Monday, May 15, 2006

David Lereah @ Boca Raton

The Boca Raton News had this to report on the latest statements by David 'soft landing' Lereah.

Lereah was quick to make his message clear: "You don't need a boom for real estate to roar. The real estate boom is over but the real estate expansion is still here." Although homes are not selling as quickly right now, prices are still up. "There are no real estate bubbles, only balloons that expand and contract," he said
David Lereah is basically saying slow appreciation. Certainly there will not be slow appreciation in bubblicious Boca or other bubble markets.

"Forty percent of all home sales in 2005 were second homes - investment properties and vacation homes - compared to about 9 percent 10 years ago," Lereah said.

This should scare the sh*t out of any one who bought in a bubble market.

"Real estate is not an irrational investment, but speculators purchased irrationally during the boom, especially in areas like Miami. This drove prices up, and many speculators took out interest-only loans. This produced a vulnerable real estate market," Lereah explained. "In 2006, we are cleansing the market of speculation."
In 2007, Lereah believes that the real estate market will continue to expand even if mortgage rates increase to 7 percent. "That is still low," he said.

Sure. There will be no expansion in prices in 2007 in the bubble markets.

Buying real estate has advantages, too. "It is the most leveraged asset and there are tax advantages…Real estate needs to play a role in your investment and retirement portfolio. You should diversify," Lereah said.

He added that he is bullish on Florida, Arizona and Nevada because of even greater population increases. "The law of supply and demand works."
Wow, now he isreally going out on a limb. Remember the fundamentals. But can they afford the overpriced housing units?

All of Lereah's real estate investments are in condominiums and townhomes because he doesn't want to be involved in maintaining them. "If you're Mr. Fix It, then it's okay to invest in a single-family home," he said.

Lereah also pointed out that he has invested in several condominium conversions. "Condo conversions are good because the property is already there."
Looks like he may loose money as well during the bubble. I wonder how much money Mr. Lereah has invested in RE.


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