Tuesday, May 06, 2008

He's Baaaaaaaaack!!

David Lereah is back giving more opinion on real estate on the mainstream media. This time in a Newsweek article. Remember, Lereah was probably the biggest cheerleader for the housing market during the bubble years.

Lereah is infamous for calling the bottom many times. Will he call the bottom once more?
His answer: not yet. "We're not at the bottom," he says. "[People] want it to be near the bottom, but we're not there yet. The leading indicators are still very bad. Pending home sales are still in bad shape. Mortgage applications are low … There's still supply out there in abundance … This thing is going to get worse before it gets better."
Wow! Lereah is actually saying that the housing market will continue to decline. The article continues ".. That's quite a turnabout from the view he articulated in his book, first published in 2005." In his book he wrote that "Today's real estate market is the result of rational decision making based on supply and demand conditions with today's economy, home owners are in no danger of experiencing a widespread fallout of home prices."

So what is David Lereah up to these days, career wise?
It turns out he has recently set up a new firm called Reecon Advisors, which is advising Wall Street firms and institutional investors about the real estate market. "Wall Street has an intense interest in [this], because they're looking for when is the recovery going to come, and at what point does the cycle turn," Lereah told me.
After Lereah's history of grossly wrong predictions, why are Wall Street firms taking advice from him? Anyone? Lerah continues and discusses what he got wrong.
Oops. "You knew there were a couple of [regional] balloons out there, and [I] said you could have a couple of these balloons pop," Lereah says now. "But I didn't think this would turn into an all-out bursting of a balloon for the whole nation." He, like other prognosticators (including Greenspan), points to his lack of understanding of the profound effects that subprime lending was having on housing markets. "[I] just didn't realize the scope, the extent, the magnitude of the loose underwriting—not looking at incomes and wages, just providing so many mortgage loans based on [expected] future price appreciation rather than the creditworthiness of the borrower," Lereah says. "That got so out of hand, and none of us realized the magnitude of it until it was too late."

None of us? There were some who did warn about these issues including by not limited too Dean Baker, Robert Shiller, the Economist, and the housing bubble bloggers. It is simply plain wrong to say no one realized what was happening. It is easy to blame his wrong predictions on the subprime mortgage mess. Lereah is desperately trying to restore his credibility be saying 'well gee no one was correct about this mess, so I'm ok.' Lereah is wrong. Others did realize what was happening and let it be known and did speak up. David Lereah has lost his credibility a long time ago.

My other blog, the David Lereah Watch was linked to in the Newsweek article. Thanks for the link. :-)

Here is what others have to say about Lereah's statements in this article:


  1. "None of us", referring to him and the other paid shills.


    Washington DC 8.3 mos.
    Alexandria City 5.8 mos.
    Arlington 4.9 mos.
    Fairfax 8.1 mos.
    Loudoun 9 mos.
    Prince William 11.1 mos.

    [note: 5-6 months is a 'balanced' market. Under 5 months is a sellers market and over 6 months is buyers market.]

  3. Hi, Everyone,

    I just received an e-mail from Freedom Works (the ones who started the petition against the mortgage bailout that has @ 44,000 names so far) that they are encouraging people to call the White House and protest.

    Here are the numbers: 202-456-1414 and 202-456-1111
    and email: comments@whitehouse.gov

    The message should be: "I am calling to ask you to veto any housing bailout that comes out of Congress."

    Start calling! We ARE making a difference. Thanks!

  4. Wall Street is all about covering their butt. If the manager can say a highly-paid consultant told him something was going to happen... and then it didn't... whose fault is that? Job saved.

  5. Given his track record, if Lereah is saying we are "not yet at the bottom" there is probably a decent chance we really are at bottom!

  6. Congratulations, David. I'm sure you know that Lereah will most likely never publicly retract his statement calling you a "stalker". All the same, it must be sweet vindication for you to see him publicly turn his position 180 degrees from years of blue-sky pronouncements for the NAR. It should be even better to appreciate that this is his futile attempt to rebuild his credibility to gain traction as a Wall Street 'advisor'.

    Yun and others should take note, and consider the lack of exit options after one sells their soul and the 'machine' spits them out when it is through.

  7. You are using my copyrighted image of David Lereah
    on your blog without my permission.

    Please remove this image immediately.

    I earn my living and support my family through the
    use and licensing of my copyrighted images. You
    have placed my image on your site making it available
    for anyone to use without permission or compensation
    regarding it's use.

    Please remove this image immediately.