The NAR Sees "No Housing Bubble", So Here Is A Look At NAR's History Of Absolutely Disastrous Forecasts

When it comes to industry associations such as the homebuilders' National Association of Realtors, one thing is certain: their chief economists, in this case the always wrong Lawrence "Larry" Yun, never see anything but blue skies ahead... even when the second great depression is starting them in the face.

Which is logical: after all forecasting anything but a chart from the lower left to the upper right for a person tasked with selling houses (which is what the NAR ultimately does) is the same as Goldman issuing "sell" recommendations on all its stocks, starting a market crash, and alienating all of its corporate clients. It is also why all NAR recommendations are utter garbage and why in 2011 the NAR admitted it had artificially inflated its housing metrics by 14% for the 2007-2010 period.

Unfortunately, these individuals also never learn from their mistake, and today was a perfect example: as part of its improving housing market propaganda, which incidentally is now carried almost entirely on the back of Chinese investors parking the PBOC's hot money in US real estate, and who just surpassed Canadians as the largest foreign buyers of homes in the US...


... the inimitable Larry Yun made a repeat CNBC appearance (we wonder where his August 2008 CNBC interview with Diana Olick disappeared to which he patiently explained that there is no better time to buy houses just weeks before housing suffered its biggest collapse since the Great Depression) in which he pronounced "that 2015's annual price could exceed the 2006 peak. Then he made another bold claim: "This is clearly not a bubble."

"Yun defines a "bubble" as home sales and prices rising at an unsustainable pace, not supported by economic fundamentals, such as steady job growth, and/or sales and prices driven by lax underwriting. Mortgage credit availability is now far tighter than it was during the housing boom, when anyone with a pulse could get essentially free money. Fundamentals, however, are another story."

CNBC adds: "The year 2006 saw both sales and price bubbles. That is not the case today."

Terrific: surely Lawrence "Larry" Yun, an expert on things to come, foresaw that bubble and warned homebuyers to stay away from housing in 2006.

Since things tend to stick on the internet, we can go to the primary source: here is the NAR's December 2005 forecast about the state of housing in 2006. Enter Larry Yun and what surely will be his dire warning of an imminent bubble in both "sales and price" right? Wrong. To wit:

With the fundamentals in the housing marketplace still solidly in place, it is likely that housing activity will only moderate in 2006 rather than experience a sharp decline. With demand for property continuing to remain strong due to favorable demographic and population trends, there will continue to be some upward pressure on home values.... the much anticipated home price appreciation is expected to decelerate back into single-digit territory, registering 6.1 percent and 7.3 percent for existing and new home prices, respectively. Although it is difficult to follow the strongest year ever, housing in 2006 will not disappoint. At year-end, 2006 is expected to post the second highest home sales on record.

The above forecast was enough to win the NAR's Larry Yun an entry in Bloomberg's worst predictions of 2006:

PREDICTION: The national median home price will rise about 6.1% in 2006. Over a full year, it "has never declined since good record-keeping began in 1968." — National Association of Realtors, Dec. 12, 2005


THE REALITY: Through October, the median price of residential properties was down 3.5% from a year earlier

Wait, didn't CNBC just say that in 2006 there was a clear bubble? Why did Larry Yun not warn us about this, instead of predicting a 6.1% increase in home prices?

But that is nothing compared to what was about to be unleashed.

Fast forward one year when in December 2006 we again read Larry Yun's forecast for housing in 2007:

Fortunately though, that same compression means a lower base with which to compare in 2007. By the late spring of 2007, the media will likely begin reporting positive “uplifting” trends. Statistical momentum says that will inevitably happen.... Some smarter buyers will see the herd of impending buyers over the horizon and will want to get a jump start. The stock market also is agreeing that the worst of the housing slowdown is over.


So, we can all feel good that the year is over. Housing has weathered the storm, and down the road, it will be back to health.

In other words, the worst is behind us, the NAR's Larry Yun says. Here is the truth one year later from the USA Today:

Home sales plummeted 13% in 2007


The most severe real estate recession in a generation sent sales of existing homes plunging 13% last year — the steepest annual dive in 25 years — and the median U.S. home price fell, probably for the first year since the Great Depression, the National Association of Realtors said Thursday.


The 2008 outlook remains equally grim, though many experts expect the housing market to bottom out by the middle or end of the year.


Sales could fall a further 13% this year, says Doug Duncan, chief economist of the Mortgage Bankers Association — and even more if the overall economy falls into recession. He puts those odds at 50-50. "It's going to be an intense and turbulent year," says Steve O'Connor, the MBA's senior vice president.

Odd, it is almost as if the situation got far, far worse, and still no warnings from Larry Yun.

But wait, there is more. Much, much, much more.

Because as the US housing market was clearing plunging into a depression from which it still hasn't emerged 8 years later, surely at least then Larry Yun would warn anyone who was dumb enough to listen to him, to realize that the housing bubble has burst.


Luckily courtesy of the Lawrence Yun Watch blog we have a detailed chronicle of the NAR's chief "economist" every public utterance of stupidity starting in 2007. Which there are countless examples of.

Let's begin:

May 2007: NAR presentation: "Price Correction - ending?"

June 14, 2007:

US market 'sluggish' but upturn expected

NAR expects es should experience ‘a gradual upturn’ later in the year, the National Association of Realtors has forecast.

‘Overall housing levels are historically strong, but sales remain sluggish compared to the recent boom’, NAR senior economist Lawrence Yun explained. ‘Home sales will probably fluctuate in a narrow range in the short run, but gradually trend upward with improving activity by the end of the year. It’s important to keep in mind that all real estate is local, and many markets are expected to have higher sales and strengthening prices during the second half of this year’.

June 25, 2007:

Psychological factors blamed


NAR senior economist Lawrence Yun said, 'I think psychological factors are currently the biggest drag on the housing market.' While subprime problems are still a 'headwind,' he said. Yun said buyers are simply waiting to step forward and make purchases. He's found that household formation has slowed dramatically since late 2006, something rarely seen outside of a recession.


"The market is underperforming when you consider positive fundamentals such as the strength of job creation, economic growth, favorable mortgage interest rates and flat home prices," Yun said


* * *


Here Larry Yun talking to Diana Olick again:


Lawrence Yun, NAR senior economist, said the market softness is understandable. “I think psychological factors are currently the biggest drag on the housing market, in addition to a disruption from tighter credit for subprime borrowers,” he said. “Household formation has slowed dramatically since late 2006, implying that many people are doubling-up – they’re adding roommates or moving in with parents.

July 31, 2007:

"We are encouraged that home prices, at least for now, have stopped declining," said Lawrence Yun, senior economist at NAR. "If they were to drop much larger than that, it could tip the economy into recession." The association has predicted that existing home sales will fall by 1 to 2 percent in 2007.

August 28, 2007

The Wrong Correction


The media aren’t making the distinction between what’s happening to you and what’s happening to consumers. But you can make that distinction for your customers.


Consumers are hearing a lot in the media about the correction in housing, and they’re understandably concerned about whether now is a good time to get into the housing market.


This hesitancy is evident in home sales volume: Even though interest rates fell to 6.2 percent in early 2007 from 6.8 percent in August 2006, and the economy added 3.5 million new jobs, existing-home sales were down 8.5 percent in 2006, with further softening expected in 2007.


The irony, of course, is that although declines in sales volume have hurt real estate practitioners, they may be a plus for consumers. To a great extent, we can thank steady media coverage of the real estate market “correction” for unfounded consumer concerns.

September 5, 2007

Pending home sales fell in July to lowest level since 2001


Pending sales of existing homes fell in July to the lowest level in nearly six years as borrowers struggled to finalize home purchases, particularly in expensive areas. July's reading of 89.9 was the second-lowest ever for the index and its lowest since September 2001, when the economy was jolted by the terrorist attacks.


Lawrence Yun, the Realtors trade group's senior economist, called the problems "temporary," and related to jumbo home loans above $417,000 that can't be packaged into securities sold to investors by government-sponsored mortgage giants Fannie Mae and Freddie Mac.

October 11, 2007

Realtors Group Revises Home Sales Forecast


"The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains," Yun said.

October 24, 2007, Further distortions of reality:

National Prices Drop 4.2 Percent, Rise in Some Areas

“Because there were fewer transactions at the upper end of the market, there is a downward distortion reflected in a lower national median home price," Yun says. "Home prices continue to trend up in the Northeast and in the condo sector. In other areas not dependent on jumbo loans, such as much of the Midwest, prices are rising.”

October 6, 2007:

Larry Yun promoted to Chief Economist of the NAR


The National Association of Realtors® today named Lawrence Yun chief economist and senior vice president of research. Yun has served at NAR since 2000, most recently as vice president and senior economist.


Lawrence is a talented economist and an outstanding forecaster who has contributed greatly to NAR’s growth and prestige as the leading advocate for the housing industry,” said Dale Stinton, NAR executive vice president and chief executive officer. “We are proud to have a man of Lawrence’s integrity and honor.


“He is a no-nonsense and level-headed analyst of the housing market who calls the data as he sees it, and has guided NAR with skill as chief spokesman for the past several months in a competitive real estate market. We have great faith and trust that Lawrence’s tenure will be a stellar one that will enhance NAR’s reputation as the most reliable and credible source of real estate research.”

November 14, 2007

Housing market at the bottom, realtors say


The market for existing homes is “hitting the low right now” and heading for a “modest recovery” next year, the chief economist for the National Association of Realtors said at the group’s annual convention here Tuesday.


The number of sales will rise to 5.69 million next year, Yun said. But the housing recovery will be very uneven, with some markets bouncing back more quickly than others, Yun predicted.”

* * *

And cue 2008, the year everything just imploded:

January 10, 2008

Stable Existing-Home Sales Expected in Early 2008, then Gradual Rise


“‘The exact timing and the strength of a home sales recovery is a bit uncertain,’ Lawrence Yun, the group’s chief economist, said in a statement. ‘A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008.’

January 18, 2008

Worst is behind


While Yun was mostly positive on Denver's outlook, the issue of foreclosures remains. With about a 1.8 percent foreclosure rate, Denver is keeping pace with the national average, according to Yun. Michigan, Indiana and Ohio are faring worse, with foreclosure rates above 3 percent.


The subprime-mortgage crisis already is a thing of the past and should not affect the housing market going forward, Yun said.

February 14, 2008

Economist: Housing slump overblown


Talk of a pending recession spurred by a housing slump is greatly exaggerated by national media and could spur a self-fulfilling prophecy as the negative news is emphasized, the chief economist for the National Association of Realtors told local real estate agents today. "Paraphrasing Franklin Delano Roosevelt, what I fear is fear itself,"   Lawrence Yun said at the Greater Rochester Association of Realtors 2008 Real Estate Trends and Issues luncheon today at the Hyatt Regency Hotel.


Yun told the audience that the national news outlets tend to cherry pick data and expert interviews to perpetuate the story that the economy is heading into recession as housing prices fall and foreclosure rates rise. 


"If the news organizations have an agenda, they will call somebody and they'll get the information they want," he said.


He said short-term losses have actually brought the markets back to healthy levels, which is often ignored in the national storyline. They give more play to economic experts who support those stories, he said.

February 19, 2008 - revisionist history

It is also fine for people to point the finger at me. In a fast changing market conditions, I too have been off on my forecast. I knew that the boom was clearly unsustainable and I made the forecast in early 2007 that home prices were likely to experience a price decline on a national level for the first time since the Great Depression. The national median home price indeed fell by 1.4%. I believe I downgraded my forecast for ten or so straight months in 2007 as it was strongly pointed out to me. At the same time, the Blue Chip consensus forecast, comprised of about top 50 private forecasters, including forecasts by Merrill Lynch, Goldman Sachs, UCLA, and the like — had also downgraded the housing forecast by more than 20 straight months. Forecasting is never perfect. Forecasts are bound to be off but the forecaster's job is to make the best prognosis given the available information at the time. The readers should always view any forecast with caveat emptor.

February 25, 2008

Existing home sales slip and prices tumble


The NAR's chief economist, Lawrence Yun, said the market is "scratching the bottom," with sales holding at a deflated rate of around 5 million units for the past several months.

March 18, 2008, USA Today names Larry Yun its fifth top economic forecaster, Yun predicts "No" recession in 2008

Yun was named NAR's chief economist and senior vice president of  research in November 2007. He has been with the association since 2000, previously serving as vice president and senior economist. He pioneered the development of the Commercial Leading Index after helping develop the residential Pending Home Sales Index.


"I'm honored to be recognized among some of the best economists in the country," said Yun. "The economy and housing industry are facing many challenging issues at this time, which makes this an interesting and stimulating position."


USA Today enlisted the help of the Federal Reserve Bank of Atlanta to determine the most accurate forecasters among the economists surveyed in the newspaper's quarterly survey on the U.S. economy.

April 9, 2008:  Larry Yun doing what he does best: pitching houses.


May 19, 2008

Silver lining? Prices falling sharply


When it comes to housing, the optimists are those who see the near free fall in home prices as encouraging: It may at least shorten the economic agony.


"Because the prices are going down so fast, we'll be hitting the stabilization point sooner," said Lawrence Yun, chief economist at the National Assn. of Realtors.

June 17, 2008: Larry Yun predicts 99% of market will have higher values in 5-years than today.


July 24, 2008, and here

Pent up demand

"There are signs of pent up demand,'' Yun said during the press conference. ``People are very hesitant to enter the market because of price declines.'' A stabilization in prices would bring first-time buyers into the market, allowing current owners to move up in the market, he said.


* * *


"I think we are very near to the end of the housing downturn," Yun said.

September 20, 2008: winter's fault, all the way back then:

Yun also said that he expects the worst of the housing slowdown is over, or nearly so. “The winter months are always weaker,” he said. “But this winter wil be better than last winter. There is a great pent-up demand that cannot be held back any further.

October 8, 2008, 1 month after Lehman, Yun suddenly expects a recession 5 months after telling USA Today the opposite

Yun now expects growth in the U.S. gross domestic product (GDP) to contract for two consecutive quarters, in the fourth quarter of this year and the first quarter of 2009, before expanding in latter part of 2009 as the housing market begins a steady improvement.

And then, in February 2009, after years of constantly wrong forecasts, and predictions that cost millions of homeowners billions in losses, Yun says he will take full responsibility for his stream of constant errors:

National Association of Realtors Chief Economist Lawrence Yun said in Orange County this morning that his bosses at the real estate brokers' trade group never pressured him to spin forecasts in a positive light, something his predecessor said happened when the housing boom began to falter a few years back.


"Whatever I say, I take full responsibility for everything I do," Yun said moments before addressing more than 200 people at the Orange County Association of Realtors headquarters in Laguna Hills.

And thus, having taken full responsibility for his actions does Yun resign? Of course not.

So in case it is still confusing, here is a visual summary of his forecasts:


* * *

And with all that said, let's go back to today's CNBC article, coming some 6 years after Yun said we would take full responsibility. So what does he do? Why goes back to square one: peddling more lies, more propaganda, and more disinformation:

June 22, 2015:

Soaring home prices not a 'bubble': Realtors


The median price of a home sold in May of this year was $228,700, according to the National Association of Realtors (NAR). That was just off the highest monthly median home price ever of $230,400 in July 2006, at the peak of the last housing boom.


It was also high enough for NAR's chief economist, Lawrence Yun, to pronounce that 2015's annual price could exceed the 2006 peak.


Then he made another bold claim: "This is clearly not a bubble."

And scene.