August 27, 2006

FLASH: I can't believe what I'm reading. NAR admits US housing disaster underway

I'm floored. I never thought we'd see this day. Ever. Even when inventory explodes another 200%, even when sales drop another 50%. Even when prices crash another 20%. I never thought the corrupt spinmeisters at the NAR would ever let information get out that the real estate industry is in historic meltdown mode.

Yet all the dirty laundry finally is here, courtesy of this internal NAR presentation given last week at their annual big-wig gathering. Oopsie, they posted it on their site though.

Of course the MSM won't report it, unless the bloggers get the word out to the point that they have to. And Lereah won't use this internal NAR data when speaking to the press - he'll stick on message for sure - all is well, all is well.

The only glitch is that even after all the horrific data, he still tells his henchmen "soft landing". Yeah, right David.

Here's what the winged monster had to say. You must download the full PowerPoint to see all the amazing charts - including the condo disaster unfolding on slide 16. Kudos to papermoney for the original post.

Real Estate Reality Check - David Lereah NAR Leadership Summit August 2006

What Happened?

•Boom ended August 2005
•Mortgage rates rose almost one point
•Affordability conditions deteriorated
•Speculative investors pulled out
•Homebuyer confidence plunged
•Resort buyers went to sidelines
•Trade-up buyers to sidelines
•First-time buyers priced out of market
•Sellers’ market transitioning to buyers’ market
•Home sales plummet, prices lag, inventories rise
•Cooling markets left with high percentage of exotic loans
•Builders offering non-price incentives
•Days-on-market lengthening
•Residential construction activity slows
•Home prices beginning to soften




65 comments:

Anonymous said...

at first I thought this was a gag, but it's not. I'm amazed (and scared!)

Anonymous said...

someone wake me up in a year - I can't wait to see how this story (and Iran) turn out

mrgn said...

Someone secretly switched their business-as-usual kool aid with the old fasishoned recipe: two parts data and an extra large dose of reality. Think they'll notice the difference?

Anonymous said...

this has to be a mistake that it's posted on their site. feels like the internal henry blodgett memos that surfaced during the dotcom meltdown where he publicly was pimping .com stocks while internally roasting them

Anonymous said...

and bubbles for slide background! what a disaster!

Anonymous said...

Great googly-moogly.

That is absolutely, positively, the best housing bubble post ever.

Someone please save that powerpoint presentation and host it, I can't imagine it will remain available for long.

Anonymous said...

OMG!!!!1

Dogcrap Green said...

LOL

what is that Kieth? You non-raciest civil discussion board?

crispy&cole said...

Lock this in the vault. The congressional hearings in 2008 will want a copy! THEY KNEW IT WAS ALL A LIE. Eventhough they kept saying "RE never goes down, buy now or ...."

Anonymous said...

As I have a Real Estate license, I am an official member of NAR.

I would just like to say that all of you are simply anti-America bastards and giving aid to the enemy.

We are going to tap your phone and trust me, all of your names have been tracked down through your IP address and provided to the FBI.

Anonymous said...

Are you sure this is not Bob Saget ??

Stuck in So Pa said...

And the MSM still refers to it as some "cooling" in the market.
Kinda like the "cooling" the hit the Titanic!

Anonymous said...

utah prices continue to go up and houses are still selling.

Anonymous said...

I hate blue state educated liberal elite pushing the house prices up for us true Americans!

In the real America the house prices are still rising as we know how to skip work, drink bear, and piss in our nieghbours yard.

Anonymous said...

Who DOESN"T have a real estate license? Clearly they have zero standards.

Anonymous said...

Wait - who is the enemy RE agent?

SHHHHHH! Home buyers!

foobeca said...

Hmm, interesting that they have a bear on the first page. And it's a polar bear at that.

Anonymous said...

WOW!!! Even the N.A.R. is admitting the market topped in August of 2005! Can you beleive these disgusing used house salespeople spent a YEAR telling us the market is just fine??? >:-O

Check out page 14. Oh man, what an ugly graph.

Anonymous said...

Smaller homes hit harder by revaluation
Friday, August 25, 2006

By DEENA YELLIN and DAVE SHEINGOLD
STAFF WRITERS

http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjczN2Y3dnFlZUVFeXk0NSZmZ2JlbDdmN3ZxZWVFRXl5Njk4MTA0NiZ5cmlyeTdmNzE3Zjd2cWVlRUV5eTM=


WASHINGTON TOWNSHIP -- It seems like reverse logic.

On busy Pascack Road, the owner of a modest home assessed at $192,100 and situated on 0.43 acre received a 52 percent tax increase this year.

A few blocks away on the more scenic Gorga Place, the homeowner of a new-construction home assessed at $417,500 and situated on 1.35 acres is enjoying a 12 percent tax break.

Based on the township's new tax assessments, it pays to own a pricey home.

Some residents faced sticker shock, and others breathed a sigh of relief last month when the township mailed out its tax bills.

Residents of the town's costlier homes, clustered on Washington Township's western border, saw minor tax increases or, in many cases, actual tax cuts because their assessment generally went up less than those of lower-priced homes.

Some of the expensive homes on Katharina Place, Gorga Place and Horizon Court received tax cuts in the range of 12 percent to 17 percent, according to an analysis by The Record. One Gorga Place home had a 17.6 percent tax cut, from $14,324 to $11,810.

On the other hand, more moderately priced homes on Taylor Avenue, Pascack Road and Ridgewood Road are being charged 10 percent to 15 percent more because their assessments generally went up the most. Some assessed values of those homes rose by more than 155 percent.

On some streets there is a hodgepodge of tax values, with neighbors paying vastly different tax bills. For example, on Ridgewood Boulevard North, five homes had disparate tax bills with their values rising 109, 123, 132, 140 and 148 percent, respectively.

Assessments are the values on which actual property tax bills are established. The assessments are supposed to reflect actual market value so that all property owners pay their share of the local property tax burden. But over time, the values become out of date as different neighborhoods rise at varying rates. When that occurs, inequities in the local tax system need to be balanced out through a property assessment update. The updates are generally done every decade or so, usually at the demand of the state.

According to a computer analysis of the township's revaluation, the median assessment on all homes in the township, which is the point at which half are below and half are above -- rose 126 percent, from $232,900 to $527,000. But the typical assessment on the most expensive homes in town, or those worth at least $300,000 before the revaluation rose only 113 percent, while the median assessment on the less expensive homes -- those valued at under $200,000 before the revaluation -- shot up 138 percent. The median tax on those homes jumped 12.5 percent, from $5,850 to $6,580.

Homeowners can be cheered by the fact that the overall property tax burden shifted slightly from residential to commercial property owners because of new construction at the shopping mall. Nevertheless, with the township being one of the most commerce-free zones in the county, homeowners still bear 96.6 percent of the property tax burden.

"Once the tax bills were sent out, people started complaining that they didn't expect them to go up so high," said Mayor Rudy Wenzel, whose own taxes rose roughly $700. "If you have a small house on a good piece of property, you could get hit harder because, technically, you could build a larger home on that lot."

Wenzel said the recent tax revaluation makes him pessimistic about the future. "I see big increases coming up because of education and the high cost of municipal employees. I don't see growing ratables to help us cover it in the next few years. The high cost of living here is sending people to other states."

Councilman Bob Schroeder said the council is doing what it can to address the high taxes. "We run the township efficiently. The council is addressing all the departments to see where we can cut costs. We're also looking at sharing services with neighboring communities."

But the state is wasting tremendous amounts of money, he said. "Trenton needs to cut spending to lessen the blow to taxpayers here."

The revaluation took 10 months to conduct and the new tax rates went into effect in January.

"We had very few tax appeals, so not so many people are complaining," said Joseph Politi, president of Market Value Appraisal Service Inc. in Fair Lawn, which was paid $259,000 to conduct the revaluation.

He said there are several reasons someone's home value could increase while someone else's decreases. "Some homes might have been assessed too low last time. One house could have had an addition, which requires higher taxes. Different neighborhoods increase in value at different rates. Someone with a bigger piece of property will have a larger increase than a nicer house on a smaller piece of land."

Politi advised homeowners that "if their property would sell for the amount the house was valued at," then it is correct.

"People have been underpaying in taxes for years. Now the system finally caught up to them. Nobody wants to hear that," he said.

Anonymous said...

everyone forward this to your local newspaper as a tip

keith said...

man, someone realized their credibility was sh*t and that they were becoming baghdad bob, and changed their tact. Lereah now predicting hard landings. Really.

from usa today http://tinyurl.com/pnsuy

"I was disappointed, it was a lot lower than I anticipated," said David Lereah, NAR's chief economist. "What is clear to me is sellers are more stubborn than I expected them to be. We definitely need a correction in prices in order for buyers to come back into the market."

He said he expects home prices to come down 5% nationally, more in some markets, less in others. And a few cities in Florida and California, where home prices soared to nose-bleed heights, could have "hard landings," he said.

skytrekker said...
This comment has been removed by a blog administrator.
skytrekker said...

From all the information I am reading, and the opines of even bulls on the stock market and economy- a hard landing is in the process of hanpening- and the current down trend has no bottom in site- the rout will likely become worse.

Splat, bloodbath, truthfully this has scary implications for all of us here.
A major disaster, and drama is playing out before our eyes, fascinating and frightening at the same time.

Anonymous said...

In our local newspaper there was an article about the cooling real estae market. In the end, they said that sellers should price their houses realistically and then be willing to take........ $100,000.00 off!

Farm Girl

Anonymous said...

Just looking at that guy makes me want to ralph.

That same standard picture. Look at me I have a degree. I'm an expert on real estate. I know something you don't.

His resume:

I know how to lie.
I know how to present facts to prove a fiction.
I can talk a good talk and say nothing.
I am a highly educated, smooth talking shill.
I have some Condo's I need to sell in Florida.

Anonymous said...

Fuck the FBI-I bet BUSH and CHENEY FAKE their own deaths!!!!!

Anonymous said...

IF you want to keep your home-Learn the LAWS OF CONTRACTS-Remember that every(100%) of all home,car,mrtgages are all fraudulent under the law of contracts.The Bankers lied or covered-up in all cases.

Anonymous said...

Well said Anon 2:37:53

Frocco said...

WOW!!!! Best post ever for sure!! Nothing like haveing proof the naysayers special interests know what we know but are keeping it from the general public...

Anonymous said...

Farm Girl (Anon 11:56),

Pricing it "realistically," is one thing, if you have an equity or have put a bigger down. But pricing it not lower than what you've paid for, and what you owe with no down, at an overvalued price is another.

The latter is what millions of homeowners will be facing at in the years to come.

Anonymous said...

do you think lereah might have kept his sunny talk going just long enough that he could dump his real estate holdings and now that he's free and clear he can turn on the reality - thus talking the market down so that he can pick up distressed properties?

Someone investigate this man! where is the media! call in 20/20!

Anonymous said...

Great post. We've heard this before, but to see it coming from the NAR is pretty remarkable.

One thing, though - people seem to be under the impresssion that realtors have an interest in high prices. Actually, high prices can hurt real estate agents, mortgage brokers, and so forth - if they keep sales volume down. Think about it - would a real estate agent rather close quickly and easily on two houses for 500K each - or spend twice as long to sell one house for 800K? The first scenario is the easier money.

They talked it up to get people to keep buying. Now... if a quick and ugly drop and prices will bring new buyers back into the market, that's what the NAR will want - even if it hurts the previous buyers who were told (by the NAR) that housing was going up, or in for a soft landing.

It's definitely and about-face, but talking down the RE market may be in the best interest of the NAR right now.

borkafatty said...

Looks like the Sheep at the NRA are losing their shirts..either that or someone went to confession over the weekend.

borkafatty said...

that "NAR"

borkafatty said...

Anyone else hear the drum beats??

http://tinyurl.com/kc3mz

Why Bush will Choose War Against Iran

Anonymous said...

Realtors andmortgage brokers are in the same clas with meth dealers.

They don't care who they hurt as long as they get paid.

I hope they all rot in hell.

Anonymous said...

A "Must Sell and Willing to Negotiate" housing link I followed for fun led me to a 3 of a Bank Officer's personal Flipper Properties. I thought that I recognized his work place telephone number.

This rat is going down with the ship as Nothing is selling and he and his wife have 27 Plus properties and a high maintenance lifestyle way beyond their means.

Before his wife was a Real Estate "Professional"..she was a Hairdresser !

Anonymous said...

Like it or not! The Captain of the Titanic had to eventually admit he had a Problem too!

Anonymous said...

The most notable thing about this is that according to NAR the boom ended August 2005.

One full year ago.

The stories have really only been picking up in the MSM this summer. This should be an indicator of how long this is going to last.

Slide 35 is really the most telling. In past busts, even little dips in values took up to 7 years to recover.

Are we looking at 10-15?

Anonymous said...

Anon 3;06:17,

You've made a good point. Lereah and the author of Rich Dad;Poor Dad.

I think it's a "bait and switch." Now, if they turn around and start buying distressed properties, can you hold tehm liable for misleading the public? I guess it's tough to prove, let alone makes their action illegal.

Anonymous said...

Anon 6:38:45,

Yes, 15 years is optimum. In fact, there's another chart produce by IMF, showing Japan at the peak of the bubble in comparison to the U.S. Guess what, ours (U.S.) surpassed Japan's at the peak, but it took 14 years, from peak to trough for Japan to suffer. 14 years to hit bottom. I don't think that Japan has fully recovered yet.

Ours, can be 20 years, from peak to trough, if we get unlucky. I don't think there's any luck left.

Anonymous said...

Read beyond the information used as positive data.

Lets Review
Alaska doubles sales: Hmm… Really small population equals insignificant numbers on the national level.

Boise looking good: Once again very small by comparison plus last week news that they to are bubblishly screwed.

Charleston, WV: Days on market improvement. Small market in comparison and lots of price reductions here. Contrary to popular belief this is a shrewd population, knowing the handwriting is on the wall for a national bubble pop they are reducing prices to sell. Case and point, WV has consistently had the highest rate of right out home ownership is the nation.

Keep in mind that we are approaching the last quarter. These stats are from the second quarter and earlier.

My point! No Points of light Exist for the real estate market. Soft Landing? No Way

Anonymous said...

this is the most important post in the history of the blog

I encourage all hp'ers to pass this to their local media tonight

dvo said...

HERE'S A FUN QUIZ:

http://tinyurl.com/m3np2

(second half of segment. 1st half talks about biotech...)

What your favorite LAUGH OUT LOUD MOMENT from Countrywide Lending Executive VP Susan Martin's little rah-rah fest? (It seems she did NOT get the memo)

There are so many gems...I'll pick THIS one:

"Well, Countrywide in particular is very concerned about making sure the consumer is educated, and making sure the consumer fully understands the mortgage loan product that they are undertaking. Because this is a partnership for the next 30 years -- or 40, or 15."

*laughing until I cry...

What. a. TOOL!

Anonymous said...

Kinda looks like John Mark Karr, doncha think?

Their both just as dillusional, and twisted....but which is worse?

Anonymous said...

What a smug-looking WACKO!!!!!

Anonymous said...

I love these coward's that talk up a market, but can also talk of the downside as well. Covering their ass no matter what the outcome. Then they can say, I said this, or I said that. Never taking any blame!

Very reminiscent of Ken Lay, touting Enron's stock strength, while secretly selling all of it as fast as possible!

Anonymous said...

Keith and my fellow HP'ers:

I was looking at the real estate section of for sale homes in our local newspaper and this is what I've found out in one of the sales pitch or description below the picture of a house subject for sale;

"DROWNING IN THEIR TEARS!"
"Sellers have reached the end of their rope and must sell this fabulous 4 bdrm home immediately!"

QUESTION: If your an agent, what choice of words would you use to describe a sale?

Anonymous said...

Don't be too surprised if you see the gang "coming clean". It's part of the game. The reason conmen are so named is that they gain the confidence of the mark so astoundingly well. After that first milestone is achieved the "voluntary money-mark separation process" begins but the confidence must be there and it must be maintained until the process is complete. When one confidence gaining tactic is failing because the scammers credibility is being damaged by outside information professional conmen( for example NAR, National laywers guild, Jimmy Swaggart, et al.) will "admit" some truth which they can no longer hide or twist. After all there's nothing lost here, the damage is already done, may as well try to regain some confidence by such a trust building gesture. This plays on an emotional rather than rational response from the mark, a true cornerstone in "the business". If any of you have ever known a pathological liar you know what amazing effect they can have on an audience that wants to believe, just think of Bill Clinton and his devotees in the U.S.

trailer trash said...

Seller's market transitioning to buyer's market?

I certainly don't understand this NAR assessment of the current real estate situation. For example, lets say I shrewdly negotiate a 20% discount off of the $500,000 ASKING PRICE of a house in a bubble area. Big deal! Now I will have paid $400,000 for a house that will steadily decline in value for the next two years, until it is worth somewhere in the neighborhood of 320,000. If I put 20% down, that investment would be wiped out. Even without a gimmicky loan, I would still be in a negative amortization situation.

The depreciation associated with buying this house would closely match that of buying a new car. This looks more like a sucker's market to me. A buyer's market occurs only after home prices have reached rock bottom.

Anonymous said...

I actually kinda hate to say it but, this guy looks like the stereotypical slick confidence man! Not suppose to judge a book but, this one is a cheap read!

Anonymous said...

All that picture is missing is him with a milk moustache after making another deal!

keith said...

hilarious post at housingdoom:

Yes Nurse? Mr. Lereah is here? Ask him to come in and lie down on the couch, will you?

Mr. Lereah- Thank you for coming in today. I heard from Keith at Housingpanic, who indicated that you had been making a lot of progress toward your recovery. He said that I should see your Powerpoint presentation on Realtor.com discussing- can you bring yourself to use the word yet? -the housing bubble.

You know that admitting you have a problem is the first step to recovery, and I think we can safely say that you are beginning to take some baby steps here.


Under the heading of What Happened? you started with: Boom ended August 2005 (from the man who authored “Why the Real Estate Boom Will Not Bust“- this is quite an admission). You then continued with: mortgage rates rose almost one point, affordability conditions deteriorated, speculative investors pulled out, homebuyer confidence plunged, resort buyers went to sidelines, trade up buyers went to sidelines, first-time buyers priced out of market. (Dr. Twist is so proud of you!)

I must admit I had to return to page one just to make sure this was really written by you.

I went on to read The Aftermath: Seller’s market transitioning to buyer’s market (that sounds a little more like you). Home sales plummet, Prices lag, Inventories rise, Cooling markets left with high percentage of exotic loans, Builders offering non-price incentives, days-on-market lengthening, Residential construction activity slows, Home prices beginning to soften.

You titled this presentation Real Estate Reality Check. I was certain that after this level of objectivity, bubbleheads across the U.S. would be forced to remove your photo from their dart boards.

But Mr. Lereah, I’m afraid Dr. Twist is going to have to point out a few teensy problems with your presentation. I won’t be able to cover all of them, at least not in this session. I’m afraid that in order to complete your journey to recovery, you will need to revisit a few things.

One is your “Rising Months Supply” chart. You do document some serious increases from Q2 of 2005 to Q2 of 2006- particularly Miami’s increase from 5.6 months to 16.4 months. However, anyone who looks at the inventory numbers from Phoenix and Las Vegas as often as Dr. Twist does would wonder where you get a Q2 2006 result of 6.2 months for Phoenix, and 2.5 months for Las Vegas.

According to our friends at Bubble Tracking, at the end of the second quarter 2006, Phoenix had an inventory of 50,974 homes and sales of 5,460- by my calculations that would be 9.3 months. For Las Vegas, they had an inventory of 22,479 with sales of 3,097, or 7.2 months. I must confess, I do wonder about the other cities you list, whose numbers are not as familiar to me.

Then there is that Divided Real Estate Nation map you have. You indicate that 69% of the nation is contracting, and 31% of the nation is expanding. The bottom corner states, “Source: NAR, Existing Home Sales 2006 Q2 vs 2005 Q2. But while the number of sales in the expanding states may be higher than last year, virtually all of these states are faced with rising inventory- an indication that the real estate market is falling further behind. A visit to Housingtracker.net shows double digit increases in inventory over the last four months in the majority of cities they track- the housing market is weakening all over.

All in all though Mr. Lereah, you are showing remarkable signs of progress. I’ll see you again next week. Oh, and I’ll have my nurse measure your head before you go. We’ll order you a new bubble- just in case.

Anonymous said...

I think for economists (with PhDs) should undergo some real world training, like actually living with a wage or income similar to an average Joe and see if he/she can really afford to buy a house at a bubble scenario.

It's like; what makes a person a good manager apart from his education, is his/her hands-on training, having worked as an average worker and moved up.

This is precisely the reason why Mr. Lereah underestimated the bubble. He needs to live in a neighborhood where an average Joe makes $10 - $15 an hour with houses being sold for $400 & up. Give me a break!

keith said...

Os - did you get new talking points sent to you from the NAR or did this come as a surprise?

Anonymous said...

Thank you Captain obvious!

Anonymous said...

First they (realtors) say, values can Never go down! Or it would take a recession to drive prices down! Or a slow down due to rising interest rates!

Well in the perfect storm, we may be headed toward a scenario of all of the above!

Plus add in expanding inventory, those funky interest only loans, upcoming readjustments, plus just the mindset of potential buyers holding off. Not to mention sellers who will under no circumstances take a reduction in price! The new construction just being finished added to the supply!

Anonymous said...

Recession, HELL! What about a Depression!

sc in dc said...

People forget that it is the interest of Realtors (and therefore) NAR to sell houses for as quickly as possible at the highest price possible.

The fact that "sellers" are reluctant to lower prices and "buyers" are balking at these prices means that houses aren't selling.

Hence the need new NAR talking points, that they hope will lower prices (slightly) and get more people buying houses.

So next will be NAR indicating what a good deal all these reducted prices are.. {It's never been a better time to buy!! Buyer's market!! etc etc}

Here is the paper money link said...

Kieth, Your link to paper money does not work. It is a very good blog with a format similar to yours. I think the author finds some real gems, both the pics and the content, such as the NAR presentation.

http://paper-money.blogspot.com/

They didn't do it said...

"I love these coward's that talk up a market, but can also talk of the downside as well. Covering their ass no matter what the outcome. Then they can say, I said this, or I said that. Never taking any blame!"

The fed is now saying they did not cause the bubble / crash.

I suppose the people didn't have to drink that Kool aide that was on the table.

Anonymous said...

"Then they can say, I said this, or I said that."

When was the last time someone said, "I'm a shill! I'm a shill!"

Here is the Paper Money link said...

Kieth you credited paper money for the info (I posted the link here) but you have a dead link in the credit.

Here is the correct one. It should be in your blogroll.

http://paper-money.blogspot.com/

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