower rate from the Fed, since changes in the Fed's short term rates don't always have much effect on the 30 year mortgage rates?
ReplyDeleteBut when you look at the 1/1, 3/1, and 5/1 ARM's that have been abused to get people into houses they can't really afford, there actually has been a steady rise in rates over the past few years. And those rates typically do respond immediately to the Fed's rate changes. The real estate industry is addicted to these artificially low short term interest rates, and is reacting like a crack addict desperate for a fix.
"Please Mr. Fed Chairman, I need a hit REAL BAD man. Just enough to get me through the week, man. Come on, you're killin' me dude. Just a quarter point, that's all I need."
LOL!
ReplyDeleteLiar-reah is just laying the foundation to blame this whole mess on the Fed - "but I told you back in June to stop raising the rate BB, now look what you've done!"
ReplyDeleteanon 1:43 & TomCarbon,
ReplyDeletegood points
This is the most ridiculous plea I have heard! Does the NAR actually think Bernanke will alter his plans because they asked him to!
ReplyDeleteAnd why does the NAR think they have a right to butt in when real world pressures could pose an even more dangerous long term risk than a temporary housing cooldown?
Unbelievable
Does anyone know have any numbers related to Fairfield County, Connecticut? Or do you know of any blogs that discuss that area?
ReplyDeleteWhat is the $1 million + market doing there?
Yeah Fontaine,
ReplyDeleteHow could lereah go from book writing cheerleader to groveling beggar that is running for the covers in such a short period of time. I guess he is a poster boy for the heard mentality, and now that he hears those in the front of the line getting slaughtered, he knows that his time is near.
I saw a similar quote from David Lereah in a Bloomberg article about 2 weeks ago where he mentioned that "if mortgage rates keep rising, the air will come out of the balloon". That was just about the exact thing that he said at the time. I remembered thinking this was the cop-out he was looking for. And now he has essentially said the same thing on CNBC this morning, sometime between 9-10 AM EDT.
ReplyDeleteHe is definitely using the Fed as a scapegoat to get out of the predicament he put himself into by being so rosy about the housing market to begin with. Even if the Fed did not raise rates, he would blame mortgage rates for getting too high, although they have not gone as high as he predicted (remember that at one point he predicted 7% mortgage rates by the end of last year).
Now that David Lereah is on our side, he he, he should link to the bubble blogs. He now sees what is really happening and he is worried that his RE investments will tank.
ReplyDeleteHe should have worried months ago instead of greedily holding onto these investments until it is too late. Moron.
OK, I've had enough of all you Lereah-bashers! David Lereah is an honest and trustworthy guy who's trying to let Americans know what a great investment houses are. Just think of him as the Carlton Sheets of real estate. Everybody should be rich! Whether you housing perma-bears like it or not, real estate is the best investment there is because it can't go down. It's no risk and all reward, so quit trying to spoil everyone's dreams!
ReplyDeleteThere were a lot of self styled
ReplyDelete"bubble non-believers" here, until the weekend.
They finally saw the writing on the wall, and either are converts or scrambling to sell their own homes.
you said,"OK, I've had enough of all you Lereah-bashers! David Lereah is an honest and trustworthy guy who's trying to let Americans know what a great investment houses are."
ReplyDeleteI used to think that people bashed Lereah on these sites just to have someone to be mad at, but after seeing him jawbone about the rosy outlook while ignoring the risks, and writing a book about pricing never going down, and now viewing the fed as the reason for the price reversal...give me a break. what about all of the creative financing and relaxed lending standards? What about the rising rate of investor owned units? what about the unprecedented run up in prices? These all create risks that cannot be denied. Maybe he is an honest man, to ignore all of these risks and then maintain that the market will move from these huge gains to a historical average of 1-2%over inflation without missing a beat is either incompetent or irresponsible.
I was wondering if anyone would take my defense of David Lereah seriously or not. I decided to play devil's advocate. I thought maybe some would get the joke when I called him, "the Carlton Sheets of real estate" and said housing is "no risk and all reward." (The old rule of thumb in investing is, "the greater the risk, the greater the potential reward.") Also, I got my quote slightly wrong, but "Everybody Ought to Be Rich" was the title of an article in Ladies Home Journal in 1929, that advocated investing in stocks at what we now know was right before the great crash.
ReplyDeleteLereah is just the mouthpiece of NAR. If he refused to put out the spin, they would have found someone else to do it.
ReplyDeleteI've gone to a bunch of open houses lately. They are all spouting the same nonsense. It is almost like realtors are an army of mind-controlled zombies, lurching along, muttering repeatedly, "Must sell houses, never goes down, weather is great, location, location, buy, buy, buy..."
"Lereah is just the mouthpiece of NAR. If he refused to put out the spin, they would have found someone else to do it."
ReplyDeleteThat does not make it right.
Has anyone noticed that the price of many lower-priced townhomes in working-class neighborhoods are still going up, according to zillow? Why is that??? They (as everything else) are sitting in the market longer, but in the past 2 months or so, prices continue to rise for these properties....hmmm.....
ReplyDeleteBecause here they are still selling for increasing prices. Someday the sheeple will see that the TH they though they were restricted to is about $20K less than the SFH with .25 acres down the street.
ReplyDeleteOn another note, David, the trolls come around more when you post those pictures, I've noticed. They're absent here, when we actually discuss news and facts. Imagine that.
Post some more pictures! I'm tired of looking at boring, old Rome where they elect prostitutes to parliament. Too much history and traffic here. I'd rather see the traffic-free slums along Rhode Island Ave and in Anacostia!
ReplyDelete