David Lereah, the former chief economist of the National Association of Realtors, has gone independent and created his own company called The Reecon Advisory Report. Recall, Mr. Lereah was a prominent cheerleader of the housing bubble.
The Reecon Advisory Report can by yours for $295 for six months or $495 for a full year. No, I am not endorsing his product.
How can Mr. Lereah be trusted after his dismal record of predicting the real estate market during the bubble years? A much better idea is to read the housing and economic blogs.
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Step 1: See what he says.
ReplyDeleteStep 2: Bet against him.
Step 3: Profit.
David,
ReplyDeleteYou're back! Welcome back!
Okay ... we were wondering ... have you bought yet?
Looks like some of the better known brokers of the failed FIRE economy are struggling to make ends meet.
ReplyDeleteLance,
ReplyDeleteI still post only every two weeks or so. Thanks for the welcome back.
" have you bought yet?"
No. But purchasing in summer 2009 or fall 2009 is a possibility.
Speaking of economics; "What you must realize, above all, is the rich no longer control the economy and its mores. Ward Three (DC) people do, and their rule has just begun."
ReplyDeleteFrom the New York Times OP ED section:
http://www.nytimes.com/2009/02/03/opinion/03brooks.html?_r=2
Ward Three Morality
By DAVID BROOKS
Published: February 2, 2009
I’ve become increasingly concerned about the rising number of rich people who are being caught unawares by shifts in the sumptuary code. First, there were those auto executives who didn’t realize that it is no longer socially acceptable to use private jets for lobbying trips to Washington. Then there was John Thain, who was humiliated because it is no longer acceptable to spend $35,000 on a commode for a Merrill Lynch washroom.
Then there are the Wall Street executives who were suddenly attacked from the White House for giving out the same sort of bonuses they’ve been giving out for years. Now there is Tom Daschle, who is being criticized for making $5 million off his Senate prestige.
I’m afraid there are rich people all around the country who are about to suffer similar social self-immolation because they don’t understand that the rules of privileged society have undergone a radical transformation.
The essence of the problem is this: Rich people used to set their own norms. For example, if one rich person wanted to use the company helicopter to aerate the ponds on his properties, and the other rich people on his board of directors thought this a sensible thing to do, then he could go ahead and do it without any serious repercussions.
But now, after the TARP, the auto bailout, the stimulus package, the Fed rescue packages and various other federal interventions, rich people no longer get to set their own rules. Now lifestyle standards for the privileged class are set by people who live in Ward Three.
For those who don’t know, Ward Three is a section of Northwest Washington, D.C., where many Democratic staffers, regulators, journalists, lawyers, Obama aides and senior civil servants live. Thanks to recent and coming bailouts and interventions, the people in Ward Three run the banks and many major industries. Through this power, they get to insert themselves into the intricacies of upscale life, influencing when private jets can be flown, when friends can lend each other their limousines and at what golf resorts corporate learning retreats can be held.
The good news for rich people is that people in this neighborhood are very nice and cerebral. On any given Saturday, half the people in Ward Three are arranging panel discussions for the other half to participate in. They live in modest homes with recently renovated kitchens and Nordic Track machines crammed into the kids’ play areas downstairs (for some reason, people in Ward Three are only interested in toning the muscles in the lower halves of their bodies).
Nonetheless, many people in Ward Three do have certain resentments toward those with means, which those of you in the decamillionaire-to-billionaire wealth brackets should be aware of.
In the first place, many people in Ward Three suffer from Sublimated Liquidity Rage. As lawyers, TV producers and senior civil servants, they make decent salaries, but 60 percent of their disposable income goes to private school tuition and study abroad trips. They have little left over to spend on themselves, which generates deep and unacknowledged self-pity.
Second, they suffer from what has been called Status-Income Disequilibrium. At work they are flattered and feared. But they still have to go home and clean out the gutters because they can’t afford full-time household help.
Third, they suffer the status rivalries endemic to the upper-middle class. As law school grads, they resent B-school grads. As Washingtonians, they resent New Yorkers. As policy wonks, they resent people with good bone structure.
In short, people in Ward Three disdain three things: cleavage, hunting and dumb people who are richer than they are. Rich people have to learn to adapt to the new power structure if they hope to survive.
First, try to submit to the new sumptuary codes. People in Ward Three have nationalized extravagance and privatized Puritanism. Under their rule, the federal government is permitted to throw hundreds of billions of dollars around on a misguided bank bailout, but if a banker like John Thain spends $1,500 on a wastepaper basket then all hell breaks loose. Dazzling personal consumption is out. Middle-class drabness is in. It’s sad, but there’s nothing to be done.
Second, in conversation, try not to say that times are so hard that you are down to your last $400 million. This will not arouse as much sympathy as you might think.
Third, there are times when Masters of the Universe must be Masters of the Grovel. If you are a hedge fund manager and you find yourself in conversation with a person from Ward Three, apologize for ruining the Hamptons, and subsequently, the entire global economy.
What you must realize, above all, is the rich no longer control the economy and its mores. Ward Three people do, and their rule has just begun.
A discussion mounted the other day between James and Lance about whether or not there was a bubble, and moving goalpoasts. Perhaps in an effort to solve this, lets go back to an old definition the venerable David gave us years ago on 11/26/05.
ReplyDelete"A bubble market is any area where residential real estate prices will decline more then 20% in real dollars [inflation adjusted] over the course of 3 years."
As 3 years was up on 11/26/08, maybe its time to look back and see how that prediction stacked up. Here I am using average prices (medians arent out yet but will come in close to these numbers anyway), and I am tacking on 3% for inflation. The result is pretty clear:
Arlington -6.3% (2005-2008)
Result - NO BUBBLE
Alexandria -12.1% (2005-2008)
Result - NO BUBBLE
Fairfax -22.6% (2005-2008)
Result - BUBBLE
Loudoun -32.9% (2005-2008)
Result - BUBBLE
PWC -43.8% (2005-2008)
Result - BUBBLE
DC -6.7% (2005-2008)
Result - NO BUBBLE
Montgomery -11.0% (2005-2008)
Result - NO BUBBLE
Prince Georges -20.0% (2005-2008)
Result - BUBBLE
So there we have it. You could argue that given enough time, all will fall below 20% inflation adjusted, but that would be moving the goalpoasts.
Still, 4 out of 8 markets were correct and this was written more than 3 years ago? Nice job David.
Nonetheless, many people in Ward Three do have certain resentments toward those with means, which those of you in the decamillionaire-to-billionaire wealth brackets should be aware of.
ReplyDeleteAlternately, you could make the argument that, as elected officials, these "Ward Three People" take a special interest in the most egregious cases, since they're assured that they will get absolutely crucified at the polls if the uber-wealthy continue to scoop the last remains of the US Treasury into their maws by day, while continuing to eat the roast suckling newborns of the poor by eve.
But I'm sure that's the last thing on their minds. 'Cause, you know, it's the *Democrats* who've always relied on the politics of resentment.
BTW, never thought I'd see the day when David Brooks would be one of the hot-ticket columnists at the nations "most liberal" broadsheet. As Y. Smirnoff would say, "What a country!"
"As 3 years was up on 11/26/08....
ReplyDeleteResult - NO BUBBLE....Result - BUBBLE"
HAHAHA
Dude, the prices didnt even start dropping until like 3 or 4 months ago! 3 years ago prices were still GOING UP! This correction has just started in the DC metro area (at least in MD) and the alt-A's havent even started going into foreclosure yet!
I dont care what you define this period of prices dropping 10% in a month or two....its puts a smile on my face and cant wait for another 8-10 months to pass by.