Tuesday, February 07, 2006

The NAR Reminds Us That RE Is Cyclical

Sellers had better start stocking up on a lot more of those St. Joseph statues (but in Marin I guess it would be crystal Buddhist statues and incense sticks) -- check out this blogger's post.

First, David Lereah was saying that there is no housing bubble. Then he said the bubble was a balloon. Later it was "we are in for a 'soft landing'" and that we can "look forward" to just 5-6% appreciation. Then the bubble was a ship (and presumably slow to change course). Now he is saying real estate is cyclical and house prices can be expected to fall. What a fraud. The NAR has no credibility. How about just telling the truth you shisters?

Some choice quotes:
“‘Sometimes people lose sight of the fact that real estate is cyclical,’ the realtors’ chief economist, David Lereah, said. Construction too will tumble to levels not seen since before 2004, Lereah said. He forecast 2006 housing starts at 1.87 million units, down 9.3 percent from the 2.06 million in 2005.”

“Sales of new homes should fall as well, down 8.5 percent to 1.17 million units from a 2005 record of 1.28 million, Lereah said.”

No doubt the NAR minions will start talking a lot more about cycles rather than balloons.

And be sure not to miss the quote by Gary Shilling who says that "the current housing weakness will develop into a full-scale rout".

So will Lereah next be warning us about not getting suckered into the inevitable "dead cat bounce"? Or will he remind us that reversions to the mean trend line almost always undershoot the trend line? Will we have NAR economists calling the bottom of the bust all the way down to the real bottom?

Will the NAR become the "next Enron"?

Things are definitely getting more interesting.

21 Comments:

Blogger Econ_101 said...

David Lereah and Appleton-Young are to economists what tobacco industry scientists are to the science profession. They are basically PR people who act paid mouthpieces for an industry.

No real economist takes this kind of junk seriously - I'm pretty sure that none of their work has rated any serious peer review - because it's such a joke.

Feb 7, 2006, 2:42:00 PM  
Blogger moonvalley said...

My husband and I were on a business trip to LA this last week. At the hotel we were at, The Marriott in Marina Del Rey, there were seminars being conducted almost every night we were there. The signs on the ballroom door...How to Make Money in Real Estate with Other Peoples' Money! One of the seminars was some sort of BS Donald Trump VIP Real Estate Seminar. All of the ballrooms were packed. I suppose there is one born every minute, I just don't want him or her using my tax money for their little RE experiments.

Feb 8, 2006, 12:33:00 AM  
Anonymous Anonymous said...

You should do a thread on Lereah with a picture of "Bagdad Bob". Post underneath the picture some if his now "famous" quotes. I remember someone said once that, "Figures don't lie, but liars can figure."


Anyone else notice that the Fed is no longer reporting changes in monetary flow as of March? Hmmmm. wonder why. Maybe they don't want us to see that they are just printing up more worthless money to prop up the Real estate market with liquidity.

Feb 8, 2006, 5:34:00 AM  
Blogger SCProfessor said...

This comment has been removed by a blog administrator.

Feb 8, 2006, 9:03:00 AM  
Blogger SCProfessor said...

Thought process that serves as a basis for not publishing increases in the money supply (M-3) is that if the Federal Reserve Bank gets those presses running. As a result is the Dollar's purchasing power is reduced (say by 50%). That will solve the existing overvalue of real estate prices since the $400K home based upon the purchasing power of the 2005 dollar will still be valued at $400K but in reality will only be worth about half that in a few years (based upon the purchasing power of the 2005 dollar).

Problem with this scenerio is I seriously doubt that wages will double. So you still won't have able buyers out there. Inflation = Hidden Tax.

Feb 8, 2006, 9:07:00 AM  
Blogger Marinite said...

And people's savings get cut in half in terms of purchasing power. How can people save for retirement if our Fed devalues our dollars? People should be mad but too few get it.

Feb 8, 2006, 9:41:00 AM  
Blogger fredtobik said...

the truth is out there... maybe.. aw heck I dunno...


http://tinyurl.com/b73b7

"I just don't want him or her using my tax money for their little RE experiments. "

That is what scares me, and forces me to care.

Feb 8, 2006, 9:55:00 AM  
Blogger Marinite said...

fred -

I just read that article you posted. It argues that the current way of estimating GDP and the like does not take into consideration such intangibles as R&D, innovation, creativity, advertising and promotion and other such "intangibles" -- the "knowledge economy".

I am no economist but it seems to me that all of these things have been around forever to varying degrees. How could they not? So focusing on them now, adding them into the calculation now seems a lot like wishful thinking or making up new ways to make the numbers look good.

Maybe someone reading this thread who has more expertise in these matters could comment.

Feb 8, 2006, 10:46:00 AM  
Blogger fredtobik said...

I just thought it was interesting that nobody knows nothing and isn't sure about anything, except that maybe something could be different than that other thing, BUT everyone is CPT Hindsight!

Feb 8, 2006, 2:09:00 PM  
Anonymous Anonymous said...

I read the article. My only question is if Melissa Bradley is a 3-input girl.

Does anyone know for sure?

Feb 8, 2006, 9:22:00 PM  
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Excellent piece, very amusing

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