Tuesday, January 02, 2007

NAR's 2006 Prediction Is Way Off

Back in December of 2005 the National Association of Realtors (NAR) made a woefully wrong prediction. Thanks to Business Week for finding this gem:

PREDICTION: The national median home price will rise about 6.1% in 2006. Over a full year, it "has never declined since good record-keeping began in 1968." — National Association of Realtors, Dec. 12, 2005

THE REALITY: Through October, the median price of residential properties was down 3.5% from a year earlier.

The NAR was way off on this prediction. The median price decline is even worse if you take into account all the extra incentives that have been thrown on new home buyers. Don't trust the National Association of Realtors. Remember, David 'the shill' Lereah works there!

21 comments:

  1. Ok, so the NAR is discredited, but so are many of the bloggers.

    Bearish Barry Ritholz is discredited in an even bigger way because he said that the dow would end around 7000.

    Nouriel Roubini said the economy would be more or less falling into a housing-induced recession right now and that the stock market would have just a sucker's rally (not the strongest rally that I can remember in year's, of course).

    So I don't think it's fair to say the NAR (whom I dislike very much, BTW) is now officially discredited without discrediting everyone else who got a prediction wrong in 08.

    It's just showing your bias.

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  2. You aren't showing anyone's bias.

    There are millions of blogs on the internet. They are written by a wide range of people with varying levels of knowledge.

    You can't discredit "blogs" any more than you can discredit all of mankind.

    The NAR on the other hand... they are a single entity with an established track record of making erroneous predictions. They can be discredited.

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  3. Charts -
    You're right about a lot of people being wrong, but do you have any way of knowing this is *not* a suckers rally? I don't much think it is, but I don't think there's much way to tell, either..?

    If you look at the fundamentals of the economy, we're doing OK, but not doing great. There's too much debt (both public and private), job growth is iffy, and there's a BIIIG softening in cars and real estate, both of which are pretty important.

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  4. There are millions of blogs on the internet. They are written by a wide range of people with varying levels of knowledge.

    You can't discredit "blogs" any more than you can discredit all of mankind.


    Furthermore, we bloggers (or at least most of us) do not have anything close to the resources that the NAR has. So your argument (that some bloggers got it wrong too and so therefore David is being biased) is a straw-man argument at best.

    Given their resources, if the NAR got it so wrong -- ass backwards -- then it was likely because they were lying through their teeth hoping that enough people (i.e., buyers) would believe them and not because they were trying to make an accurate prediction.

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  5. Maranite said:
    "Given their resources, if the NAR got it so wrong -- ass backwards -- then it was likely because they were lying through their teeth hoping that enough people (i.e., buyers) would believe them and not because they were trying to make an accurate prediction."

    Lacking a fully-functional crystal ball, it would be a near impossibility for anyone to be as accurate as the standard to which the bloggers are holding the NAR. The real question is, who has done a better job at predicting trends and amplitude of the changes. I believe without question that that has been the NAR and not the bubble-thumping bloggers. Apparently David has also come to that conclusion with his price-decline predictions for 2007 which more more closely match the NAR's trends and amplitude predictions that any of the BHs' predictions in the past. You can't beat having experiences and "resources", hence why I am more apt to believe the NAR's chief economist than amature blogger-predictors. Now, do I take the NAR's word as "God's word"? H@ll no! Of course they have a horse in the race and of course there is going to be some bias in their pronouncements. So, in my mind I know to "adjust" for this discrepancy. Review the predictions I made last summer for this coming year and you'll see that my "NAR-adjusted" numbers were pretty much on the mark.

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  6. Over the long haul....I'll take the stock market

    http://www.forbes.com/realestate/2005/05/27/cx_sc_0527home.html

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  7. Barry Ritholz? Nouriel Roubini?

    Who?

    I've never heard of these people. They certainly don't have the high profile of say Lereah, or Abby Joseph Cohen, Henry Blodgett, etc. How about chosing one regularly qouted in the media like Lereah. When you find them, and figure out their industry biases, then its time to start buying.

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  8. Anonymous said...
    "Over the long haul....I'll take the stock market"

    Okay ... I hope you can keep warm and dry under your stock certificates.

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  9. Let the real crash begin.

    Realtor credibility will take years of repair and time. A public backlash is coming!

    KEEP UP THE PRESSURE ON THIS UNETHICAL CREW!

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  10. Oh no, more good news forecast for the economy (WSJ 1/2/07 page 1). How will the "crash-crowd" spin this? Looks like little chance of David's recession....maybe in another year or so or three or four?

    David your predictions are as baseless as your counterpart - David L.

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  11. what planet is VA investor from????

    real unemployment is at 10-12%
    real inflation is at 8-10%
    reserve status of the dollar in question
    M-3 totally out of control and not even published anymore
    controller general says we are a bankrupt nation..

    on and on...but wait VA investor and her pal Lance say all is good..thank you for the pronouncemnts from the Mount..the oracles of delphi have nothing on you two clowns.

    the wall street journal is a mouthpiece for the present administration. VA you are and have been totally baseless.

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  12. anon 7:37

    A little paranoid? Everyone, including the WSJ, the FDIC, and MIT are paid shills! Keep drinking the kool-aide.

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  13. Anonymous &:37 said...
    "what planet is VA investor from????

    real unemployment is at 10-12%
    real inflation is at 8-10%"


    Anon 7:37, why are you disseminating outright lies?

    U.S. unemployment rate rises to 4.5%

    www.freep.com/apps/pbcs.dll/article?AID=/20061209/BUSINESS07/612090339/1002/BUSINESS

    Chart with monthly annualized inflation rates: (Last November it was an annualized 1.97%)

    http://inflationdata.com/Inflation/Inflation_Rate/CurrentInflation.asp

    Wall Street Journal Survey of Economists: US economy poised to shake off housing slump and regain momentum by end of 2007

    www.finfacts.com/irelandbusinessnews/publish/article_10008539.shtml

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  14. http://money.cnn.com/2007/01/02/news/companies/lennar_warning/index.htm?postversion=2007010210

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  15. Anon 1:48. Strange that you haven't heard of Barry or Nouriel. The two are quoted regularly in the WSJ, NYT and make plenty appearences on CNBC supporting the bear case. Plus their blogs are among the top 10 most trafficed econ blogs out there.

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  16. http://money.cnn.com/2007/01/02/news/companies/lennar_warning/index.htm?postversion=2007010210

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  17. Lance said...
    Anonymous said...
    "Over the long haul....I'll take the stock market"

    “Okay ... I hope you can keep warm and dry under your stock certificates. “

    And you hope to keep warm and dry under your paper “gains”?

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  18. "what planet is VA investor from????

    real unemployment is at 10-12%
    real inflation is at 8-10%"


    Anon 7:37, why are you disseminating outright lies?

    Agreed. I think the poster is either Lance, va_investor or an anti-BH trying to reduce the credibility of the BH's on this site.

    And no. I haven't heard of Roubini or Nouriel. If they are just bloggers, I don't want to hear from them as a respected source. I wouldn't want to hear David on MSNBC or other as a respected source, even though I agree with his views. There is something to be said for being an academic or a professional in a field. Being a professional blogger doesn't cut it.

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  19. "And no. I haven't heard of Roubini or Nouriel. If they are just bloggers, I don't want to hear from them as a respected source."

    Ummm....it's Nouriel Roubini, as in one person.

    Here is Roubini's blog:

    http://www.rgemonitor.com/blog/roubini

    Here is his bio:

    Nouriel Roubini, Chairman

    As Chairman of Roubini Global Economics, Nouriel supervises the editorial policy that has made RGE Monitor the world's leading source for macroeconomic and geostrategic information.

    Nouriel is a Professor of Economics at the Stern School of Business at New York University (see http://pages.stern.nyu.edu/~nroubini/ for his Stern homepage). His applied academic research includes seminal work in international macroeconomics, global macro policies, financial crises in emerging markets and their resolution, and the reform of the international financial architecture. As a leading economist in the field of international macroeconomics, Nouriel has had significant senior level policy experience. Numerous policy appointments include former assignments as Senior Economist for International Economics at the White House Council of Economic Advisors, Senior Advisor to the Under Secretary for International Affairs at the U.S. Treasury, Director of the Office of Policy Development and Review at the U.S. Treasury. He has been a policy and research consultant at the IMF since 1985, and is a member of many leading policy forums and organizations including the Bretton Woods Committee, the International Roundtable of the Council of Foreign Relations, the NBER and the CEPR. Nouriel is a consultant for a wide range of policy institutions, Central Banks, and a number of senior executives from major financial institutions. His recent book with Brad Setser on financial crises in emerging markets, Bailouts or Bail-ins? Responding to Financial Crises in Emerging Economies, was published by the Institute for International Economics Council of Foreign Relations in 2004.

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  20. Great posting.

    Especially the part about the seller incentives. I'm a Realtor and I am sick of the BS that NAR and other data sources put out. On my blog I recreated the numbers put out by our local MLS and I took into consideration those subsidies that you refer to and the data shows seller contribution was an extra 2%, up from nearly 0%. So the 3% drop that they finally admit to is more like a 5% drop!

    Frank Borges LLOSA- Owner/Broker/Realtor FranklyRealty.com
    Featured in WSJ, NYTimes, BusinessWeek, CNBC etc.
    Check out my blog and comment at Blog.FranklyRealty.com

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  21. Don't forget inflation for the real effect on these median price numbers...add about 2-3% to the decline...

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