Monday, May 15, 2006

Lereah @ Boca Raton

The Boca Raton News had this to report on the latest statements by David 'soft landing' Lereah.

Lereah was quick to make his message clear: "You don't need a boom for real estate to roar. The real estate boom is over but the real estate expansion is still here." Although homes are not selling as quickly right now, prices are still up. "There are no real estate bubbles, only balloons that expand and contract," he said
David Lereah is basically saying slow appreciation. There will not be slow appreciation in bubblicious Boca or other bubble markets in the coming couple of years.

"Forty percent of all home sales in 2005 were second homes - investment properties and vacation homes - compared to about 9 percent 10 years ago," Lereah said.

This should scare the sh*t out of any flipper or specuvestor who bought in the last 2 years in a bubble market.

"Real estate is not an irrational investment, but speculators purchased irrationally during the boom, especially in areas like Miami. This drove prices up, and many speculators took out interest-only loans. This produced a vulnerable real estate market," Lereah explained. "In 2006, we are cleansing the market of speculation."

In 2007, Lereah believes that the real estate market will continue to expand even if mortgage rates increase to 7 percent. "That is still low," he said.

Sure. There will be no expansion in prices in 2007 in the bubble markets.

Buying real estate has advantages, too. "It is the most leveraged asset and there are tax advantages"Real estate needs to play a role in your investment and retirement portfolio. You should diversify," Lereah said.

He added that he is bullish on Florida, Arizona and Nevada because of even greater population increases. "The law of supply and demand works."
Wow, now he is really going out on a limb. Remember the fundamentals. But can they afford the overpriced housing units?

All of Lereah's real estate investments are in condominiums and townhomes because he doesn't want to be involved in maintaining them. "If you're Mr. Fix It, then it's okay to invest in a single-family home," he said.

Lereah also pointed out that he has invested in several condominium conversions. "Condo conversions are good because the property is already there."
Looks like he may lose money as well during the bubble. I wonder how much money Mr. Lereah has invested in RE.


  1. "All of Lereah's real estate investments are in condominiums and townhomes because he doesn't want to be involved in maintaining them."

    I see Mr. Lereah's attitude as symptomatic of the larger problem. Like so many people these days, he wants to make some money sitting on his duff and not doing any work. It used to be that owners would be the ones who would do the repairs-- being a landlord meant work. Now everyone just wants to make the easy cash. IMHO, this is another bubblicious sign.

    At least Mr. Lereah is putting his money where his mouth is, though.

    A Redskins fan

  2. Hey, more conclusory assertions from David. Great. Very helpful and convincing.

  3. "lose" not "loose".

  4. I think maybe next time these guys should get a quote from somebody who doesn't have a vested interest in seeing property valuations stay skyhigh...It's like asking the fox to comment on security around the henhouse. "It's very secure, really it is, I'd put all my chickens in there, they'll be safe". Meanwhile, he's cutting a hole in the wire as he's about time for journalists to stop quoting the RE shill. Plus, gotta love the DC stat in there!
    Thanks for your take on the artile, David. I, for one, appreciate your conclusions, and how you present a link to the article so people can go read it for themselves and make their own conclusions, as adults should know how to do.

  5. I find it amusing that Lereah says that 7% mortgages are historically low. While that's true, it's a common diversion for pumpers who want to ignore the last 5 years of this real estate market, where most mortgages have been well under 7% during that time, and that's where the majority of the price appreciation occurred. While low mortgage rates were not the only factor that caused the bubble, it was certainly an important act in the play.

  6. David's sunny outlook can be listened to on this link.
    P.S. Still the BS about "very healthy".

  7. Liar Lereah stands to lose his shirt. He has an obvious conflict of interest being an observer of the RE industry at the same time holding some of its riskiest property, condos!