Friday, August 25, 2006

Lereah Says "Hard Landing"

Go check this post over at the Sacramento Land(ing) blog. Apparently, David Lereah (chief RE cheerleader for the National Association of Realtors...you know...'there is no bubble' Lereah, 'the market is like a ship' Lereah, 'it's a balloon not a bubble' Lereah, 'it'll be a soft-landing' Lereah, 'we've reached a permanently high plateau' Lereah) is now predicting a hard landing for those markets in California that achieved "nose-bleed" pricing levels.

Hmm, judging by these POSs I'd say Marin is well lodged into "nose-bleed" territory.

Lereah also said he expects prices to drop -5% nationally. That's huge and should be making front-page headlines as it will be the first time that has happened since the Great Depression.

Update 08-26-2006:

You can find Lereah's latest PowerPoint presentation here. To download the free PowerPoint Viewer, click here.

For those of you who are not inclined to install the viewer, below are screen shots of the more interesting slides from Lereah's latest presentation (the Leadership Summit, Chicago presentation). Keep in mind that Lereah was talking about national trends. Notice that for the nation as a whole Lereah is still calling for a "soft landing" whereas for "nose-bleed" states like CA it's now a "hard landing".

Click on any picture for a larger view:












And don't you just love the bubbly backgrounds Lereah chose to use in the slides?

18 Comments:

Anonymous Anonymous said...

Whats the latest housing stats, did I read prices were down, way down...

Aug 25, 2006, 7:15:00 PM  
Anonymous Anonymous said...

I guess the POS house on stilts owner is hoping Dave Diareah's hot air "balloon" will support it during the mudslides and earthquakes. If the photographer had just aimed her camera up we might have seen a nice shot of him hovering overhead.

Aug 26, 2006, 7:06:00 AM  
Anonymous Anonymous said...

By next Spring, these Happy Homedebter's will be Mud Wrestling with each other in the Housing Pit to see who CAN Sell FIRST !

Aug 26, 2006, 9:33:00 AM  
Anonymous Anonymous said...

Talk about seller denial... I just looked at the Mill Valley listings and there's one seller who just registered a price reduction - of a whopping $500! Are today's sellers really that unaware of what's going on, or are they just extra stubborn?...

Aug 26, 2006, 11:29:00 AM  
Anonymous Anonymous said...

Best thing to do is tell your friends not to buy anything until the inventory comes back down and prices go back up. That will be sometime after 2008.

Aug 26, 2006, 3:35:00 PM  
Blogger marin_explorer said...

"not to buy anything until the inventory comes back down and prices go back up."

Certainly...someday. But first, prices need to meet the market of buyers. Nobody should buy until it makes better financial sense--and that's easily several years away, if not part of a longer economic trend.

On another note, I'm rather surprised by Lereah's quick about face; what does he "know" now that he didn't "know" last fall? Is "hard landing" talk the new NAR strategy to pressure sellers to meet buyers--and keep sales volume going?

Aug 26, 2006, 6:41:00 PM  
Blogger sf jack said...

anonymous #132,212 said.

"Best thing to do is tell your friends not to buy anything until the inventory comes back down and prices go back up. That will be sometime after 2008."

******

Prices may "come back" somewhat in 2008... though they will go down again.

Even better to tell your friends that perhaps prices will finally begin a consistent rising trend sometime in 2012.

Aug 26, 2006, 10:36:00 PM  
Anonymous sreilly1874 said...

Looked at open houses last week -there's a rumor amongst realtors that much more inventory is going to appear in September...anyone know anything to substantiate this?

Right now this would be a sellers worst nightmare. I see a lot of price drops even for traditionally stably priced single family homes in the $800k range.

Aug 27, 2006, 9:36:00 AM  
Blogger sf jack said...

reilly -

Yes - I had heard that rumor, too.

Since it seems that many people vacation in August, those who have decided to sell first list their houses in September after they've returned from their trips.

I wonder how active the realtors(tm) will be in discouraging more listings.

Aug 27, 2006, 12:41:00 PM  
Blogger Lisa said...

Yep, inventory usually spikes after Labor Day, as it's the last chance to move before the holidays hit in November & December.

I read on Marin Heat Index that inventory is 3x what is was last year, and that was mid-August. Can you imagine when September comes??!

Aug 27, 2006, 4:50:00 PM  
Blogger Marinite said...

I read on Marin Heat Index that inventory is 3x what is was last year

That's true...it's triple from last year.

Aug 27, 2006, 5:20:00 PM  
Anonymous Anonymous said...

Inventory should go up due to finished housing starts. You start building in spring and finish it up in late summer or fall. This is especially true for cold, snowy climates.

Aug 27, 2006, 5:52:00 PM  
Anonymous Anonymous said...

That's astounding.

And even more astounding that Lereah was such a tout even 3 months ago.

Aug 28, 2006, 5:33:00 AM  
Anonymous pothead said...

"Best thing to do is tell your friends not to buy anything until the inventory comes back down and prices go back up. That will be sometime after 2008."

Super. How about, first making sure your own finances are sorted. Assuming that's the case, why would you wait to see inventory coming down and prices are rising?

Aug 28, 2006, 11:23:00 AM  
Blogger marin_explorer said...

I wonder how active the realtors(tm) will be in discouraging more listings.

If a realtor is under contract to sell your home, how can they possibly discourage listing your home with the rest? Just curious, as any homeseller should demand the same market visibility. There’s some cosmic justice to a surplus of realtors for a surplus of listings.

Aug 28, 2006, 1:11:00 PM  
Anonymous Anonymous said...

Is "hard landing" talk the new NAR strategy to pressure sellers to meet buyers--and keep sales volume going?

Yes, it's been leaking out here and there - but it seems obvious that the new RE commodity is the buyer and RE's are trying to market change to sellers.

One issue though. RE agents can't really push sellers into the pricing reality because they are scared of turning sellers off to them and going to another agent who says, "sure $899k for your 1100sq/ft 3 bedroom ranch house in Novato that hasn't been updated since 1983 is a GOOD idea".

Since there are so many hungry agents out there now, they find themselves at the mercy of seller greed right now and can't get the properties to sell - to which the seller just blames the agent.

It's so stupid.

Aug 29, 2006, 2:49:00 AM  
Blogger sf jack said...

explorer -

I meant the kind of realtorspeak(tm) whereby they try to tell people who are thinking of heading for the exits, but who may just be "testing the waters" so to speak, to not bother listing.

That was part of their strategy earlier in the year, to try and restrain the growth in inventory.

So I'm talking more about CAR "policies" or talking points and such (for example), rather than viewing it from an individual realtor(tm) behavioral perspective (as I think you have regarding my earlier comment).

Aug 29, 2006, 9:30:00 AM  
Blogger marin_explorer said...

sf jack-

I get what you're saying, and I've heard that talk as well. Of course, if a real panic selloff ensues, realtors might want to stand aside from the exits. ;-)

Aug 29, 2006, 4:01:00 PM  

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