Thursday, June 07, 2007

Realtors: Home Sales Projected to Fluctuate Narrowly With a Gradual Upturn

The National Association of Realtors (NAR) is once again predicting better times soon.

Lawrence Yun, NAR senior economist, said the market is relatively soft. “Overall housing levels are historically strong, but sales remain sluggish compared to the recent boom,” he said. “Home sales will probably fluctuate in a narrow range in the short run, but gradually trend upward with improving activity by the end of the year. It’s important to keep in mind that all real estate is local, and many markets are expected to have higher sales and strengthening prices during the second half of this year.”
The NAR is sounding like a broken record, constantly predicting that better times are just around the corner. Remember their chief economist calling the bottom at least four times. The National Association of Realtors (NAR) cannot and should not be trusted as they have lost their credibility. They are the representatives of the largest number of real estate agents. The housing declines are long and in most bubble markets we are not even two years from the peak. In most bubble markets one can expect further price declines for at least a couple of years.


  1. Checking HoustingTracker's numbers (old site for continuity):

    Inventories shot up this week. They are almost 5% higher than this time last year.

    In three months, as of 9/07/07, we will have a continuous time series from the peak at 9/07/05.

    At this time, the media price is 435K, down 64K from the 9/07/05 peak at 499K. That's basically a 13% reduction in NOMINAL dollars.

    The June 06 to September 06 price movement last year was -25K. Chances are we'll get the same movement, most likely further down, because inventories are higher.

    So, a very conservative (high-end) projection of 9/07/07 median price is 410K. That's 18% lower than the peak in 05. In real dollars and adjusting for inflation, that's essentially 25%.

    David J's prediction, unlike any of Lance's, is about to be proven.

  2. "It’s important to keep in mind that all real estate is local, and many markets are expected to have higher sales and strengthening prices during the second half of this year."

    Can someone explain this to me? "All real estate is local, and higher sales and higher prices are coming to YOUR locality soon!" without regard to what locality he's talking about?

    Why do reporters quote these guys??

  3. Ever notice that the NAR NEVER backs up their projections with any explaination as to why they believe things will turn around. We're just supposed to take their word for it.

  4. The only one who has lost his cred is David J. I see that the same BH's who declared the "bubble", "blood in the streets", "50 or 60% haircuts", "depression", and "economic ruin" no longer take ownership of those terms.

    It isn't the end of the world as we know it. Nothing is "imploding". The doomsayer's are now displaying some amount of maturity. No more statements about buying houses for pennies on the dollar. A simple, basic correction in a market known to be cyclical. Ho hum.

    " most bubble markets we are not even two years from the peak. In most bubble markets one can expect further declines for at least a couple of years."

    Wow, what a revelation. It sounds like exactly what I said here over 18 months ago. David J's change in tune over the past few months is remarkable. Revisionist, to say the least.

    Too bad Lance isn't around much...leaves you people with little to talk about.

    Got Popcorn?

  5. ". I see that the same BH's who declared the "bubble", "blood in the streets", "50 or 60% haircuts", "depression", and "economic ruin" no longer take ownership of those terms."

    I NEVER claimed a depression or economic ruin.

  6. anonymous 4:32...

    I think you have the quotes on this site & (mostly) the comments on this site confused with those of the HousingPanic site. That site is full of the hyperbole of which you speak. David tends to speak more of significant real price (not nominal) declines and the effect that lower sales have on the economy (much of the paltry 0.5% GDP increase in the first quarter has been attributed to housing and supports this claim).

  7. David,

    I don't feel like going back and reviewing all your posts. If you didn't actually call for disaster, you certainly fomented the atmosphere.

    Chicago Real Estate Bubble,

    How are the NAR predictions and calls any different from those of the bubbleheads? I've been waiting two years to buy a house at half price.

  8. "I don't feel like going back and reviewing all your posts. If you didn't actually call for disaster, you certainly fomented the atmosphere."

    Translation - the facts aren't on my side. I want to blame you for stuff other people said, so I don't have to face the fact that you were right.

  9. Annon:

    Patience lad/lass. Your accusations of trying to lump all people who think real estate prices are over inflated an unsustainable following an unprecedented rise in prices as panic mongering bubbleheads is intellectually dishonest and just plain wrong. So your refusal to parse David’s comments and paint with a broad brush is called for what it is: Horseshit. There is a Latin term for the logical fallacy you are engaging in by accrediting the comment of select members of a arbitrarily or undefined group as the collective beliefs of the entire group, but horseshit is much more accurate in this instance.

    I happen to find it remarkable that the people who have been preaching "its a great time to buy" or "housing prices can't go down" and are accusing people they call bubbleheads of revising their earlier predictions are now engaging in their own revisionist rhetoric, saying, "well, it hasn't gone down that much" or "you are using the wrong statistics." Credit to Lance who has not changed his tune. He actually thinks prices haven't gone down, despite the avalanche of data to the contrary. But whatever credit he earns by being consistent, it is consumed by a catastrophic debt of delusion.

    But to you other revisionists, once again I say crap in one hand, hope in the other, and see which one fills up first. What are the economic indicators that say the housing market is going to miraculously reverse course. According to my read of the S&P/Case-Shiller index, D.C. peaked in April 2006 and has dropped 5% since then as of March. Asking prices on are down 10% YOY. A market correction is usually defined as a 10% drop. I can foresee that housing price declines could actually accelerate well past this point. The only reason that they haven't is that sellers have been patient, and buyers have not. Oh, and interest rates have remained relatively steady.

    Preach the “all is well, just give me your money” speech if you will, but I’m not buying.

  10. "I've been waiting two years to buy a house at half price."
    I live in Northern VA area and my manager who lives in Loudon county said he saw a relatively new house for sale last year for 650K and he just saw the same house for 350K now. He doesn't know the condition of the house but that's a HUGE deduction.

  11. Homes at half prices will only be in certain areas. If you heard about the auctions in Las Vegas, you know in some areas its already arrived.

    We haven't been predicting a 50% drop in DC. But wait... DC is leading the list in home prices dropping! So wait... as prices slip toward 2004 pricing... we aren't going to be far off.

    I am one predicting recession, not depression. Well... except for Detroit and Florida. (My definition of depression is 25%+ unemployment. As soon as it breaks 25%... depression. Detroit is *almost* there.)

    David has been very rational. But it will be until 2009 before I can recommend to anyone to buy. See... by then, people know.

    Its June and Joe Sixpack knows home prices are declining. Prediction #1 of mine correct.

    I'm sliding my August prediction to late September...

    Got popcorn?

  12. "I don't feel like going back and reviewing all your posts."

    Translation: I like making stuff up, and I turn chicken when I'm called on it.

  13. "
    I NEVER claimed a depression or economic ruin."


  14. "What I'm suggesting is that the ship is very vulnerable is very very likely to be in a recession by 1Q or 2Q 2007."


  15. "I don't feel like going back and reviewing all your posts. If you didn't actually call for disaster, you certainly fomented the atmosphere."

    Translation... just because I said something I don't feel like I should have to actually support it or anything. I would rather make false accusations and run away than be proven wrong.

  16. Never believe anybody that is trying to sell you something and in the same breathe says that things are going to go up.

    NAR should be legally required to STOP making any forward looking predictions.

    Ignore all this information and buy only if you have a 7-10 year horizon, or if you are a gambling man!

    Frank Borges LL0SA - Virginia Broker/Owner

  17. anon 7:16 . . .

    Just keep biding your time. We are already in 10-15% real declines depending on what area of Nova you live in. In some places in real terms its close to 20%. If prices go completely flat for the next 4 years you'll have your 40-50% shave thanks to good ol' inflation.

    Housing is not like stocks its not over after 2 years . . . the typical housing cycle is about 18 years long so we've still got approx. another 7 years before this thing turns around.

  18. David,

    If you want one more go at Leerah check out this link to a power point presentation he did towards the end of 2006. He basically is preaching our sermon. But then for the next few months, he still cheerleads the market. One more post on the shill would be great.

  19. Caveat Emptor said:
    "Credit to Lance who has not changed his tune. He actually thinks prices haven't gone down, despite the avalanche of data to the contrary."

    Caveat, here's a dose of reality to counter your wishful thinking:

    Posted by: "dcbubble437" dcbubble437
    Sat Jun 9, 2007 1:53 pm (PST)

    According to the Greater Capital Area Assn of Realtors:

    Condos prices are flat, while inventory seems to be drying up a bit.

    Single family houses are up year over year. As for inventory its
    harder to discern a trend.

    See chart and detail here:

  20. "Caveat, here's a dose of reality to counter your wishful thinking:"

    Of course, Lance ignores all the later posts that totally refuted Bubble's misreading, but that's Lance for you.

  21. Lance,

    Re: your numbers:

    A blog quoting a real estate association is not exactly my idea of credibility. I traced the links and the assocation says the source is MRIS, but they don't tell how they sliced and diced the numbers. Just to check, I pulled the MRIS numbers from the zip code I am looking to buy in, and the median sold price was down 15% and the average list price was down 10%. The problem with MRIS numbers is that if the number of sales goes down and the price goes up, this usually means that more expensive homes are being sold, not that prices overall are going up. In my neighborhood, with midian prices down and number of solds constant with dollar volume down as well, this probably means people are buying less expensive houses, which would explain the dramatic increase in inventory in houses over $1M and would also explain why I have seen 50K to 150K price drops in that segment of the market over the last couple of weeks.

    But true to form, your delusion continues. Congratulations. Check out this next post, and tell me how this is going to make prices continue to dramatically rise 10% YOY.

  22. From WSJ:

    Shoppers for Mortgages Say 'Ouch!'
    Decline in Treasurys
    Sends Rates Climbing;
    Looking Toward Munis
    June 9, 2007; Page B1

    The drop in U.S. government bond prices this past week is expected to cause pain for some homeowners and mortgage shoppers, and bring fresh opportunities to income investors.

    The yield on the 10-year Treasury note, which moves in the opposite direction to the price, jumped above the psychologically significant 5% threshold, ending Friday at 5.119%, up from 4.955% a week earlier. The 10-year's yield is now at its highest level since July 2006.

    If yields continue to rise, investors in long-term bonds could see real losses if they sell, something bondholders haven't felt in more than a decade. Bond mutual funds could also post losses. If prices stabilize, bonds may end up looking more attractive than stocks.

    Investors reacted to the interest-rate move by pouring $3.5 billion into money-market funds this past week. While these short-term funds won't get a rate boost from higher long-term rates, investors won't lose money if bond and stock prices keep falling.

    "But what this might be saying is that investors are forewarning that [interest] rates are going up eventually," says Connie Bugbee, managing editor at iMoneyNet, a provider of money-market mutual-fund analysis. Money-market funds currently yield about 4.72%.

    . . . .

    For new home buyers and those looking to refinance a mortgage, the bond-price jump will likely cause the cost of homeownership to rise. Mortgage rates closely follow the 10-year Treasury. As such, the average rate on a 30-year fixed-rate mortgage has climbed to 6.61% from 6.32% in mid-May. On a $250,000 mortgage, that is the equivalent of adding nearly $50 a month to a mortgage payment.

    Still, if you are looking to buy a house or refinance, fixed-rate mortgages are likely your best bet. The average rate on an adjustable-rate mortgage that is fixed for five years before the interest rate resets is 6.52%, only nominally different than the 30-year mortgage. "You're getting very little benefit now [from an ARM] in exchange for a whole lot of interest-rate risk down the road," says Greg McBride, senior financial analyst at

    For homeowners looking down the barrel of a pending rate adjustment on their ARMs, the pain in your pocketbook could get worse fairly quickly. On ARMs that are just now readjusting, Mr. McBride says rates are set to hit between 7.25% and 7.5%. That will hurt homeowners who, for instance, took out mortgages three years ago when the initial interest rate was 4.5%. For these homeowners, pending payments on a $250,000 mortgage could rise by nearly $450 a month.

    Let's see, people who need to refinance their ARM now have higher interest rates than they could have received on a 30 year when they took out their original mortgage. And they are going to afford this how?

    An new buyers are not going to get much of a discount by selecting and ARM? And this is going to make people pay more for houses why?

  23. David,

    Whom do you trust regarding the housing market?

    Michael Bertocchi
    Silver Spring, Maryland

  24. "Whom do you trust regarding the housing market?"

    Yale University Economics Professor Robert J. Shiller. Princeton University Economics Professor Paul Krugman. CEPR economist Dean Baker.

  25. PEARLS of WISDOM from david j.

    May 2005 - The Bubble Will Burst Soon

    "Behold the bubble is about to pop. The Bubble will pop within the next 12 months"

    June 2005 - When will the Bubble Pop?

    "There are growing indications that there is a slowdown occurring now... By October, the price stagnation in many areas will become price declines."

    June 2005 - Homebuilders Stocks Take a Hit

    "...the bubble is about to burst"

    June 2005 - Growing Signs of a Housing Slowdown.

    "...Look for price declines of up to 50% in certain markets over the course of a few years (inflation adjusted)"

    Does a few years equal 3 yrs? It's already been 2. This coming 12 months should be hellish! 50% off by June 2008????

    July 2005 - A Black Christmas

    "There are signs that the bubble will be in bursting mode this fall...It could be the worst Christmas shopping season in many years."

    That's all for now folks. Notice how every reference David J. makes to Housing includes the words "bubble popping" or "bubble bursting"?. No slow decline or air seeping out as we hear about now.

    How is this any less irresponsible than the NAR?


  26. "How is this any less irresponsible than the NAR?"

    All the quotes you mentioned were from 2005 - at the peak of the bubble. Besides bursting of bubble depends on perspective of the people - those who bought at the peak might deem the bubble is burst even with just 10% of their property value going down or those investors who couldn't sell now. What's irresponsible is NAR touting real estate never goes down and it's always a good time to buy regardless of income level and the extreme run up of the home prices. How was Dave irresponsible by cautioning people about the bubble ?

  27. anon. 10:53,

    Thanks for affirming my point on David's backpeddling. David is no more accurate in anything he has said over the past two years than the paid lobbyists. Dumb and dumber!

  28. It shouldn't be NAR's job to try to predict the direction of the marketplace!

    And if they try to, they should have been required to do what any stock prospectus does and disclose "Past performance is not indicative of future results."

    Ignore anything that NAR says regarding the housing direction. Also I don't believe in market timing to try to pick the bottom ti buy. If you buy, just make sure you have at least a 6 year horizon, otherwise GO RENT!

    I don't know why renting has such a negative connotation.
    People frequently say "do you own this or do you rent"... Who freaking cares? It shouldn't matter and is none of their business to judge you based on your answer.

    Again, ignore all Realtors that tell you where the market is going.

    Frank - Virginia Realtor