Quoted in Reuters Article Where I Criticize Lereah

In a story by Reuters titled Realtors keep bright outlook despite cloudy data, I was quoted and one of my other blogs was mentioned.

While many economists underestimated the depth of the nation's current housing slump, Lereah critics single him out for maintaining such a high-profile and upbeat appraisal for so long.

"His words harmed ordinary buyers who heard him and thought that the market was bottoming out. He knew better and that is the problem," said David Jackson, a 27-year-old computer programmer who balked at buying a home in 2005 because of ballooning prices in the Washington, D.C., area and came to see Lereah as an emblem of the runaway market. He skewers Lereah on his blog, David Lereah Watch.

Its grand to be quoted and have influence. It is disheartening, that while Lereah was at the National Association of Realtors, those who disagreed with his opinion generally had much less media exposure.

Geeks Buy Houses

Washington, DC

Lawrence Yun is Wrong Abou Rising Prices; Puts Spin Machine into Overdrive

The National Association Of Realtors released their September 2007 existing home sales data. The numbers showed the housing market continues to decline.

• National: Months supply of housing increased from 9.6 in August 07 to 10.5 this month
  
• National: Months supply of housing increased from 7.3 in September 06 to 10.5
• National: Inventory was up .4% this month compare to last and up 16.3% over last September
• National: September 07 Seasonally Adjusted Sales Numbers vs last month -8%
• National: September 07 Seasonally Adjusted Sales Numbers vs last year -19.1%
• National: September 07 Not Seasonally Adjusted Sales Numbers vs last month -28.9%
• National: September 07 Not Seasonally Adjusted Sales Numbers vs last year -22.7%

They quickly turned their spin machine into overdrive. Lawrence Yun blamed 'temporary' problems in the mortgage market and assured us these mortgage 'problems' were already improving.

Lawrence Yun, NAR senior economist, said the decline is understandable. “Mortgage problems were peaking back in August when many of the September closings were being negotiated, and that slowed sales notably in higher priced areas that rely more on jumbo loans,” he said. “The good news is that mortgage availability has markedly improved in recent weeks with interest rates on jumbo loans falling, and more people are applying for safer and conforming FHA mortgage products. Some of the cancelled transactions will move forward as buyers apply for other loans.”

Mr. Yun went on to say that prices were really rising in many area.

“Because there were fewer transactions at the upper end of the market, there is a downward distortion reflected in a lower national median home price. Home prices continue to trend up in the Northeast and in the condo sector. In other areas not dependent on jumbo loans, such as much of the Midwest, prices are rising.”

Mr. Yun is wrong. The evidence shows that overall prices are not rising in both the Northeast and the condo market. Look at the Case Schiller Index as well as date from the Massachusetts Association of Realtors. Prices are also falling in much of where the population in the Midwest lives such as Chicago, Detroit, Minneapolis and Milwaukee

Remember for September 2006, the NAR reported "Total existing-home sales -- including single-family, townhomes, condominiums and co-ops -- dipped 1.9 percent to a seasonally adjusted annual rate1 of 6.18 million" David Lereah the NAR's cheif economist, and Yun's boss at the time said "this is a lagging indicator and the worst is behind us as far as a market correction -- this is likely the trough for sales." Since then the seasonally adjusted rate is down 19% to 5.04 million. Some trough? The NAR's spokespeople cannot be trusted as they are paid shills who give propagandist predictions. They are super spinners.

Senate Sqaure Condos are Now Available for Rent

Senate Sqaure Condos are Now "Luxury Apartments for Lease." Check out their website.

Senate Sqaure (Bubble Meter, August 2006)

52 Months Supply of Housing in Palm Beach County

September 2007: 52 Months Supply of Housing in Palm Beach County (suburban Miami). Or 4 year and a 1/3 year supply of housing units. (as a reader pointed out). ~52 = (25882 / 472) Yikes! Graph from Illustrated Properties

Lose, Lose Situation

Image from Silver Spring, MD: Suburban Washington, DC

Criminality At Countywide

The Securities Exchange Commission is investigating Angelo Mozilo CEO of Countrywide Financial, which is the largest US mortgage company. Mortgage Daily News Reports:

Countrywide is the largest mortgage company in the country and Mozilo, its founder, is generally credited or blamed for the company's evolution from a mostly conventional lender into one where subprime products dominated.

At issue is the sale by Mozilo of some 130 million of his company's stock in the first six months of 2007. It seems that there is a rather large loophole... ahem, provision, in the rules against insider trading that allows an insider to set up what is called a 10b51 trading plan. Such a plan, once established, allows the insider to proceed with transactions such as buying, selling, or exercising options even if he or she subsequently comes into possession of information that might impact stock prices which is not available to the public

There are other shady companies and characters out which need to be investigated.

The SEC is apparently investigating a dozen or so companies, including Countrywide, in connection with the subprime mess but, according to The Wall Street Journal article it is taking a special if informal look at Mozilo.

Fraud was a significant contributing factor in the explosion in prices for housing units. How large is yet to be determined? There is no question that many of the loans that had no documentation (aka liar loans) were fraudulent. Additionally, the subprime industry was infested with shady doings, being that many of its borrowers were encouraged to borrower more then they could reasonably afford.

Hopefully, the SEC and other investigating authorities will take a very tough look at Countrywide and other players in the mortgage mania.

September Home Sales in Southern California Plunge

SAN FRANCISCO (Reuters) - Sales of houses and condominiums in the most populous Southern California counties fell 29.9 percent from the previous month and 48.5 percent from a year earlier, DataQuick Information Systems said on Tuesday.

The report covers the counties of Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura and showed a total of 12,455 new and existing homes and condos sold in September, the lowest since the company began recording the data in 1988. (Reuters 10/16/07)

Best of The Bubble Sphere

Housing slump affects sales tax collections (Atlanta Journal-Constitution)

8503 2nd Ave in Silver Spring, MD just reduced agains to 589K. See Previous Post

RTC2? Banks in desperate $80 billion scramble to avoid "mark to market" meltdown. Just delaying the inevitable (Housing Panic)

For Sale And For Rent

10/12/07: Washington, DC