This is not the first time Mr. Lereah has thought that now is the bottom. On September 25th, 2006 Mr. Lereah said this:"It appears we've hit bottom, the price drops are necessary to stir sales. It is working." (Globe and Mail Dec 29th 06)
"We've been anticipating a price correction and now it's here. The price drop has stopped the bleeding for housing sales. We think the housing market has now hit bottom."But wait it gets much better. On May 25, 2006 Mr. Lereah uttered:
"This may be the bottom. It appears May is a little better."When did we hit bottom? According to Lereah it keeps on moving. Mr. Lereah cannot be trusted. He just spews words to the public through the mainstream media. He is a paid shill. Don't trust him. Don't listen to him. This guy should be fully discredited by now.
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You are fantastic and Lereah must dread reading his former pump lines.
ReplyDeleteHappy New Year!
Thanks! :-)
ReplyDeleteDavid,
ReplyDeleteI really think you have helped alot of younger people who have been manipulated by the REIC to just mortgage their life away.
I own a house and I think that prices are just ridiculous. To see the type of loans people use to just get in is shocking.
Again Thank you!
David,
ReplyDeleteKeep up the good work. Noting that the 'bottom is in' prediction is made every few months helps to destroy the shill's credibility. Hopefully he'll be exposed more and more for the shameless shill he is. With the exception of the extended time periods, I see few differences between the 'pump and dump' stock shills and the folks who predict that the 'bottom is in' every other month.
It really is a great service you provide by tracking his ever changing statements.
ReplyDeleteThis blog is a perfect example of how a free and open exchange of information benefits society at large.
Once it took a room full of scribes to produce a handful of books that hundreds could read.
The internet is the printing press of the 21st century. We are no longer dependent on a handful of homogeneous news outlets with no real interest in telling the whole story.
I bet Lereah is a regular on this blog. He clearly knows you exist and he has to be nervous that his "credibility" is being washed away.
David,
ReplyDeleteSince prices and price trends vary by location (and even by neighborhood), how does one define "bottom"? And is it median or average price or the "individual housing unit" price as you called it in your latest post. From the numbers I've been seeing posted here, it does indeed seem like what's happening is more of an ebb and flow of price levels effecting different locales at different times in differing strenghts. Given the inexactness of it all, I think it seems more than a little unfair on your part to bash someone who by and large has been on the money. There's been no bursting bubble, prices in most locales have already bottomed out and are rising again (as evidenced by the latest reports that were posted on this very blog), and the down cycle seems to have been a quicker one than in times past. You yourself have validated that even in your opinion prices won't be dropping more than "1 -12%" in nominal terms of the next year. And in the report that Va_Investor referenced, which appears to try to look at this as "local" real estate markets, they've identified very few locales where there will be a 15% nominal drop over the next FIVE years! By and large Lereah has been on the money. It would be interesting to compare your predictions from a year ago against what has actually occured ... You've already retreated on the idea of any substantial price decline.
Lance said,
ReplyDeleteThere's been no bursting bubble, prices in most locales have already bottomed out and are rising again (as evidenced by the latest reports that were posted on this very blog),
Please post each locale where prices have bottomed and are now rising. Please use exactly dollar amounts and dates for each. I will of course will re-post all your data on various other housing blogs.
I am interested to see if others agree with your data.
Lance, I know it must be a hard concept for someone like you to understand, so I'll try to spell it out slowly for you.
ReplyDeleteA bottom is at the bottom. Nothing is lower than a bottom. When you go down to a bottom you stop going down because you are at the bottom. If you think that you are at a bottom but then you go lower than that means you weren't at a bottom after all.
So, when the seasonally adjusted annual rate of existing home sales was 6.75 million in May and Lereah said that it was a bottom he was wrong because in September it was L-O-W-E-R at 6.3 million. When he then said that 6.3 million was the bottom he was wrong again because in November it was L-O-W-E-R at 6.28 million
comprende?
Miguel,
ReplyDeleteWe've been talking "house prices" not "sales volume". Get with the program!
Once again, I see disagreements between the housing bulls and bears partly because of what one defines as a "housing bubble".
ReplyDeleteFor one thing, there has not been a clear definition of what parameter the housing bubble is referring to. I see that some people are looking at number of sales, while other people are looking at prices.
Then when looking at prices, some people feel a drop in price of any magnitude is the popping of the bubble. Some people don't.
Some people think that prices have to decline at least a given percentage over a specific time period to qualify as a bursting bubble. Others think that there is no time period that should be used.
In the stock market, a decline of 10% from the peak is a "correction" and a decline of 20% is a "bear market". I don't think there is a specific definition of a stock market crash, but usually it happens in a relatively short period of time and the decline is typically more than 20%. I have heard people say that a crash should be a 30%+ decline over several months.
However, I don't think these percentages or timeframes should be applied to the real estate market. Residential real estate is relatively illiquid compared to stocks, and people happen to live in real estate. Also, the leverage that one uses to purchase real estate is nothing like purchasing stocks. It's a different paradigm, really.
So why are people looking at the stock market and applying the same or similar parameters to the housing market, to argue the existence or non-existence of a housing bubble?
David, you're the one who's been discredited - didn't you read the WSJ article?
ReplyDeletechris g said:
ReplyDelete"So why are people looking at the stock market and applying the same or similar parameters to the housing market, to argue the existence or non-existence of a housing bubble?"
Well said. I think you'll find that the idea of a "bubble bursting" has been promulgated (if not created/invented) by a generation that came of age with the stock market bubble burst of '99. It's only natural that they would think the same fundamentals can apply to housing prices ... and given the rapid increases in housing prices and their own self-perceived inability to ever catch up with rising prices, that they would put all their hopes in a similar bubble for real estate prices. Of course, as you explain so well ... there is absolutely no correlation between the fundamentals of house prices and stock prices. In simple terms, one is for most people a necessary expense (investors excepted) and the other is an optional investment vehicle. And while I hate to "burst the bubble" of this generations hopes for cheaper housing, I wish to remind them that they are really in no worse a position to buy than most previous generations (including my own) have been. They just need to learn to adapt to changing purchasing mechanisms such as the "exotic" mortgages as they like to deride them and realize that used responsibly, these options can be to their advantage. They also need to rid themselves of the idea that prices will drop significantly ... as David himself seems to have done given his new predictions for only the most modest of price declines in the coming year. Placing all their hopes in substantial price declines that will never occur is the greatest harm they can do themselves.
"They just need to learn to adapt to changing purchasing mechanisms such as the "exotic" mortgages as they like to deride them and realize that used responsibly, these options can be to their advantage."
ReplyDeleteThanks for the advice lance... we are all going to go out and buy depreciating assets with exotic mortgages. That is surely a plan that can not fail.
anon 8:30 said:
ReplyDelete"Thanks for the advice lance... we are all going to go out and buy depreciating assets with exotic mortgages."
Please re-read what I wrote. For most people a house is NOT an investment ... it is an expense - a necessary and unavoidable expense. Until you understand that ... and that your goal needs to be to lower the overall, longterm costs associated with housing yourself and your family ... you won't be making good housing decisions.
Lance said: "there is absolutely no correlation between the fundamentals of house prices and stock prices. In simple terms, one is for most people a necessary expense (investors excepted) and the other is an optional investment vehicle."
ReplyDeleteHow do you manufacture this drivel?
1) Ridiculous increase in prices without similar increases in underlying fundamentals means that prices will revert to something more historically normal, whether its housing, tulips, stocks, whaterver.
2)Necessary expense or not, housing is an investment for non-investors. Its a store of value and, in fact, the largest investment for most. Prices don't move as much downward, but downward decreases hurt terribly especially when using your house as a piggy bank is no longer possible for both those that live in them or just own and rent or flip.
And try googling "housing market and stock market correlation."
Anon 2:33 said:
ReplyDelete"How do you manufacture this drivel?"
Wow, do I sense fear out there among the BHs? Are you bothered by the all the good economic indicators coming out? ... or is it the fact that even David himself has retreated on the prospect of any greater price depreciation than a meager 1% - 12% this year ... i.e., less than half of the 24%+ appreciation experienced in 2005 alone? I guess facing realty hurts, huh?
A property that appreciates 24% in one year and the next year falls 12% has appreciated a total of 9.12% over two years (in nominal value).
ReplyDeleteAnd David, what about a property that appreciated 24% per year over 5 years and then falls 12% in the 6th year ... as happened between 2001 and 2006?
ReplyDelete"And David, what about a property that appreciated 24% per year over 5 years and then falls 12% in the 6th year ... as happened between 2001 and 2006? "
ReplyDeleteThat property isn't done falling yet.
Ride the short bus to work today Lance?
Lance said...
ReplyDelete“And David, what about a property that appreciated 24% per year over 5 years and then falls 12% in the 6th year ... as happened between 2001 and 2006?”
Let’s see if I get this straight Lance:
RE has fallen 12% in the last year. So, if you sold in 05’ and waited out last year, and bought today, you would pay 12% less for a comparable house bought in 05’ or the beginning of 06’?
Gee, what a concept. By not buying, I’ve saved 12% on the purchase price on a home.
What’s the current market trend? Inventory remains high, DOM has/is increasing, sales are down, and multiple median YOY declines. Is that a trend up or down Lance? I’ll take it as a trend down and will continue to wait, no need to rush into anything right? After all, I’ll want to consult a real estate agent, a few mortgage lenders, maybe an attorney to guide me through this mind boggling, professionals only, process of purchasing a home
Of course he's right. We've hit the bottom all three times. The problem is that the bottom keeps moving.
ReplyDeletehaha
I've been reading this blog for about 6 months. In that time the housing market in NoVA has slowed considerably. However, if one believes the pronouncements of NAR's chief economist, or the pronouncements of two contributors to this blog (Lance and Va_Investor), every day has never been a better time to buy a house. As one contributor noted, if I had purchased last year, in accordance with Lance's recommendations, I would be upside down around 8-12%. I'm glad I waited for the bubble to start leaking.
ReplyDelete