Tuesday, May 06, 2008

He's Baaaaaaaaack!!

David Lereah is back giving more opinion on real estate on the mainstream media. This time in a Newsweek article. Remember, Lereah was probably the biggest cheerleader for the housing market during the bubble years.

Lereah is infamous for calling the bottom many times. Will he call the bottom once more?
His answer: not yet. "We're not at the bottom," he says. "[People] want it to be near the bottom, but we're not there yet. The leading indicators are still very bad. Pending home sales are still in bad shape. Mortgage applications are low … There's still supply out there in abundance … This thing is going to get worse before it gets better."
Wow! Lereah is actually saying that the housing market will continue to decline. The article continues ".. That's quite a turnabout from the view he articulated in his book, first published in 2005." In his book he wrote that "Today's real estate market is the result of rational decision making based on supply and demand conditions with today's economy, home owners are in no danger of experiencing a widespread fallout of home prices."

So what is David Lereah up to these days, career wise?
It turns out he has recently set up a new firm called Reecon Advisors, which is advising Wall Street firms and institutional investors about the real estate market. "Wall Street has an intense interest in [this], because they're looking for when is the recovery going to come, and at what point does the cycle turn," Lereah told me.
After Lereah's history of grossly wrong predictions, why are Wall Street firms taking advice from him? Anyone? Lerah continues and discusses what he got wrong.
Oops. "You knew there were a couple of [regional] balloons out there, and [I] said you could have a couple of these balloons pop," Lereah says now. "But I didn't think this would turn into an all-out bursting of a balloon for the whole nation." He, like other prognosticators (including Greenspan), points to his lack of understanding of the profound effects that subprime lending was having on housing markets. "[I] just didn't realize the scope, the extent, the magnitude of the loose underwriting—not looking at incomes and wages, just providing so many mortgage loans based on [expected] future price appreciation rather than the creditworthiness of the borrower," Lereah says. "That got so out of hand, and none of us realized the magnitude of it until it was too late."

None of us? There were some who did warn about these issues including by not limited too Dean Baker, Robert Shiller, the Economist, and the housing bubble bloggers. It is simply plain wrong to say no one realized what was happening. It is easy to blame his wrong predictions on the subprime mortgage mess. Lereah is desperately trying to restore his credibility be saying 'well gee no one was correct about this mess, so I'm ok.' Lereah is wrong. Others did realize what was happening and let it be known and did speak up. David Lereah has lost his credibility a long time ago.

This blog, the David Lereah Watch was linked to in the Newsweek article. Thanks for the link. :-)

Here is what others have to say about Lereah's statements in this article:


At 11:42 PM, Blogger Russ DoGG said...

GO go go!! Tear that fool up!

This blog is great. Thanks!

At 9:44 AM, Anonymous Anonymous said...

With all due respect, the man is a genius.

Why? He KNEW that we where in a bubble and was able to earn a fortune on it, and now he's going to make an even larger fortune on the popping of the bubble.

At 10:46 AM, Blogger Physicalchemist said...

David Lereah is the Al Gore of real estate. Real estate prices and global temperatures only go up. And when all the indicators point in the opposite direction they rationalize it by calling it a temporary condition.

I sold my home two years ago and moved into an apartment. It’s always better to observe a sinking ship from shore than be a passenger on it.

I am no economist and didn't know anything about sub-prime mortgages in 2006 but even I could see that things were not all milk and honey in the real estate market.

Rest assured that David Lereah will find eager followers. Would we have the current three front runners for the presidency if people could tell when they are being deceived?

At 8:45 AM, Anonymous Anonymous said...

What idiot finance firm would pay for that guy's advice?? It could only be foreign firms who didn't do their research.

BTW the earth's temperature is rising unless you've been living in a cave.

At 8:58 AM, Anonymous Anonymous said...

IAS360 House Price Index Provides First Monthly View of Housing Price Trends Based on Neighborhood Level Data.

Integrated Asset Services (IAS), a leader in default management and residential collateral valuation, just launched its monthly-reported IAS360 House Price Index http://www.iasreo.com/ias360.html

The new Index represents the industry’s first clear representation of U.S. housing market trends at a county level. IAS360 House Price Index is a comprehensive housing index tracking monthly change in the median sales price of detached single-family residences in more than 15,000 “neighborhoods” across the U.S. This data is then rolled up to report on the changes in 360 counties, nine census divisions, four regions, and the nation overall. The timeliness of the data, which is based on all arms-length transactions occurring in underlying neighborhoods, makes the IAS360 the leading indicator for housing price trends in the U.S. April Index: http://www.iasreo.com/ias3600408.html

At 1:26 AM, Anonymous Anonymous said...

Definitely. Check out that one as well: The Anti-Lereah Predictor


At 8:29 PM, Anonymous Real Estate Economist said...

I completely understand all of your frustrations. However, I firmly believe that not David Lereah but Lawrence Yun (the new NAR chief Economist) is the one to blame. Sources tell me that even during Lereah's time, Yun was the one working with the numbers...so I would not be surprised if Yun in fact wanted to bring only good news to his boss at the time and was manipulating the data....the most recent example is the wrong NJ data ....if it was not for a NJ realtor questioning the data...no one would hav known that the sales in NJ actually fell by 30% rather than increased as NAR reported...

At 9:38 AM, Anonymous Anonymous said...

Lereah is a party to the downfall of the most important nation ever to be conceived.

At 11:02 AM, Blogger Hardmoneyloans.org said...

How much is your home worth? Well, it all depends where you live.

The real estate market is still shaking. New data suggests that home prices have hit a new record low. In every new study that comes out, homeowners from Miami, to Las Vegas, Phoenix and Los Angeles, have seen their home value go lower every time.
Is that disappointing? Of course it is.
Should we sell? Is not a good time.
Should we stick to it? Yes, if you can.
Have we hit bottom? Nobody knows.

Banks are facing their worst foreclosure crisis.
Don’t take me wrong, it’s good if you are in the market to buy a home for yourself or if you are an investor, but if you are not, and you own a home, most likely the value of your property is down at least 15 %.

Why do banks care if you are loosing your home? By having to sell repossessed homes, banks have to literally slash their prices down. It gets very costly for them, after all, they have to pay property taxes, maintenance costs, and whatever utilities that need to be paid, all of this expenses for a house that it’s just sitting there, vacant, and the bank is getting nothing in return.

The latest study by the S&P/Case-Shiller Home Price Index of 20 cities, revealed the news that for 22 consecutive months home prices dropped. Only from April to May, 2009 the decline was of 0.9 %

At 9:00 PM, Anonymous Real Estate Consultants said...

Very Good article , this article make some interesting points.

Real Estate Consultants dir

At 3:12 AM, Anonymous Anonymous said...

This guy is an absolute whore. Anything, ANYTHING for attention or a buck.

At 11:25 AM, Blogger vasanth said...


At 11:01 PM, Anonymous Randy said...

You are using my copyrighted image of David Lereah
on your blog without my permission.

Your blog post of May 6, 2008.

Please remove this image immediately.

I earn my living and support my family through the
use and licensing of my copyrighted images. You
have placed my image on your site making it available
for anyone to use without permission or compensation
regarding it's use.

Please remove this image immediately.

At 10:21 AM, Blogger adrin said...

YOur bolg is very nice. I have really learnt a lot from this blog thanks

Boise real estate


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