The Wall Street Journal reports: US housing data may have understated extend of collapse. I can do naught but laugh. Are they serious? Don’t they even bother to read BoomBustBlog? The WSJ story goes on to read…
The housing crash may have been more severe than initial estimates have shown.
The National Association of Realtors,
which produces a widely watched monthly estimate of sales of
previously owned homes, is examining the possibility that it
over-counted U.S. home sales dating back as far as 2007.
… The group reported that there were
4.9 million sales of previously owned homes in 2010, down 5.7% from 5.2
million in 2009. But CoreLogic, a real-estate analytics firm based in
Santa Ana, Calif., counted just 3.3 million homes sales last year, a
drop of 10.8% from 3.7 million in 2009. CoreLogic says NAR could have
overstated home sales by as much as 20%.
While revisions wouldn’t affect
reported home-price numbers, they could show that the housing market
faces a bigger overhang in inventory, given the weaker demand.
In December, NAR said that it would
take 8.1 months to sell some 3.6 million homes listed for sale at the
current pace, but the number of months it would take could be even
higher if sales are revised down. Any revisions wouldn’t have an impact
on homeowners, but it could have consequences for the real-estate
industry. Downward revisions would show that “this horrific downturn in
the housing market has been even more pronounced than what people
thought, and people already thought it was pretty bad,” said Thomas
Lawler, an independent housing economist.
NAR said the data, which are used by
economists, investors and the real-estate industry to gauge the health
of the housing market, could be revised downward this summer. Lawrence
Yun, chief economist at NAR, wasn’t specific about whether and by how
much the revisions could reduce reported sales, and he raised the
possibility that the CoreLogic estimates have understated the number of
home sales. “This is a very important issue, and we are looking at it
carefully right now,” Mr. Yun said.
I’m willing to go on record saying that the NAR’s economic tallies
and their forecasts are simply jokes. Their “so-called” economists are
shills and paid for marketing figures, nothing more. I have clearly
stated this in the past. In absolute fairness to the MSM, I have been getting more airtime to espouse my decidedly contrarian views - including multiple spots on Bloomberg and CNBC. I will be a guest on CNBC's Fast Money tomorrow (Thursday the 24th) for a full hour. It should be quite fun for I do plan to spread a lot of the anti-NAR disinformation-bust juice around! Tune in to join the fun.
Alas, back to the matter at hand. Let’s reminisce via excerpts from Pay Attention to the National Association of Realtors and Their Chief Marketing Agent At Your Own Risk! and
More Optimistic Fluff And Spin on Pessimistic Macro Numbers – This
Type Of Reporting Simply Drives The More Intelligent, Valuable Eyeballs
To Alternative Media, Ex. Blogs Wednesday, December 22nd, 2010
What is actually entertaining is to here
quotes from NAR chief economists in the mainstream media (MSM). At what
point do these guys lose credibility? The mere quoting of some such
as the NAR’s Yun, or to a greater extent, his predecessor, is enough to
permanently lose some valuable (as in more intelligent, higher paid)
eyeballs to alternative media. To wit, as excerpted from Pay Attention to the National Association of Realtors and Their Chief Marketing Agent At Your Own Risk!:
On the topic of the National Association
of Realtors, and their marketing gurus chief economists, I assert that
BoomBustBlog’s regular constituency is much too bright to fall for
the pumping of real estate by the economist of a national realtor
association. For those that may be a little more trusting, or a little
less mathematically inclined, I will walk through previous
proclamations that have come from the NAR and their chief marketing
July 2008 Yun stated “I think we are very near to the end of the housing downturn,” Yun said (AP News).
Lawrence Yun, chief economist for the
Realtors, said that the housing rescue bill should play a major role
in helping the housing market to rebound. He said an especially
significant feature is a tax break worth up to $7,500 for first-time
home buyers who purchase between April 9 of this year and July 1, 2009.
Yun estimated that up to 3 million first-time home buyers could
qualify for that tax break, providing a significant boost to sales at a
critical time. “I think we are very near to the end of the housing downturn,” Yun said.
As a point of reference..
In 2007 Lawrence Yun state there would be no recession in 2008, according to USA Today.
Of course, in that year I took the opposite side of that trade and
said very bad things were coming. As it turned out I was a tad bit
optimistic: Correction, and further thoughts on the topic, How Far Will US Home Prices Drop?, and Is this the Breaking of the Bear?
(Yeah, the Bear Stearns and Lehman Brother’s collapse were an easy
calls if you read the balance sheets and were realistic about leverage
and the real estate situation). This was also about the time I got
into it with GGP’s CFO for calling out their insolvency. He called me
names, and then they filed for bankruptcy. Of course, they had an
investment grade and buy ratings from the ratings agencies and the sell
side: BoomBustBlog.com’s answer to GGP’s latest press release and Another GGP update coming… (among over 700 pages of analysis, review the January 2008 archives or search for “GGP” for more research).
In my post “On the Latest Housing Numbers” of Tuesday, November 24th, 2009, I quipped.
Lawrence Yun, NAR’s chief economist volunteered,
“We have seen some bulk purchases by investors, but
we are not picking up that data through the Multiple Listing Service
or through our release data, but we do know that there is some bulk
purchases by investors who plan on releasing those properties within a
year’s time, when they see a better market condition.”
I don’t believe “better” market
conditions are coming any time soon. We are just coming off of the best
market conditions anyone will see in their lifetime. Those market
conditions were predicated upon unsustainable conditions, hence they
came crashing down. They are crashing down, not crashed – as in past
tense. I believe we have some ways to go. That is why I am not buying
real estate, and I believe that those that are jumping in now are
jumping in prematurely.
Personally, I don’t consider Mr. Yun to
be a credible source, either. He may be smart and capable, but the
extreme bias of his employer (the ultimate real property perma-bull)
and the incredibly biased reports of his predecessor color his opinions
by default. He is not nearly as bad as David Lereah (who was
literally sensationalist-style perma-bullish) was, but he is still not
objective. See The Reggie Middleton Real Estate IQ Test – Who believes the NAR?
This is an excerpt from that post on Tuesday, 08 January 2008
From CNBC.com: Home Sales Seen Holding Steady In Coming Months
Pending sales of existing U.S. homes inched lower in November and should hold steady over the next few months, a real estate trade group said. (I
ask, “Why should they do that? Credit is tighter, recession
evidence is stronger. Supply is greater, and demand is lower. Hmmm,
let me consult the book written by that ex-NAR guru for the answer.”
The National Association of Realtors Pending Home Sales Index,
based on contracts signed in November, dropped 2.6% in November, to
87.6 from an upwardly revised 89.9 in October.
Economists polled by Reuters ahead of the report were expecting
pending home sales to decline by 0.5 percent from October’s
originally reported 87.2.
The November number was down 20% from a year earlier.
The pending homes sales data suggests that the volume of sales
will hold steady for a while before turning upwards before the end of
the year, said NAR chief economist Lawrence Yun.
With all due respect to Mr. Yun, Mr.
Lereah and the NAR, anyone swift enough to complete the registration
form for this blog should know, by now, to discount this
association’s data and opinions. They do not do the industry justice
with this nonsense. Realtors should actually be the first in the
protest line. It is their credibility that is being called into
question, for this is THEIR trade group. Credibility is the key!
Notice how accurate that NAR prediction was for 2008!
There’s much, much more to throw onto the fire…
My take: I believe that my blog’s
readers are considerably above average in financial acumen and common
sense. The NAR is simply not an entity to be taken too seriously,
due to the obvious conflict of interest exemplified by their
ex-economist, [[David Lereah]], who published some of the most absurd
BS I have ever seen come from a nationally reknown organization.
Examples of his work from Wikipedia: Are You Missing the
Real Estate Boom?: Why Home Values and Other Real Estate Investments
Will Climb Through The End of The Decade, And How to Profit From
Them was published in February 2005 at just about the tippy top of
the bubble (that takes some talent). One year later in February 2006,
as the market is already on it’s way down, Lereah retitled his book Why the Real Estate Boom Will Not Bust and How You Can Profit from It. Lereah’s previous book The Rules for Growing Rich: Making Money in the New Information Economy touting investment in technology company equities was published in June 2000 at the onset of the collapse of the dot-com bubble.
This extreme cheerleading has died down substantially, but the
overly optimistic spin is still evident with their new economist,
I actually believe the Case Shiller graph
above to be misleadingly optimistic due to my doubts about
seasonality filtering and the exclusion of investor related properties
(flips, see A reminder concerning popular housing indices) which are dominating the lower end of the market.
So on that note, I will present a graph
that captures national economic house sales activity superimposed
against the Case Shiller index, but before I do that let’s laugh at
the NAR’s ex-chief marketing strategist economist…
Publications from Wikipedia
Lereah’s book The Rules for Growing Rich: Making Money in the New Information Economy touting investment in technology company equities was published in June 2000 at the onset of the collapse of the dot-com bubble.
Lereah has produced four titles on real
estate investing. His most recent book, “All Real Estate is Local” was
published by Doubleday in 2007. His 2005 book Are You Missing
the Real Estate Boom?: Why Home Values and Other Real Estate
Investments Will Climb Through The End of The Decade—And How to
Profit From Them was rereleased in February 2006 as Why the Real Estate Boom Will Not Bust—And How You Can Profit from It. Before departing the NAR, Lereah wrote All Real Estate Is Local: What You Need to Know to Profit in Real Estate — in a Buyer’s and a Seller’s Market in 2007.
Now, let’s put this all together to see
what we get (reference each date above to the chart below.
Unfortunately, I did not chart the dot.com bubble crash, which Mr.
Lereah so accurately timed to the contrarian side (literally, almost to the month), so we will have to leave that one out…
Subscribers have access to all of the
data and analysis used to create these charts, in addition to a more
granular application, by state in the SCAP template and by region
in housing price and charge off templates – see
- House price data, 2nd Quarter 2010
- Bank Charge-offs and Recoveries 2Q10
very extensive SCAP Assumptions, showing the credit metrics banks
needed to submit for the stress tests of 2009, Updated for last
quarter on a state by state basis_09082010 Web
Click here to subscribe
And now for the myriad, and may I add, requisite, “I told you so’s”. Subscribers can feel free to click the various download links to review the relevant models, reports and analysis:
3rd Quarter in Review, and More Importantly How the Shadow Inventory
System in the US is Disguising the Equivalent of a Dozen Ambac
Bankruptcies! Wednesday, November 10th, 2010: All paying subscribers can download the full shadow inventory report here: Foreclosures & Shadow Inventory. Professional and Institutional subscribers should also download the accompanying data and analysis sheet in Excel – Shadow Inventory.
The Truth Goes Viral, Pt 1: Housing Prices, Economic Sales and the State of Depression Tuesday, October 5th, 2010
Subscribers have access to all of the data and analysis used to
create these charts, in addition to a more granular application,
by state in the SCAP template and by region in housing price and
charge off templates – see
- House price data, 2nd Quarter 2010
- Bank Charge-offs and Recoveries 2Q10
very extensive SCAP Assumptions, showing the credit metrics
banks needed to submit for the stress tests of 2009, Updated for
last quarter on a state by state basis_09082010 Web
Reggie Middleton on Financial Survival Radio: Important Little Details Left Out of the Case-Shiller Home Price Index Saturday, October 30th, 2010
Click here for an interview I did with Financial Survival Radio…
Financial Survival Podcast – Reggie Middleton Reveals the Nasty Little Detail Left Out of the Case-Shiller Home Price Index