Yes, the author of 2005's "Are you missing the real estate boom? - Why the real estate boom will not bust", the "chief economist" of the NAR, the one and only corrupt David Lereah, had these gems the other day in his letter to his now-famished realtor minions:
It should be more and more obvious that a crash for realtors is the drying up in volume and commissions - REGARDLESS OF HOME PRICES, OR THE WELL BEING OF THE BUYERS AND SELLERS THAT THEY SCREWED.
The housing market is cracking. And that crack is widening.
Adding insult to injury, housing inventories continue to mount.
Many of the reasons for today’s real estate slide are obvious: home values got too high, affordability deteriorated and the homebuying public lost confidence.
Households and investors are now sitting comfortably and patiently on the sidelines waiting to get back into the real estate game, but only when property prices come down to more suitable levels.
The good news is that prices are beginning to soften. With price reductions come gains in home sales. If prices continue to fall, the decline in sales might have bottomed out in July.
Sellers need to abandon unreasonable expectations about the value of their homes.
But there should be few worries for consumers. Most homeowners today have enjoyed substantial equity gains on their properties during the real estate boom years. Cutting prices by 5 or 10 percent will not wipe out their home equity gains.
Those of us involved in the real estate profession find ourselves in the awkward position of favoring price softening. REALTORS® are asking (pleading) sellers to accept market realities and reduce their listing price.
The housing sector and the U.S. economy need home sales (transactions) more than home price appreciation.
Going forward, restoring buyer confidence is the key to ending today’s real estate contraction. Only price reductions can bring confidence back to the market.
The sooner home prices drop, the sooner we can stop the bleeding.
October 15, 2006
More pathetic rantings from the corrupt David Lereah - "the sooner home prices drop, the sooner we can stop the bleeding"
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46 comments:
All he cares about is commissions
But no, my Realtwhore® cares about me.
I'm tellin ya, tar and feathers
I know for a fact he has a PhD. And if you'd like one too please send your check or money order in the amount of $50.00 to:
The Economics School
P.O. Box E101
Burbank, CA
Use Google scholar. Only three (3) David Lereah publications show up, with two (2) citations total, and one of these is for his 1983 UVa PhD thesis, which has never been cited. He doesn't appear to have published any papers from his PhD thesis.
That's the PhD equivalent of a "Gentleman's C" -- his committee passed him, but the lack of scholarly articles and citations speaks for itself.
i have a Ph.D., and it took me 10 yrs. to unlearn what i was taught during seven years of economics "education" at top-tier institutions. i teach at a small private independent university in CA, and i tell my students EVERY DAY that their parents are paying a lot of money for them to learn things they're going to have to unlearn at the same time or when they leave my tutelage. the ones who stay in my class after that bit of honesty are the ones who REALLY want to learn economics (so they can unlearn it properly). my administration tolerates me to some degree because my students are some of the best and brightest, and many go on to graduate studies in law, economics, business, and the sciences at top-tier schools and rarely fail to be among the most generous alumni. thank goodness for them (and my successful investment advisory side schtick) or i would be competing with lereah as a shill for some totally corrupt organization.
why am i posting here of all places? i post all over on various blogs and fora similar to this one b/c this country faces perhaps the worst series of building crises as it has ever faced, and the elites are not telling the masses. they're set with their offshore assets and escape plans, but the rest of us will have to fend for ourselves when the time comes, and it is not going to be easy.
i sold my socal house and rental properties in the sf bay area progressively from winter '05 to last spring. i rent near my school. i know a couple of dozen well-known, well-heeled people in the investment mgmt. business who have also sold and are renting with their money in treasuries at 4-5%. they know that the stock and real estate markets are history and deflation is the risk, and they are acting on their understanding.
you're free to take this all with a grain of salt, so to speak, or to dismiss it outright. however, just for fun, make a note to yourself, literally, and see what happens over the next 6-7 yrs. don't take the chance that i will be correct.
get your affairs in order to sustain yourself during the difficult period ahead. houses will be consumption items, not assets or savings or retirement vechicles. unemployment will be much higher than the official figures state. the stock market is entering historically its worst performing period of a secular bear market. remember, mutual funds and fee-based mgrs. exist solely to gather assets from which to scalp fees; they don't care if you make money or not. if they can string you along and keep you holding and hoping, they make money whether you do or not, and in secular bear markets it's a zero-zum game: they make money, you don't, period.
get liquid. get out of debt. sell paper assets, including leveraged real estate, but not treasuries. buy treasuries on any seasonal increase in yields, and sell stocks, corp. bonds, and real estate.
most reading this WILL NOT heed this advice, which is why i am so vehement. do it, NOW!!!
the real growth of the monetary base has begun to bottom, which is historically consistent with recession, rising U rate, and the Fed preparing to cut rates. irrespective of whether or not the S&P 500 heads higher, even back to the all-time highs above 1500, stocks are a SELL. don't buy!!! but also DON'T SHORT!!! the market is completely rigged by the NY Fed, hedge funds, investment banks, and proprietary trading firms (modern-day "bucket shops"), and they are fully invested AND hedged, so they have no one to whom they can sell to raise liquidity. thus, they have no choice but to borrow from the NY Fed and pump the E-mini futures on each decline below the 200 DMA for the major indices. the stock market is a MASSIVE house of cards being propped with increasing amts. of leverage. RUN AWAY!!!
good luck.
Disclaimer: David Lereah, Chief Economist of the National Ass. of Realtors, is a professional liar who's pathetic, misleading ramblings serve no other purpose than to provide comic relief.
The biggest confidence game of all time, The Great Real Estate Looting Scheme, is crashing hard. Now, the NAR's head cheerleader, David Lereah, is desperately trying to restore confidence in a con game that has completely played out.
As always, Mr. Lereah mixes some truth in with his lies. Here's a true statement that he wove into his latest web of deceptive bullshit: "Many of the reasons for today’s real estate slide are obvious: home values got too high, affordability deteriorated and the homebuying public lost confidence." On rare occasion, even the Devil himself tells the truth.
As for the rest of what Lereah has to say about the real estate crash being a good thing for buyers, sellers, Realtors and the overall economy -- to hell with it! David Lereah is such a disgusting piece of lying shit that the rest of what he said isn't worth discussing.
Hilarious. "Only price reductions can bring confidence back to the market." Yup, that's a sure-fire hallmark of a sound investment: plummeting price and shrinking sales volume. Fills me with a confidence that can only be described as 'rock solid'.
I'll agree with the professor on be prepared. The amazing thing is that very few see this coming.
I've paid off all debt including the mortgage and moved to cash and precious metals. I did keep one rental house, in case they gov't successfully manipulates the economy for a few more years.
The housing bust is a conspiracy by Republican Neo-cons to destroy the world.
Households and investors are now sitting comfortably and patiently on the sidelines waiting to get back into the real estate game, but only when property prices come down to more suitable levels.
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BVLLLLLLL SH!TTTTTTTT!
They aren't sitting one the sidelines, they are curled up in the fetal position in the trench getting shell shocked!
CHICAGO RE Update: Vistied the recently finished townhome complex on Irving Pk Rd and Califorina. Driving past *6* Forsale by Owner signs. I followed the signs of "Open House" to the back where I walked up the stairs to the model unit. Guess what? No one was home! There was a note on the door saying showings are done only by APPOINTMENT!
You are kidding me right?? They gave up the fort to the indians! They are not even manning the ramparts! On a Sunday afternoon of all times! How the F- do you expect to sell if you aint even around??
It's over.
Chicago is over priced, let me tell you. Not as bad as S.D. or S.F. but we are right there.
Met an owner walking his dogs in the complex. He told me that they all bought pre-cons at $380,000 for a 2 bed 2 bath 1 car. HAHAAHA! His two neighbors, who never moved in (floppers), wanted $450,000+ at the top of this year and are still trying. The only units available are asking $800,000+!!! HAHAHAHAHA
Bye Bye.
i sold my socal house and rental properties in the sf bay area progressively from winter '05 to last spring. i rent near my school. i know a couple of dozen well-known, well-heeled people in the investment mgmt. business who have also sold and are renting with their money in treasuries at 4-5%. they know that the stock and real estate markets are history and deflation is the risk, and they are acting on their understanding.
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Sorry to be the one to say it, but:
NOOOOOOO SHHHHHHH!TTTTTTTT!
Thanks anyway.
All of this assumes we will reach some economic limit. What if the central banks really can handle whatever problems or imbalances that occur? All currencies now float, and globalization has tied them all together so that failure in a major economy is no longer an option.
The money supply is growing quite nicely professor. A 10% inflation rate will make all these troublesome debts far more manageable in just a few short years.
I know it pains the doomsday crowd, but the canned peaches in your bomb shelter might just get stale before we see any hint of a HP or other economic meltdown.
Gold a ponzi scheme. LMAO. You're a true sheeple.
Will gold fall to zero? Never. Will the USD fall to zero? Yes, it's already fallen 95% since 1913.
Why do central banks around the world, including our (non)Federal Reserve, store 16,000 tons of gold if it's not real money? Because it IS real money.
Actually, it's 31,100 tons of gold in the vaults. But, that number is believed to be inaccurate due to accounting methods of CB transfers.
http://www.gata.org/CheuvreuxGoldReport.pdf
2006 Economic Outlook Roundtable:
Scenarios for the Next U.S. Recession
I believe 10 percent of the U.S. economy will actually experience a segmented consumer recession over the next 24 months
http://tinyurl.com/mqh8y
Thanks for that link Bork. It shows that about 1/3 of Americans are in a steady state at or near the poverty level, and these people will cause most of the headaches for banks in a downturn because they will default on mortgages and credit card debt.
So what's a modern central bank to do? Inflate. inflate, inflate. Inflation will raise their wages and make them feel prosperous (remember they're not too bright), and it will help banks clean up their balance sheets as long as the credit extended is growing at a slower rate than the inflation.
There is no economic problem in the U.S. that ten years of 10% inflation can't fix.
Maybe the Professor can clear something up for me regarding bonds. If we have another recession in 2007, I'd agree yields will fall initially. But, wont they later rise due to the even larger deficits we'll have to finance and that the foreign markets will be buying less of our debt because we will drag them down with us? I agree that bonds could be a big play soon, but not sure of the direction....
Anonymous said...
All of this assumes we will reach some economic limit. What if the central banks really can handle whatever problems or imbalances that occur? All currencies now float, and globalization has tied them all together so that failure in a major economy is no longer an option.
***AAAAAHAHAHAHHAAHA That just menas they ALL fail TOGETHER.
The money supply is growing quite nicely professor. A 10% inflation rate will make all these troublesome debts far more manageable in just a few short years.
***And how would YOU know that? The Frd has chosen not to report the M3 anymore. Do tell us, all knowing wizard?
I know it pains the doomsday crowd, but the canned peaches in your bomb shelter might just get stale before we see any hint of a HP or other economic meltdown.
***It's out there. I see it everyday.
I know it pains the doomsday crowd, but the canned peaches in your bomb shelter might just get stale before we see any hint of a HP or other economic meltdown.
-----------------
Tell that to Homedepot ....Shares of Home Depot Inc. eased on Monday after Goldman Sachs downgraded the home improvement chain to "neutral" from "buy," citing concern about management departures in its retail.
Your right anonymous thing's are looking up.. my suggestion go get a credit card and max it out on shit you dont need, Buy a home ..no 2..buy a new car..no 2 one for the wife.
by all means DO YOUR PART!!!keep us from our depression. BUY BUY BUY!!
"***And how would YOU know that? The Frd has chosen not to report the M3 anymore. Do tell us, all knowing wizard?"
No wizardry, just Google:
http://tinyurl.com/m7bs7
Lots of economists still watch M3, only dumb masses like you think it's gone. Now hurry up and stock that shelter with Cheetos, Fritos, and King Dons.
Home Depot is a bad example to use. It's mismanaged on many levels and the CEO is a whack job. I can't disagree that economic activity associated with home building is in decline. But the money supply is growing a near record rates and that clearly signals inflation.
Bernanke is on record saying there will be absolutely NO DEFLATION in this economy under his watch. What more do you need to know?
Home Depot is a bad example to use. It's mismanaged on many levels and the CEO is a whack job. I can't disagree that economic activity associated with home building is in decline. But the money supply is growing a near record rates and that clearly signals inflation.
Bernanke is on record saying there will be absolutely NO DEFLATION in this economy under his watch. What more do you need to know?
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Enlighten me please if you would....if we are indeed in an Infationary pattern (which i will agree we are) who and where is all the cash going to?
Not the consumer..with negitive or no equity at all they are NOT! being approved for loans.
Credit cards maxed (sure you can ask for an increase, IE: 1 steo to the grave!)
Credit scores very low, due to late payments..no approval.
Pople in most cases are leveraged to the max..WHERE IS THE MONEY GOING!??
Or is the fed pumping up the money supply, for a coming rate slashing, to prop up the economy?..
More Koolaide, it just kills me to think that more borrowing to some is a sound and great economy..it is borrowed money!!!!!!
"More Koolaide, it just kills me to think that more borrowing to some is a sound and great economy..it is borrowed money!!!!!! "
Yes it is, but money is money, and when people spend it, the economy grows. If there is nothing else to drink, Koolaide tastes pretty good!
At this point what other alternatives do the central banks have? That's right.
At this point what other alternatives do the central banks have? That's right.
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that my friend is the Million Dollar question..I wish like you I new that answer, cause we would be sitting pretty right about now HAHAH! :)
NEED ADVICE-
My buddy told me to ask opinions from you guys first. I am wanting to buy a condo in Denver. It is a foreclosure that is 70K. The previous owner paid $185K. Do you think it makes sense to buy or wait longer?
Anon Denver buyer: They aren't making any more land in Denver, and prices here never go down (especially in desirable areas like Aurora).
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.
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.
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your kidding right>? But on a positive note ,Nevada recorded 2,016 foreclosures in August, the latest month available. That's well above the 568 foreclosures recorded in August 2005 and 1,103 last May.
Thank god thos Lenders are refi-ing all those ARMS.
http://tinyurl.com/y5wmqa
Anon Denver, unless you really like the place, and can actually buy it for $70k (I'm skeptical), then there is no hurry to buy now. Foreclosures are climbing and there will be plenty of inventory to choose from.
" If gold is the only real money, why don't they store just gold? "
I didn't say it was the only real money. I said "gold IS money". Gold is a currency. The ultimate and lasting currency.
The US closed the gold window in 1971.
Hey Anon-
Be careful dude, they tell you 70K, then when you get there the price changes.
Check out this article in
SmartMoney.com
Editor's Page
Bursting the Bubble Bubble
By Ray Hennessey Published: October 16, 2006
The guy is selling his house and is trying to convince everyone there is no bubble! He should be fired!
denver - what are your monthly ownership costs on the $70k place and what would the unit rent out for?
if rent is higher than ownership, buy it. if not, stay way
it's called "the fundamentals". something everyone forgot during the ponzi scheme
Anybody out there have any thoughts on how Hawaii prices will go?
Doesn't the Bank of Japan hold the mortgage on Hawaii?
Too bad the Bank of China does not hold it. Let's screw those chinks.
tomatoes 2.99 a pound, and all i can produce with those seeds is way scrawney tomatoes in this blasted desert
inside or outside, no inflation here
Hawaii prices will go?
Down. Matter of fact, I read the whole Island State is sinking.
Going forward, restoring buyer confidence is the key to ending today’s real estate contraction. Only price reductions can bring confidence back to the market. So let’s give a round of applause for prices taking center stage for a brief turn. The sooner home prices drop, the sooner we can stop the bleeding. Expect home prices to fall for most of the remainder of this year. Although it may seem to go against your better judgment, this is a good thing for the long-term health of housing.
Restoring buyer confidence?! How about just creating some buyers with the savings and income to afford hopelessly overpriced houses and millions of them?!
When you folks read this, doesn't it make you want to jump on a plane and hunt this Lereah guy down and just give him a slap . . . or two? How can this guy keep look in the mirror in the morning without vomiting or crying or both?
"The money supply is growing quite nicely professor. A 10% inflation rate will make all these troublesome debts far more manageable in just a few short years."
The real growth of the monetary base has been CONTRACTING most of the time since Aug. '05, which has presaged recession each time it has occurred WITHOUT EXCEPTION since the early '50s. If you're going to talk facts to an academic, get your facts correct, please.
Secondly, 10% inflation?! Do you know what that would do to rates and house prices? 10% inflation would guarantee a debt-deflationary meltdown thereafter, and in a hurry. The Fed would have to jack the funds rate to 12% or more. The U rate would soar, along with millions walking away from their hopelessly overpriced and debt-laden houses.
Think about it: Middle-income people are buying homes today for $1M and borrowing with interest $2-$3M for 30, 40, or 50 years, who knows. Incomes and population will NEVER justify this kind of debt burden and present value. Lenders are criminally insane to lend this kind of money. They do it because they perceive no risk to them: moral hazard.
RE loans are now 25% of GDP, for goodness sakes! That's 25% higher than the '80s bubble that burst and resulted in the greatest financial crisis since the Deperssion.
RE loans make by nearly 40% of commercial bank assets, 50% higher than when Keating was pulling his nonsense in the late '80s. And it is said that banks are less exposed to real estate these days. Good grief.
We are facing the greatest financial crisis since the 1930s and 1890s.
Please, take your head out of the sand and open your eyes.
And just try to convince me that Phoenix and CA house prices are not going to crash outright.
OFHEO and Phoenix insanity.
"It took the rest of the day to get the perfume stink off my hand."
LOL!!!!!!!!!!!!!!! I'm easily entertained. That cracked me up.
Speaking of stinky perfume, I'm noticing that a lot more of late with women, anyone else? Man, those are some STRONGLY offensive odors! Ladies, just a dap, not half the bottle!!! I'd rather smell their body odor than that crap they wear these days!!! Geez!!!
And guys are wearing some nasty stuff, too, I've noticed lately. Come on, guys! File that stuff!!! I can't breathe!
If there's such a bubble, why aren't house prices falling? Prices are still 50% higher than in 2001. 75% higher than in 1997. Where's the big price crash, dudes?
bubble_seeker said...
If there's such a bubble, why aren't house prices falling? Prices are still 50% higher than in 2001. 75% higher than in 1997. Where's the big price crash, dudes?
Look at the trend with the recent data - this is a case of American Shock and ARM. Arm Reset that is. Watch the volume data too. You must also account for inflation as well. Americans are now having to deal with spending beyond their means. It shall be interesting to see how that turns out.
Professor, you are getting all worked up, calm down. Let me address your points one by one:
"The real growth of the monetary base has been CONTRACTING most of the time since Aug. '05"
Not from what I see. Take a look at this chart of M3. You see it is growing over any period longer than a few months.
http://tinyurl.com/m7bs7
Where is any evidence of contraction?
"Secondly, 10% inflation?! Do you know what that would do to rates and house prices? 10% inflation would guarantee a debt-deflationary meltdown thereafter, and in a hurry. The Fed would have to jack the funds rate to 12% or more."
Real inflation is easily 2X or 3X the reported CPI numbers, yet the funds rate is quite a bit lower even after these recent rate hikes. How can that go on you ask? Simple, the Bank of Japan decided that supporting Japan's exports is more important than any long term payback on the IOUs it collects from the U.S. treasury
"Think about it: Middle-income people are buying homes today for $1M and borrowing with interest $2-$3M for 30, 40, or 50 years, who knows. Incomes and population will NEVER justify this kind of debt burden and present value. Lenders are criminally insane to lend this kind of money. They do it because they perceive no risk to them: moral hazard."
The same could be said before any historical run-up in home valuations. We're in a tough nut now because middle class incomes have not kept pace with inflation -- a byproduct of globalization. I suspect that is all about to change and we will see wages increase rather dramatically during the coming inflationary decade.
Lenders are quite sane, and they are earning record profits because central banks allow them to borrow funny money at negative real interest rates and lend to mortgagees and credit card holders at 6% TO 24% rates. It's like printing money!
"RE loans are now 25% of GDP, for goodness sakes! That's 25% higher than the '80s bubble that burst and resulted in the greatest financial crisis since the Deperssion.
RE loans make by nearly 40% of commercial bank assets, 50% higher than when Keating was pulling his nonsense in the late '80s. And it is said that banks are less exposed to real estate these days. Good grief."
Seven to ten years of the current inflation, and those ominous percentages you cite will be halved. The Fed and other central banks will supply enough liquidity to service the interest and maybe even pay some of the principle. An electronic printing press has no limits. What part of that don't you understand?
"We are facing the greatest financial crisis since the 1930s and 1890s."
Perhaps we are, but the men running the central banks think otherwise, and they are the ones who control that printing press I mentioned earlier. Like they say, "Don't fight the Fed!"
"And just try to convince me that Phoenix and CA house prices are not going to crash outright."
I can't do that, those two markets are definitely out of balance. But a couple of drunks in an audience of thousands is a nuisance, not a disaster. The show will go on.
Believe it or not - he does have a point (and yes - he is an ass so don't start). Because sellers will not budge enough on price, the burst is going to get even uglier than it would have. What he isn't saying is that many realtors are telling people to keep their prices high.
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