2007 Desperate Agent of the Year

After careful deliberation, it was decided that the inaugural post of this blog, and of the 2008 New Year, should be dedicated to the person who demonstrated the greatest degree of desperation as it relates to real estate in 2007. A vote was taken, tallied, and the result was… a tie. You get three guesses. If two of them include the chief economist for NAR in 2007, you win.

David Lereah, AKA “Baghdad Bob“, who hasn’t met a South Florida condo he doesn’t think you should buy, resigned the NAR position in April. His successor, Lawrence Yun, stepped right in and didn’t miss a beat. They won hands down. Countrywide’s Angelo Mozilo was a brief consideration, but naming Mozilo without calling out the CEOs of every Wall Street firm that financed him somehow seemed hypocritical.

But back to the NAR’s paid shills. It seems inconceivable that two men smart enough to extract a decent paycheck from the country’s largest wolf-like political lobby dressed in sheep-like real estate agent trade group clothing could be so a) stupid, b) consistently wrong, or c) deliberately misleading.

Mr. Lereah is the genius who, in 2005, penned, “Are You Missing the Real Estate Boom?: The Boom will not Bust and Why Property Values will Continue to Climb through the End of the Decade and How to Profit from Them“.

In September 2006, NAR reported,

“Total existing-home sales — including single-family, townhomes, condominiums and co-ops, dipped 1.9 percent to a seasonally adjusted annual rate1 of 6.18 million”.

Lereah’s take?

“This is a lagging indicator and the worst is behind us as far as a market correction — this is likely the trough for sales.”

He was only off by a mere 19%. ‘Nuf said.

Mr. Yun experienced his own moment of forecasting brilliance in 2005 in an interview published by the Northern Virginia Association of Realtors:

The chance of a housing price decline in the DC area is close to zero, in my view. I anticipate that prices in DC will outpace the national average price growth. DC prices will rise at close to a 7 to 10 % rate of appreciation. That’s not the 20 to 25% rate we’ve seen in the past, but it’s still very respectful.The chance of a housing price decline in the DC area is close to zero, in my view. I anticipate that prices in DC will outpace the national average price growth. DC prices will rise at close to a 7 to 10 % rate of appreciation. That’s not the 20 to 25% rate we’ve seen in the past, but it’s still very respectful.

Then more recently:

Lawrence Yun, NAR chief economist, said the market appears to be stabilizing. “Near term, existing-home sales should continue to hover in a narrow range, just as they have since September, and that’s good news because it’ll be a further sign that the housing market is stabilizing,” he said. “Mortgage interest rates are near historic lows and the most current data shows decelerating price declines, along with a modest reduction in the number of homes on the market.” Disruptions in mortgage availability and pricing peaked in August, which caused sales to slow in subsequent months.

With only a few exceptions like Portland and Austin, nothing has stabilized. Need proof? Take a look at the recent Case Shiller Index.

Daniel Gross of Slate says it best in Worst. Forecasters. Ever?

But within the fraternity of financial and fiscal forecasters, the seers at the National Association of Realtors—longtime chief economist David Lereah and his successor Lawrence Yun—may be uniquely ill-equipped to deliver sobering forecasts. They work for a trade group whose mission is to buck up the spirits of real-estate brokers. And real-estate brokers—who live to sell, promote, and market—are constitutionally disinclined to hear anything but good news.

And now the flack is coming from abroad. From the TimesOnline:

Nar’s forecast for this year was again way off the mark. Existing home sales were expected to end 1% lower than the 2006 total, while new-home sales would fall by 9.4%. Nar then cut back its forecasts for nine months in a row. It now expects existing-home sales to fall 12.5% to the lowest levels since 2002.

There was one comment on the Times’ site that lent support to the NAR mantra of “buy now”:

It’s a new paradigm, and everybody who doesn’t buy, now, will be priced out forever. Anybody who does buy will be rewarded with a lifetime of riches, as their property will continue its 30% yearly price increase. Renters, and anybody born in a future generation, will not be able to afford a $10,000,000 starter home in 15 years. They will live in tent cities, and Hondas. This asset bubble is different than all of the others - it will never slow down, or pop. The gains are permanent.

Greg Swann, Phoenix, AZ, US

Only one question remains - was that written by the real Greg Swann or the Fake Greg Swann?