It is heartening to know that Mr. Lereah now admits that he was wrong. Notice how even though he admits his mistake, he is still busy pointing out that some of the bubbleheads (aka realists) were also wrong.Perhaps the most prominent housing booster was David Lereah, the chief economist at the National Association of Realtors until April. In 2005, he published a book titled, “Are You Missing the Real Estate Boom?” In 2006, it was updated and rereleased as “Why the Real Estate Boom Will Not Bust.” This year, Mr. Lereah published a new book, “All Real Estate Is Local.”
In an interview, Mr. Lereah, now an executive at Move Inc., which operates a real estate Web site, acknowledged he had gotten it wrong, saying he did not fully realize how loose lending standards had become and how quickly they would tighten up again this summer. But he argued that many of his critics have also been proved wrong, because they were bearish as early as 2002.
“The bears were bears way too early, and the bulls were bulls too late,” he said. “You need to know when you are straying from fundamentals. It’s hard, when you are in the middle of the storm, to know.”
Wednesday, August 29, 2007
David Lereah Admits He Was Wrong
David Lereah, admitted that his predictions were wrong. In a New York Times article:
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Bears are almost always "too early," because they are rational. Once the fundamentals get out of whack, you have to step away. Otherwise, you assume tremendous risk. No one ever knows where the top is without hindsight.
ReplyDeleteWhen houses eventually shoot below fundamental value, it will be ok to buy again. If they go even lower it won't really matter, you won't get hurt, medium term.
Lereah is trying to absolve himself of responsibility, sort of asking, "who knew?" Right.
“The bears were bears way too early, and the bulls were bulls too late,” he said.
ReplyDelete....That is how it is with ALL markets, stocks, bonds, houses, collectables, etc., nothing new with that.
“You need to know when you are straying from fundamentals. It’s hard, when you are in the middle of the storm, to know.”
....Of course, if one studies history, especially the history of housing and bubble markets, it is easy to see the fundamentals that prices can't exceed the rate of inflation as much as housing did and expect prices to go up forever.
Anyone remember Nixon did, or didn't do, after he left office? He went into seclusion, he didin't give interviews or opinions for years afterward.
It is strange to think that Lereah will be viewed as a person even lower than Nixon, but not unbelievable.
When you find yourself at the bottom of a hole you have dug yourself into-
STOP DIGGING!
Great, so he expect the "bubbleheads" to have accurately predicted when the downturn would occur. Nice.
ReplyDeleteLook, predicting the trend is fairly easy. Predicting the reversal point is very hard. The fact that "bubbleheads" were able to make the easier prediction but Lereah still could not is far more damning of Lereah.
What a loser he is.
Uh - how was 2002 too early to be bearish? The correction isn't over yet, pal. Here in Boston we're at 2003 prices (inflation adjusted) and falling. I fully expect it to recede beyond 2002 prices.
ReplyDeleteA common theme when saving face.
ReplyDeletethe bears were not wrong- even in 2002. They identified what was happening, called the disconnect from fundamentals, and drew accurate conclusions that it was a bubble, and would implode upon itself from the weight of it's own excess greed, excess commissions, excess pricing and lack of lending standards.
ReplyDeleteThe bears were right, and some were smarter than the average bear and identified the $hit storm brewing. Those who stood to gain during the mania had every incentive to deny it was happening as long as cash was flowing their direction. As long as the NAR's former Chief Liar was making money off the sheeple he denied the bubble. Now that his name is mud, he is making his confession of ignorance. He is no better than the fools who "didn't know what they were signing."
Except for the fact that he held the job of NAR's Economist and a big part of his job was predicting finanical trends. He knew about this bubble, he saw it coming, he was fully aware when it was happening and he did everything he could to shake every last cent out of it for his own benefit and the benefit of those of his ilk. This is PRECISELY what NAR paid him to do. He did a fine job lining the pockets of his kind at the expense of every FB out there and those of us who will feel the impact of all of their foolishness.
He knew. He rejoiced. He was only accountable for his employer who was paying him to identify opportunities to make maximum $$$. He was never accountable to those parted with their money. He is only now claiming ignorance of the mania and bubble to avoid being held accountable in the litigation to come. He is setting up his defense for his financial version of Nuremburg trial.
And when are the bubbleheads going to admit that they were equally wrong? Lereah may have been wrong thinking that the boom would continue throughout the end of the decade, but the bubbleheads are equally wrong in thinking we're going to have a sudden and absolute deflation in prices. Is it still "just around the corner" after all these years?
ReplyDeleteNice straw man, Lance.
ReplyDeleteNobody is buying anything. High lisitng prices don't mean squat if no one will pay it.
ReplyDelete"[T]he bubbleheads are equally wrong in thinking we're going to have a sudden and absolute deflation in prices."
ReplyDeleteI never said that, so I suppose it means that I'm fully right. Ahhh, that's a nice feeling.
Lance:
ReplyDeleteWe expect nothing less than obtuse foolishness from you, and you never fail to deliver.
Bubbleheads like me didn't count on the Fed allowing stated-income liar/ neg-am non-owner-occuped NINJA fog-a-mirror loans 2003-2006, nor dropping rates to the floor in 2004. . . That's what kept the party going past 2002, and why prices are heading back to 2002, since the past ~4 years of lending practices have proven to be unsustainable.
ReplyDeleteMedian asking price drops again. Now down to $399,950, from $500K at the peak.
ReplyDeletehttp://www.housingtracker.net/askingprices/DC/Washington-Arlington-Alexandria/
Lance
ReplyDeleteSince I sold in 2003, I will admit I was wrong if prices over the next two years fail (even on a nominal basis) to revert back to 03 or earlier prices.
I sold in Sausalito and I don't think the prices are back there yet -- but I'm following similar homes and their getting close to what I sold at.
Down here in OC where I moved I can say even at the coast (the type of area like Marin that is "special") we are firmly back to early 05 and late 04 prices -- and the data I am seeing is pre crisis.
So Let's revisit in six months. If prices are not back to 03, I'll admit I am wrong -- but if I am write I'll expect the same from you.
Uh...Lance? You did see the Case Schiller numbers yesterday, right? Plus the near universal expectation of declining prices through to 2009 associated to said Case Schiller?
ReplyDelete(Which leaves aside the fact that all those huge non-price concessions aren't included in calculations, greatly increasing the real decline.
)
Between inflation and absolute declining prices, I'd say expectations of large scale deflation are right on the money.
Lance said...
ReplyDelete“And when are the bubbleheads going to admit that they were equally wrong? Lereah may have been wrong thinking that the boom would continue throughout the end of the decade, but the bubbleheads are equally wrong in thinking we're going to have a sudden and absolute deflation in prices. Is it still "just around the corner" after all these years?”
“Lance”, you’re priceless. Ignorant, but priceless.
We have a local realtor that did an article on “rent vs. buy”. Same blah blah that you might expect, even had a link to a rent vs. buy calculator. However, a couple of folks noticed that the link was to a calculator on the (drum roll please)……….American Home Mortgage website. This was quite a few days after they shut down. The realtor did not/does not see the irony, nor was too pleased that we informed his reading audience that indeed, AHM was one example of many that have folded.
“Lance” shows the same reasoning..
(or lack thereof)
Bubbleheads had a disadvantage - the foxes were guarding the chickenhouse and there was no farmer to be found to chase them off. Imagine if someone, oooh, I don't know, like someone in charge of say interest rates, had increased them when they realized a bubble was being created...hmmm. This is like this month's report about the nation's economic conditions - the report says people are making a bit more money, but ONLY because they are working more hours, and a lot of them are losing their health insurance. Bush says, "Look, the economy is going well. People are making more money!" And ignores the fact that they have to work like dogs to get that extra lousy 2K a year.
ReplyDeletePeople see what they want to see.
Robert said:
ReplyDelete"The realtor did not/does not see the irony ..."
Nor do I.
The Realtor is giving a tool to fools (such as yourself) so that you can see that over the long run it is ALWAYS far cheaper to buy than to rent. And YOU meanwhile are pointing out that the tool he pointed to happens to be sitting on a now defunt mortgage company's website. I don't see the irony or the connection. But of course you do because you have your own badly formed misconceptions which obviously include the weird belief that using a calculator to see how much better off you can be buying vs. renting is somehow going to lead you to bankruptcy like the mortgage companies who found themselves unable to make further money after making oodles of it over the last 10 years. Of course you wouldn't understand that would you ... ?
lance is correct about one thing . . . renting can always be cheaper than buying, but buying the better long-term move since it locks in your housing expense.
ReplyDeleteMy friend bit the bullet in 1994, and even at the market low thought the $225k he was paying for his (very nice) condo was excessive since renting a similar one was cheaper. 13 years later, rents have doubled but his payment has gone down thanks to refinancing from high rates.
lance is of course trollishly wrong about the wisdom of buying now, or even soon, though, since current prices have been driven up by financial products and public sentiment that are no longer present.
I expect to remain a JBR for the next 3-5 years since I've seen this price-decent movie first-hand twice (California 1989-1992, and Tokyo 1992-2000).
Lance wrote:
ReplyDelete"And when are the bubbleheads going to admit that they were equally wrong? "
As soon as you admit that you were even a little bit wrong, Lance. In other words, never.
Lance said...
ReplyDelete“Nor do I.”
What a surprise.
Amazing! I return and Lance is still as silly as he ever was. I have not checked this blog for months because of his foolish rants. I check back today and his still "thick as a brick". See you in a couple of months!
ReplyDeleteNAR needs to get out of the business of being a market predictor and nonstop cheerleader.
ReplyDeleteInstead, just help people that want to buy houses for non-economic reasons.
Frank
Blog.FranklyRealty.com