Tuesday, March 06, 2007

Lereah Blames Declining Sales on 'Weather Disruptions'

The National Association of Realtors (NAR) released their pending home sales report for January 2007. Nationally the seasonally adjusted index was down 8.9% as compared to January 2006. Hat tip to Paper Money. The pending sales index showed decline in all 4 regions of the county.
  • The Northeast region was down 1.3% as compared to January 2006.
  • The West region was down 7.0% as compared to January 2006.
  • The Midwest region was down 10.8% as compared to January 2006.
  • The South region was down 11.8% as compared to January 2006

The manipulative David 'Paid Shill' Lereah blames the declining sales on the weather.

"We are seeing temporary near-term weather disruptions in much of the country, but there is an underlying pattern of stabilization in the housing market, … As a result of these weather disruptions, it may take a couple months for the picture to fully clarify, but a modest recovery is likely. Housing remains a great long-term investment. The rapid shift in January to frigid air in much of the country had a cooling affect on home shopping that went beyond normal seasonal factors, … Weather disruptions have continued since.”


Lereah is pathetic in trying to blame it on the weather. In fact, I went to NOAA's website and found the following maps showing weather conditions for January.

January 2007 Precipitation in US: Overall about normal

January 2007 Temperature in US: Overall about normal

These weather maps shows temperature and precipitation conditions in the US in January. Overall, for the country the temperature conditions were about normal (with the east coast and Midwest experiencing above normal temps, and the southwest experiencing below normal) and the precipitation was about normal.

Where is Mr. Lereah's evidence for the claim the weather significantly impacted sales? Mr. Lereah is wrongly blaming the weather for the continuing decline of housing sales. Mr. Lereah is getting more desperate as his half truths, spin and deception are further exposed.

32 comments:

  1. HAHAHAHAHA!

    Lereah will be paranoid to open his mouth knowing everything he says (bs) will be examined and scrutinized ...

    NICE PICK UP ON THE WEATHER RAP!

    No more Blah blah blah blah and getting away with it.

    KEEP UP THE PRESSURE. LOL!

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  2. So, I assume you think weather also had nothing to do with the very strong december sales numbers, right?

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  3. Perhaps it was the lunar eclipse?

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  4. I have a better theory...

    A butterfly farted in South America and negatively affected sales.

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  5. Notice also that the states (at least the populated ones) that had colder than normal temperatures were fairly warm climate states like California, Arizona, and southern Texas. It did not get cold enough in these states to significantly impact sells.

    In the colder climate states, the weather was warmer than normal. There is no basis for Lereah's statement.

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  6. So, I assume you think weather also had nothing to do with the very strong december sales numbers, right?

    Actually it probably did. But the point is that the weather was actually warmer than normal in January so Lereah's argument does not hold water. Furthermore, Lereah sure as heck didn't mention the warmer then normal December temperatures when he talked about strong December sales.

    I'll be the first to say that the February numbers will be negatively impacted by the cold February weather. I have no problem admitting that.

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  7. Why is this news? We all know that compared to January 2006 when we were in the middle of a boom, this January's numbers should be lower. What is surprising is that based on what I keep hearing on this blog, I would have thought these numbers would be a lot lot lower. Also, I'm having a hard time understanding how either of the Davids are using the weather in January to affect sales in January. Do people not go to their scheduled settlements simply because the weather has gotten cold? I.e., Sales recorded in January would have originated with offers accepted on average some 45 days prior ...

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  8. S.A ( guess who I am : )March 06, 2007 5:36 PM

    Lereah is right to be afraid of you- your knocking down his very core- the very thing he 'stands up' for- if word travels long enough and the world sees him for what he really is, a 'paid shill' - he will stand to loose his prominent position at the NAR. You have done a great job in convincing me that in reality, he is the SATAN- that is coming to harm us innocent buyers in this corrupt housing market. Kudos

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  9. so since Mr. L is such a wonderful and honest guy like his mother describes, i'd expect then, say if the US real estates goes to shi(t)s in the coming 12 months or so, that he would apologize to the recent buyers of homes who'd thought things are just "fine."...

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  10. How many think Lance is actually David Lereah's mother?

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  11. I don't put a whole lot of emphasis on January home sales in any year. The weather is more volatile in that the precipitation can take different forms (ice/snow/sleet/rain) where the summer months are just rain. Also, January sales are typically slow for the nation as a whole, with the exception of some of the southern states. It would seem to me that good or bad weather would cause a much more accentuated effect in January than, say, in July.

    Also, I don't understand why housing bulls are getting so excited about lower percentage declines YoY. That's like saying "Billy isn't getting F's anymore -- now he's getting D's! Isn't that great?"

    Besides, the only thing it confirms to me is that a full-fledged housing crash isn't in the works on a national level. However, that doesn't mean a lot of people won't go through a tremendous amount of pain for another couple years, as interest rates reset on their mortgages in a market where only the most motivated sellers get their houses sold.

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  12. A very good laugh

    I wonder what the weather was like in China last week -- perhaps that is why their market dropped and come to think of it, wasn't it bad weather in NY last week so isn't that why stocks dropped.

    Please NAR instead of speaking do some thinking.....and then give your members some good advice so they can tell sellers to lower their expectations and we can get some transaction volumne back into the market.

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  13. How do I find the original selling prices for condos at the Columbia in DC (24th and Penn)? The examples I see listed in the Post and elsewhere are priced at hallucinatory numbers where they will not sell, imo.

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  14. "How do I find the original selling prices for condos at the Columbia in DC (24th and Penn)? The examples I see listed in the Post and elsewhere are priced at hallucinatory numbers where they will not sell, imo."

    I am a bubblehead and the prices are high, but this building has a better chance than most of getting high prices since it can attract stodgier well-paid lobbyist types. Yes, it is overpriced and about 20 lockboxes are outside.

    A good source of original closing prices is www.dc.gov and go to real property database (do a search. There you can get a wealth of information if the have the property address.

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  15. Anonymous said...
    "How do I find the original selling prices for condos at the Columbia in DC (24th and Penn)? The examples I see listed in the Post and elsewhere are priced at hallucinatory numbers where they will not sell, imo."

    You can look it up on the dc.gov site (either the sales or the assessment databases.) Note though that it takes at least a few months for sales to hit the District's tax records. These are fairly new and probably just going through settlement now. Their website has a sales center, so it sounds like they still have some new units available. (I'm guessing you were refering to re-sale units?) As for the price, this is a primo location (convenient to everywhere) and the units appear to be very luxurious. Keep in mind that the developer gave the neighborhood millions and millions of dollars just for the right to build these units on land that wasn't otherwise zoned for it. I would expect these units to be among the most expensive in the city. Probably starting somewhere above the $1M dollar mark. Definitely not "starter" homes ...

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  16. Hey, I've noticed that there were some rumors about Liareah's supposed condo investments down here in the Sunshine State.

    Did a quick search in Hillsborough County (Tampa) records, and as Gomer Pyle was often want to say, "Surprise, surprise, surprise!"

    Liereah's Florida Condos - Mortgages & Deeds
    (you'll need to scroll down)

    Property Tax Records

    Google Map

    Aren't public records grand?

    Cheers!
    - Jerry @ Paradise Lost

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  17. Why is this news?

    Because Lereah made it news. He, obviously felt the need to explain away January's numbers.

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  18. At least David Lereah put some of his money where his mouth was in 05. Still makes him a blatant PR person, not an economist. Makes me think he actually may believe what he says....very scary.

    Add David to the ist of FBs.

    And to the list of greater fools. Looks like he managed to buy just at the tippy tippy top of the market in FL.......no wonder he continues to spin the positive news -- his job and investment depends on the RE market.

    You would think someone in his position would be a bit smarter -- heck if my job depends on the RE market, perhaps I should make investments that are not corellated with the RE market so if the RE market tanks at least I have a chance that my investments are ok.

    But that would require logic and brains.....

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  19. The Subprime mortgages total 13% or $1.28 trillion (including fixed rate sub prime mortgages) of the $10.03 trillion dollar mortgage market in 2004 and 2005. As Ben Bernanke recently said “Several credible reports say we are facing a tidal wave of defaults and foreclosures, which could strip these families of their major, if not their only source of wealth and long term economic security.”

    Now, who was that idiot here who claimed that subprimes were less than 1%?

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  20. www.washingtonpost.com/wp-dyn/content/article/2007/03/07/AR2007030702643.html

    Interesting article in today's Post about the "haves" in London. Now, I'm not saying Washington is London (at least not in our lifetimes), but what is occuring in London is occuring to a lesser scale in DC. And it's all due to the pan-globalization we're experiencing. This change from national economies to a global economy is bringing fast amounts of wealth with it ... And we are all benefiting from this wealth created by increased efficiencies ... 'cept some of us are benefiting more that others. And whereever these "haves" want to live is sure to get expensive in many ways ... including real estate. After all, for them million dollar condo doesn't really cost that much. Actually, it costs nothing ... since they've got the money ... and have to put it somewhere anyways. I know they're not buying ALL condos and houses, but this great wealth concentrated in the hands of a few has tremendous ripple effects. Read the article ... and to try to imagine "what if Lance is right and high prices aren't baseless ... but based on vast changes occuring in how the world does business? And when doing so ... remember that borders mean a lot less for this flow of money ... and start comparing the price of mid-town Manhattan real estate not to Peoria like we used to but instead to Calcutta ... and ask yourself. In light of prices out in Calcutta where our 800# customer reps are taking our service calls, are the "high" prices in Peoria (and Silver Spring) really that high? Could our relative wealth (in a pan-global sense) be behind the sudden increase in real estate prices precisely in all those areas around the world where the world's "economic frontrunners" live? And yes, in the scope of things ... even David at 26 is an economic frontrunner ... earning some 10 times what that worker in Calcutta is making.

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  21. I can't figure out why the MSM even wants to talk to this tool. Nobody treats the rest of the informercial kings and queens as legitimate sources of news. So why again are we hearing from him and his kind all the time as if they have even an ounce of credibility?

    The REIC is a great big reality sized pyramid organization. Not credible sources looking out for the public interest. good grief. This guy acts like you have to have bought during the freaking bubble years in order to be considered a person worthy of pointing out that he is a complete tool.

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  22. Anon 8:05 said:
    "Now, who was that idiot here who claimed that subprimes were less than 1%?"

    Genius, the question was never what the percentage of mortgages written in 2004 or 2005 were "subprime" (i.e., given to people with less than perfect credit), it was whether the number of defaulting subprime mortgages could cause a collapse in house prices.

    Just 'cause 13% of mortgages written in 2004 and 2005 were subprime mortgages, doesn't mean that 13% of all outstanding mortgages are subprime. Far from it. (a) as recently as a few years before 2004 and 2005 --- under the normal market conditions we are returning to now --- only one tenth as many subprime mortgages were written as were written in 2004 and 2005; (b) subprime mortgage tend to get refinanced within 5 years of their having been issued.

    SO, when you look at all outstanding mortgage out there, the blip that was 13% of mortgages issued in 2004 and 2005 shrinks considerably. Taking into accout that prior to 2004 you had on average something like 1.5% of all mortgages issued being subprime AND taking into account that within 5 years the vast majority of these have been refinanced into conventional mortgages by subprime borrows who are no longer subprime by virtue of their having improved their credit rating by paying on the subprime mortgage, and there is no way that you have more than 1% of all outstanding mortgages today being subprime. Take into acccount that approximately 40% of all primary residences are owned free and clear and 80% of all second homes and investment properties are similarly owned free and clear and you see how miniscule the percentage of all homes with a subprime mortgage on them becomes. Even if ALL subprimes mortgage defaulted (and the default rate on subprime mortgages recently quoted for last year was something like 12%), these defaults wouldn't be a drop in the bucket. I.e., The percentage of all homes out there that could possibly end up on the auction block is miniscule and can't under any circumstances affect the price. To get the price collapse Bubble Heads are wishing and waiting for, you'd need to have ALL homes with mortgages on them suddenly end up on the auction block. And even then, you'd have to wonder about the effect of having 40% of primary homes owned free and clear (and 80% of second/investment homes owned free and clear).

    So, genius, sorry but my "less than 1% of all outstanding mortgages being subprime mortages" statement stands. AND more importantly, the point I was making which is that "there aren't enough subprime loans out there to affect the price of houses" doubly stands.

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  23. Athena said:
    "The REIC is a great big reality sized pyramid organization. Not credible sources looking out for the public interest. good grief. This guy acts like you have to have bought during the freaking bubble years in order to be considered a person worthy of pointing out that he is a complete tool."

    Yikes! Sounds like they definitely struck a nerve with you! Are we maybe a little nervous having missed out on opportunities during the freaking bubble years?

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  24. My guess is that Lereah will blame global warming.

    http://www.msnbc.msn.com/id/17503344/

    -Meanwhile, the collapse of subprime lending is putting further pressure on housing prices because it’s taken a large segment of the home-buying public out of the market. About a third of last year's new home buyers would be rejected for a loan today, according to Zandi.

    “What’s going on in subprime market right now means that there will be a smaller pool of people than can be qualified for mortgages going forward,” said Moore.

    And with fewer potential buyers out house-hunting, the slide in homes sales will be tougher to turn around.
    Meanwhile, all those homes bought by borrowers who got in trouble — and are now defaulting on their loans — are being put back on the market. That increase in new inventory, especially when offered at fire-sale prices, puts added pressure on the price of houses already listed for sale.

    “Most lenders want to get rid of this problem as fast as they can,” said Zandi. “They’re not going to fool around. They’re going to put the foreclosed properties up for sale at a discount to move the properties. And that’s going to put another weight on the fragile market.”-

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  25. Robert quoted:
    "About a third of last year's new home buyers would be rejected for a loan today, according to Zandi."

    hmmmm ... 80% of all second homes and investment properties are owned free and clear ... ditto for 40% of all primary residences. One third of new home buyers not being qualified for a loan today is an unverified and preposterous claim.

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  26. Hmm . . .
    Lance said . . .
    80% of all second homes and investment properties are owned free and clear ... ditto for 40% of all primary residences

    Okay there are approx. 6.5 million people in the urban area and 8.5 in the metro area of DC. From wikipedia it states that there are 572,000 people in the district and 248000 households. So extrapolating that out you'd could get a rough figure of 3.25-4.25 million househoulds in DC. We'll use 4 million for right now, say ownership is around 60%. That's 2.4 million living units in the DC area people own/have a mortgage on. Using your numbers of 40% owned free and clear and 80% of second homes-we'll use 50% of all living units are owned free and clear. Thats 1.2 million living units that have loans on them. If only 0.1% of those go into default that's an additional 1200 units on the market. If it reaches close to just 1% that's 12000 units on the market. Considering that the inventory in is roughly 30000 in the dc area that would be a 4% and a 40% increase in the market respectively.

    So lance if all the sub-prime mortgages defaulted and there were 1% of total mortgages, it would cause a 40% increase in inventory, a little more than a drop to me.

    I don't know if these #s are correct, the point stands that just b/c 80% of investment and 40% of primary homes are owned free and clear (as you claim) it doesn't mean defaults could destroy the market. A small increase in the total # of defaults of existing mortgages could absolutely kill the market. Think if just 2%, just 2% of total mortgages defaulted it would cause about a 100% increase in inventory.

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  27. no this is a preposterous claim.
    "there aren't enough subprime loans out there to affect the price of houses""


    but I guess you know more then bernake, cause he said it would affect house prices.

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  28. Shane said:
    "Think if just 2%, just 2% of total mortgages defaulted it would cause about a 100% increase in inventory."

    Good analysis. Wrong conclusion. Sorry, but we already experienced that 100% increase in inventory last year and it didn't cause prices to go bursting .... It's easily digestable by the market ... Also, you assumed that ALL subprime mortgage went belly up. Estimates vary as to how many might go belly up, but the worst estimates put it at 12% ... So, 12% of that 100% increase in inventory you calculated now becomes a mere 12% increase ... and that is at "worst case" ...

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  29. The Real Bob said...
    but I guess you know more then bernake, cause he said it would affect house prices."


    hmmm ... so how do you explain this?

    Against this backdrop, Bernanke said he wanted to be clear that by suggesting the change in Fannie Mae's and Freddie Mac's portfolio holdings, he was not advocating a change in the exposure of the mortgage giants' subprime loans.

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  30. Taking into accout that prior to 2004 you had on average something like 1.5% of all mortgages issued being subprime AND taking into account that within 5 years the vast majority of these have been refinanced into conventional mortgages by subprime borrows who are no longer subprime by virtue of their having improved their credit rating by paying on the subprime mortgage, and there is no way that you have more than 1% of all outstanding mortgages today being subprime.

    Cool, when you get off that joint you have been smoking I suppose you will post data supporting all this.

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  31. Against this backdrop, Bernanke said he wanted to be clear that by suggesting the change in Fannie Mae's and Freddie Mac's portfolio holdings, he was not advocating a change in the exposure of the mortgage giants' subprime loans.

    And the next line was:

    Last week, Freddie Mac announced that it would no longer buy certain risky, sub-prime mortgages.

    Nevertheless, the first intelligent post by Lance. Applause please.

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  32. Guys, here is another "educated guess" from the Biggest Real Estate Guru of all time David Lereah! :)

    "Underlying trends point 15 a housing recovery in 2007, but it will take a couple months for us to get a better handle on it. Existing-home sales are expected to slowly improve from what appears to be the cyclical low last fall," NAR Chief Economist David Lereah said in a market report this week."
    http://biz.yahoo.com/ibd/070315/realestate.html
    ++++Thursday March 15, 7:00 pm ET+++++++++
    REMEBER THIS DATE!
    Let's check real estate bubble ina few month to see how accurate was THE GURU!

    See, Mr. Lereah has his own "trends"!
    All world investors are worring about coming foreclosure tsunami on US real estate market and all markets are falling.
    Such a bunch of dumbs!
    They must listen to wise Mr. Lereah and invest like crazy in American sub-prime lenders and home builders! :)

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