MarketWatch Slams David 'Paid Shill' Lereah

MarketWatch slams David Lereah in an article titled 'Realtors' economist stayed sunny all year. In the most excellent article, it is written

There are two universal truths at the National Association of Realtors: 1) It's always a good time to buy or sell a home; and 2) We've seen the worst of the housing market correction.

That is the gospel at the the National Association of Realtors which is desperately trying to keep home sales and home prices high. Lereah is sounding even more pathetic then normal. He recently said:

"With fingers and toes crossed, it appears that we have hit bottom in the existing home market"

Despite Lereah's convoluted body the market will continue to decline in the coming year. David Lereah has lost credibility, it is refreshing to see the mainstream media criticize David 'paid shill' Lereah.

Going on Vacation For Two Weeks

It is time for a vacation. I'll be overseas starting tonight. I may post once during my two week trip. Not sure if there is a bubble there or not. I will investigate upon my arrival. :-)

Investors must have been dissapointed when WCI Communities of Florida had "preliminary combined tower and traditional gross new orders totaled 261 for the fourth quarter but were offset by a combined total of 270 tower defaults and traditional home cancellations and defaults.” News Press (Hat Tip to Housing Bubble Blog)

There are plenty of solid housing blogs out there, just check out the sidebar on the right side of this webpage.

Bye!

Home Builders Association of Metro Orlando Engages in Scare Tactics, Self Contradictions, and Lies To Sell Homes

The Home Builders Association of Metro Orlando is a member of the housing industrial complex aka the Real Estate Industrial Complex (REIC). In their new ad campaign they have engaged in scare tactics, self contradictions, and lies to sell their homes.

Background: The Orlando sentinel wrote this about their campaign:

The Home Builders Association of Metro Orlando kicked off a marketing campaign this week to encourage "fence sitters" that now really is a good time to buy a home in the Orlando area.

Valued at nearly $1 million, the six-week multimedia campaign is appearing on local television, in print, on billboards and on a Web site (realopportunitycfl.com).

Representatives of the Orlando-based trade association said the campaign is the largest in the group's history and includes brochures, automobile stickers, movie-theater announcements and a comprehensive media effort."

Lies: The Home Builders Association of Metro Orlando has resorted to outright lies in their desperate attempt to find new buyers for their bubblicious new homes. On their newly created propaganda website they write "This website has been created to server only one interest - that of the today's homebuyer.



No. Their website was NOT created to "serve only one interest - that of the homebuyer," but instead was to help them attract additional buyers for their homes. These homebuilding businesses are here to sell homes profitably and thus make money. Many of the homebuilders in the Orlando area are desperate and need sales. As one commentator on Housing Panic put it "The website is pure self-interested sales collateral." The homebuilders association resorted to lies and other corrupt measures to move a glut of housing units

Scare Tactics: The Home Builders Association of Metro Orlando uses scare tactics to frighten renters into buying now. In their Frequently Asked Questions (FAQ) section. They ask and answer "As a first-time buyer, should I wait until prices go lower to buy a home? No. If you continue to wait, you may never be able to afford to get into the housing market."

Self Contradictions: In their Frequently Asked Questions (FAQ) section. They ask and answer "If I wait to buy a new home, won't prices go down even lower? Timing the market isn't a great idea." However, in one of their TV Ads the announcer says "When it comes to buying a home, timing is everything. That time is now." Thus, their TV ad contradicts thier FAQ on their website.

My esteemed housing bubble blogger Keith over at Housing Panic wrote this and attacked their campaign saying "the ads and website are disgusting. more lies and spin from the REIC."

The Home Builders Association of Metro Orlando's campaign to convince people to buy now is pathetic. It engages in scare tactics, self contradictions and lies. They should be ashamed of their outrageous tactics. Don't be fooled.

NYTimes: Buyers Scarce, Many Condos Are for Rent

The NYtimes in an article titled Buyers Scarce, Many Condos Are for Rent discusses the declining market for condos especially in the Washington area.

Since the middle of 2006, the frenzied condominium market here and in several other big cities like Las Vegas, Miami and Boston has collapsed. Once roaring sales have slowed to a trickle, sparse inventory has mushroomed into a glut and soaring prices have flattened out and started falling.

This development, originally proposed as condos, in the DC area is now becoming apartments:

After six weeks of failing to lure more than a couple of dozen buyers, Mr. Franco and his partner, Jeff Blum, joined the builders of nearly 6,000 condominium units in the Washington metropolitan area who have decided in the last three months to recast their projects as rental apartment buildings.

Below, we are told of a condo owner wanting to sell their unit but can only get somewhat less then the original 2004 purchasing price.

Take the owner trying to sell a spacious two-bedroom condo for $879,000 in the former Columbia Hospital for Women, which closed in 2002, in the Foggy Bottom neighborhood of Washington. In 2004, the investor was so confident that he would make a handsome resale profit that he told his agent, Thomas P. Murphy, he wanted to buy five condos. Mr. Murphy said he flatly told his client he would only assist him in purchasing one unit in any one building.

Could he rent the condo? Yes, but that option is not appealing, either. Mr. Murphy estimates that the unit could rent for $4,000 a month, far short of the $6,800 a month the condo costs in mortgage interest, maintenance fees, insurance and taxes.

"They have a choice of how they want to lose it," Mr. Murphy said of investors and condo developers. "Drip by drip or in one slap."

The condo market in the DC area is undergoing serious decline as the number of sales has plummeted and prices have dropped. The average sales price for a condo unit in December 2006 compared to December 2005 [these are ones listed through the MLS and does not include many condos such as those sold directly by developers].

Montgomery County : -7.1%
Washington, DC: -7.9%
Fairfax County: -4.0%
Loudoun County: -4.4%

The condo market in the Washington, DC area will continue to decline due to the growing inventory and the lack of investors. Expect further price declines in the Washington, DC condo market in 2007.

BubbleSphere Roundup

Check out the informative The Mortgage Lender Implode-O-Meter which tracks "mortgage lender going bust." Great Site

New bill targets appraisal, mortgage fraud (Rocky Mountain News).

Flipping Frenzy. Indeed! As documented by Flippers in Trouble which was recently freatured in the Sacraemento Bee.

Also check out Dr. Housing Bubble. Solid!

Lincoln Park Terrace Condos in DC

Lincoln Park Terrace Condos
From the 300's

Under Construction

December 2006 MRIS Numbers

The new monthly numbers for December 2006 are out from the MRIS (Metropolitan Regional Information Systems) the multiple listing service for the area. YoY = Year over Year, that is the comparison between December 2006 and December 2005. These numbers include all housing units ( not just single family residences but also condos and co-ops).

The housing market in the Washington and Baltimore area had already started declining in fall 2005. Thus the year over year comparisons only represent a portion of the declining housing market.


Northern Virginia (Fairfax County, Fairfax City, Arlington County, Alexandria City, & Falls Church City, VA (NVAR))

• Median Price: $451K
• Median Sales Price YoY: -5.7%
• Average Sales Price YoY: -2.9%
• Total Units Sold YoY: -19%
• Average Days on Market YoY: 139%
• Active Listings YoY: 27%

Baltimore City Area (Anne Arundel, Baltimore City/County, Carroll, Harford, Howard (BALT AREA) )

• Median Price: $265k
• Median Sales Price YoY: 3.9%
• Average Sales Price YoY: 1.0%
• Total Units Sold YoY: -17%
• Average Days on Market YoY: 93%
• Active Listings YoY: 45%

Washington, DC (just the District of Columbia, no suburbs)

• Median Price: $388k
• Median Sales Price YoY: -2.9%
• Average Sales Price YoY: -13.0%
• Total Units Sold YoY: -15%
• Average Days on Market YoY: 92%
• Active Listings YoY: 36%
  

Prince George's County, MD

• Median Price: $330K
• Median Sales Price YoY: 4.8%
• Average Sales Price YoY: 5.5%
• Total Units Sold YoY: -32%
• Average Days on Market YoY: 128%
• Active Listings YoY: 85%
  

Montgomery County, MD

• Median Price: $435K
• Median Sales Price YoY: -3.0%
• Average Sales Price YoY: -5.3%
• Total Units Sold YoY: -13%
• Average Days on Market YoY: 118%
• Active Listings YoY: 47%
  

Loudoun County, VA

• Median Price: $440K
• Median Sales Price YoY: -13.7%
• Average Sales Price YoY:-11.2%
• Total Units Sold YoY: -34%
• Average Days on Market YoY: 173%
• Active Listings YoY: 13%

Arlington County, VA

• Median Price: $500K
• Median Sales Price YoY: .2%
• Average Sales Price YoY:-2.2%
• Total Units Sold YoY: 15%
• Average Days on Market YoY: 100%
• Active Listings YoY: 14%

Frederick County, MD

• Median Price: $301K
• Median Sales Price YoY: -6.4%
• Average Sales Price YoY: -4.1%
• Total Units Sold YoY: - 30%
• Average Days on Market YoY: 100%
• Active Listings YoY: 44%

Fairfax County, VA

• Median Price: $450K
• Median Sales Price YoY: -7.0%
• Average Sales Price YoY:-3.9%
• Total Units Sold YoY: -25%
• Average Days on Market YoY: 155%
• Active Listings YoY: 28%

For more numbers on jurisdictions not mentioned here please go to MRIS Market Statistics.

These numbers are in sharp contrast to what occured between December 2004 to December 2005. For example in Loudoun County:

December 05 YoY Median Sales Price: 17.7
December 06 YoY Median Sales Price: -13.7

That is a turnaround of greater then 30% which goes to show just how fast this market has changed.

These numbers clearly showing a declining housing market in the Washington - Baltimore area. The housing market in the Washington, DC area is experiencing a significant decline. The above numbers are nominal dollars, looking at real dollars (inflation adjusted) the declines are even greater.

The Washington - Baltimore area will not have a spring bounce that will save the housing market from further declines in 2007. In the metropolitan area a declining housing market is reality.

Spring Will be No Saviour

The spring is fast approaching. Many in the housing industry are preaching that the spring buying season will save the housing market from its continued decline. They are preaching and praying for a 'spring bounce.'

Spring is the busiest season for real estate. "Indeed, April through July outpace the balance of the year in sales, historic data at the National Association of Realtors indicates. So there'll surely be more home inventory and variety then. But you better move fast, because that's just what other home hunters are doing (Bankrate)."

David 'the Shill' Lereah, is predicting a spring bounce, warning buyers to buy now or have to deal with less inventory (a spring bounce)

"Conditions for buyers have improved because sellers are flexible now and mortgage interest rates are near historic lows. The market promises to be more balanced between buyers and sellers by early spring, supporting future price growth"

Faithful cheerleader, Blanche Evans, editor of Realty Times, wrote "home prices and sales expected to rise again in the spring. (Realty Times, Nov 3, 2006)" Alexis McGee, president of ForeclosureS.com said:

“Although it’s impossible to know exactly when we hit the bottom on the price correction, I firmly believe that when the market heats up again this spring, we’ll look back at this winter season as our best buying opportunity in six years”

Clearly some in the housing industry are hoping spring will reverse the current sales and price declines occurring in most bubble markets. They predict that with the spring season a large amount of buyers will swoop in, raise demand, and bid up prices. This will not happen.

Last year, some in the housing industry were promoting the spring boom. Realty Times Editor, Blanche Evans wrote:

"What about housing? There's a lot of positive news that suggests that housing may have had its "rest." Spring might catapult housing into another record year."

As we now know, last spring's selling season was a bust and did not stem the tide of the housing decline. Mr. Lereah another housing cheerleader, who is predicting a strong spring season, has already called the bottom of the housing market three times.

This year we can expect a surge of inventory coming on the market as desperate sellers try again to sell housing units that have been delisted, foreclosures increase and recently built housing units are completed. In a research note titled: "Not So Fast" by Credit Suisse (hattip to Calculated Risk):

• Record new inventory could get worse: According to our channel checks, despite the soft markets, the pipeline for new communities remains full with an 11% median increase in community count expected for next year. In fact, 63% of respondents expect to increase the number of open projects. We are dubious that the increased supply won't heighten the need for incentives and aggressive pricing in the spring.

• Existing inventory could run up again in spring: With both real homeowners and forced investor sellers looking to the new year to test the market, we expect the pressure from resales to resurface in the first quarter.

Meanwhile, on the demand side the speculators will have a minimal impact as they have largely existed the market. There will be no spring bounce to rescue currently overpriced houses.

The spring will bring out more buyers but also more sellers. Inventory will increase significantly in most bubble markets. In most bubble markets prices will likely remain flat or fall slightly in the bubble markets during the spring months. This year's spring selling season will be very disappointing for sellers expecting a spring bounce.

BubbleSphere Roundup

Paper Money talks about NAR's November Pending Home Sales.” The highlight "nationally the index was down 11.4% as compared to November 2005." Remember, by November 2005 the housing market was already declining.

Is Wall Street Souring on SubPrime Loans? at The Real Estate Bloggers.

Macroblog features a 'Mixed Bag' of recent economic news.

Optimism on the Menu for 2007 for Seattle. Uber Blogger Timothy Ellis discusses the local cheerleading by the housing industrial complex.

Patch Tuesday, mocks a local Realtor who sends out bubblicious postcard. The Realtor claims regarding the house "this home could be thbeginningng of your financial independence."

Revised Brochure From The Federal Reserve about ARMS is Lousy

The Federal Reserve revised its consumer handout about how adjustable rate mortgages work. The Mortgage Daily News reports that:

The Board in conjunction with the Office of Thrift Supervision issued a revised version of its venerable Consumer Handbook on Adjustable-Rate Mortgages
(the CHARM booklet.)

Under the Board's Regulation Z, every lender must provide a copy of the CHARM booklet or a suitable substitute to every borrower who makes application for an adjustable rate mortgage. The booklet which was originally published in 1987 has been periodically updated but with the current concern about borrowers overextending themselves by choosing ARMs during a period of rising rates and putting themselves at even greater risk by picking so called exotic variations on ARMs such as interest only or option ARMs, the revised booklet is timely and one hopes also helpful.

The brochure was developed "in consultation with the following organizations" which included some members of the housing industrial complex (Mortgage Bankers Association, National Association of Home Builders, National Association of Realtors) who cannot be trusted.

The book has a solid discussion of how ARMS work. However, the big picture risks are not properly detailed.

For example, there is NO mention of the risks of foreclosure or losing your housing unit. [Search the brochure, the word 'foreclosure' is NOT mentioned.] The Federal Reserve Board should be ashamed of their lousy brochure. How can one write a proper 37 page brochure about ARMs and not mention the term foreclosure?

The Grant DC Condos

The Grant DC (official website). Hey it is a pretty website!
Bubble Meter: The Grant DC (July 30, 06)

NAR's 2006 Prediction Is Way Off

Back in December of 2005 the National Association of Realtors (NAR) made a woefully wrong prediction. Thanks to Business Week for finding this gem:

PREDICTION: The national median home price will rise about 6.1% in 2006. Over a full year, it "has never declined since good record-keeping began in 1968." — National Association of Realtors, Dec. 12, 2005

THE REALITY: Through October, the median price of residential properties was down 3.5% from a year earlier.

The NAR was way off on this prediction. The median price decline is even worse if you take into account all the extra incentives that have been thrown on new home buyers. Don't trust the National Association of Realtors. Remember, David 'the shill' Lereah works there!

Housing Predictions For 2007

Here are some my 2007 predictions for the US housing market:

1) High foreclosure rate. Foreclosure rate continues to rise nationally. Lots of financial pain will ensue as hundreds of thousands of homeowners lose their housing units to foreclosure in 2007. The high 2007 foreclosure rate will be due to the very loose lending standards of the past few years in conjugation with the declining housing marking. The Center for Responsible Lending says that "About 20 percent of sub-prime mortgages granted in the past two years will end in foreclosure as owners struggle to make payments and home prices stagnate." The irresponsibility of the lenders is tragic.

2) Prices will continue to decline in most bubble markets. In general, housing units in the bubble markets will fall in nominal dollars between 1 - 12% and in real dollars between 4% - 15%. [ This is for individual housing units, which is not the same as the median sales price.]

3) Interest rates will edge up somewhat, but remain low. By year end, the average contract interest rate for 30-year fixed-rate mortgages will increase to about 6.5 from its current of about 6.1. The average contract interest rate for one-year ARMs will increase to 6.3 percent from its current of about 5.8.

4) Job losses will accelerate in the residential construction sector. The percentage of job losses will be even greater in the bubble markets. Nationally, between 400K to 600K construction jobs will likely be lost during 2007.

5) The US economy will slump into a recession. As the housing market continues to decline, consumer spending and business investment will fall. It will be tough.

Lereah 'It appears we've hit bottom' Again!

The NAR's November existing homes sales were released on December 28, 2006. One day later Mr. Lereah declares:

"It appears we've hit bottom, the price drops are necessary to stir sales. It is working." (Globe and Mail Dec 29th 06)

This is not the first time Mr. Lereah has thought that now is the bottom. On September 25th, 2006 Mr. Lereah said this:

"We've been anticipating a price correction and now it's here. The price drop has stopped the bleeding for housing sales. We think the housing market has now hit bottom."

But wait it gets much better. On May 25, 2006 Mr. Lereah uttered:

"This may be the bottom. It appears May is a little better."

When did we hit bottom? According to Lereah it keeps on moving. Mr. Lereah cannot be trusted. He just spews words to the public through the mainstream media. He is a paid shill. Don't trust him. Don't listen to him. This guy should be fully discredited by now.