Economist Lereah: Realtors pressured me to issue upbeat forecasts

Remember David Lereah? He was the chief economist for the National Association of Realtors whose unsinkable optimism drew criticism as the housing market started...um...sinking.

Well, the Wall Street Journal did a profile of Lereah, and he insists he was pressured by the Realtor association's executives to issue positive reports.

Mr. Lereah, 55 years old, is one of many prognosticators who won professional accolades during the housing boom, only to see their reputations wither in the bust. Throughout 2005, when home prices in the U.S. hit their fifth consecutive annual record, Mr. Lereah was on television so often his wife, Wendy, would catch him by accident.

He flew first-class to meetings and speeches in places like Hawaii and Aspen, Colo., staying in suites at expensive resorts. His bosses awarded him more responsibility. That year, he published his second book, "Are You Missing the Real Estate Boom?"

Mr. Lereah continued to make rosy statements amid growing signs of a housing downturn -- like this declaration in January 2007: "It appears we have established a bottom." A few months later, NAR announced that existing-home sales fell 2.6% in April from a month earlier and 10.7% from a year earlier.

Another tidbit brought to my attention by my Times colleague Kris Hundley: In 2005, putting his own advice to work, Lereah bought a condo in Tampa for $169,600 at The Madison at Soho II at W. Azeele Street and S. Armenia Avenue. Hillsborough County prices the unit today at $146,489.

Let's give Lereah a little credit: His investment has shed only 14 percent of its value, about half the average decline in the rest of the region.

Comments

[Fuzzy Bear]

Remember David Lereah?

Give Lereah credit? The only credit I would give him is for being the cheerleader for the realtors and puting out false information that helped fuel the boom and cause a historical crash of the Real Estate market and the US economy!

I'm certain that many of those who fell for Lereahs hype and spin and who are now in financial troulble with their mortgages or who have lost their homes will not have a positive word for this man.

People who acted like Mr. Lereah are what is wrong with our economy and nation as a whole as they are the ones who are ruining our economy. The public was conned by Mr. Lereah! Buyer beware!!

[Tino]

You can still hear the echoes of the Lereah lies any time you listen to a local-yokel realtor.

"this house provides instant equity!"
"this house is priced right!"
"this house has been seeing a lot of interest!"

James, you use Hillsborough county records as pricing guides? That is just downright bizarre. I would think that as a journalist you would be able to get access to actual sales prices.

[James Thorner]

Tino, it was just a jokey way of tweaking Lereah for being a "genius" even in the down market. I'm sure the real value of that condo is below Hillsborough's market value, but I didn't have the 30 minutes to invest in tracking sales.

[BuyHighSellLow?]

So let me get this straight...

Some yokel realtor tells some yokel blog poster that she has an REO listing for 50% below current appraisal and the blogger believes there is no equity, it's not priced right, and nobody's been looking?

[ParadigmShift]

There is a fine line between being optimistic and lying.. I’m sure if you questioned motive you’d find a certain few benefited at the expense of others. I was out looking at open houses this weekend and I’m finally starting to see some movement in the elevated prices and I even had a short sale close in my neighborhood. The local realtor’s I think have breathed in too much aroma scented candles and enjoyed too much of the kool-aid and cookies to know right from wrong. “Now is the time to buy!” Uh huh.. right.. I really hope I don’t miss the boat .. nothing is selling and personally I’m perfectly happy as a buyer to wait this out until at least the end of 2009. Unless you “have” to why buy right now?? With no buy downs (yet) or aid from the government for the Joe homeowner (not banks).. combined with homeowners still desperately hanging on to what they feel their house is worth and refusing to drop the price.. and more bad news with watching your purchase today be worth less in 9-12 months than when you bought it today (in January ’09 at the time of this writing). Homeowners and their realtors are still in denial even while the inventory keeps piling up.. I’ve noticed a spike in houses being listed in my area since the new year and know of more to come. Hey homeowners and Realtors.. give me a reason to take a calculated risk and buy and I will... but don’t lie to me like I’m a fool.

[Tino]

Come on...have you been out shopping for a home lately? The surviving realtors are mean and desperate, and will resort to any lie to keep themselves from going home and putting their head in the oven.

One of the most vicious selling agents on Tierra Verde (anyone in that area will know who I'm talking about) has about 1/3 of the listings, and they are all grossly overpriced. When I was looking at a home that had been on the market for 1,100 days (that's not a typo), I asked why it was on the market so long and why it wasn't priced more along the lines of sales comps, which would have put it at about $1M.

She became offended and exclaimed that "the house was priced right" and "it had been seeing a lot of interest lately" since they dropped the price from $1.8M to $1.65M after languishing for 3 years.

Apparently the sellers finally threw in the towel, because six months later it sold for $1.0M. Had they not listened to this clueless harpy they could have sold it at a higher price and been out of the home years ago. That agent's remaining homes are still priced at 50-150% over comps and will never sell.

[Fuzzy Bear]

"and more bad news with watching your purchase today be worth less in 9-12 months than when you bought it today"

That number would be about a 15-20% additional fall in home values for 2009. Now is a great time to lose money! Buyer Beware!

[Fuzzy Bear]

Come on...have you been out shopping for a home lately?

Excellent point. I have started spot checking on pricing and ran across a home in the Carolwood area of Hillsborough County priced at $329,000. The home was only 1700 sqft and the realtor mentioned it was priced correctly. Just one slight problem, the comps for recently sold homes were much lower than the listing price.

The home was recently removed from the MLS listings as it had no activity. I may also point out that this is yet one more property in the inventory queue as it now falls into the shadow market or the "hidden inventory" I have mentioned in the past.

This downturn in residential RE is like no other downturn in the past and prices will not return to the bubble years for a long long time.

[BuyBuySellSell]

Please... Anyone can list extreme examples. There are several listings in the same areas at 1,300ft+ under $75k...also priced wrong, but getting snapped up at record pace by savvy investors. I don't see anyone arguing with banks and realtors about those!

[Grant]

I am interested in buying in S. Tampa and the prices in that area are still in the "extreme example" category. But let's be honest, the steeets in S. Tampa are not gilded, and proximity to downtown is not that big of an issue with gas under $2 a gallon. When prices in S. tampa finally (and will) fall to around 2000 levels, then the correction will be nearly complete.

[Tino]

Fuzzy:

1,700 sq ft for $329k? If it was not on a lake, then the sellers are delusional. According to the MLS, there are 226 waterfront homes under $400k for sale in Tampa alone. [granted, some eager realtors define a drainage pond to be "waterfront"]

[Get Real]

Just remember while making sweeping comments about Realtors that not all are equal. Its like someone saying taht all bloggers are losers.

[Fuzzy Bear]

Just remember while making sweeping comments about Realtors that not all are equal.

The realtors who participated in the hype and lies are ruining the reputation of the honest realtors. However, the hype and lies put out by the NAR has done significant damage to the reputations of all realtors as the information made available to the public via advertisments etc. turned out to be false, incorrect and full of spin and hype!

[ParadigmShift]

Get Real said: "Just remember while making sweeping comments about Realtors that not all are equal. Its like someone saying taht all bloggers are losers."

I'm going out on a limb here going to guess a nerve has been hit.. you would'nt be a hyping liar that is also a loser would you?!

Seriously.. to lighten things up.. a little humor is in order.. group hug and why can't we all just get along?! Tick Tock..

A realtor named Impos Syble was shopping for a tombstone. After he had made his selection, the stonecutter asked him what inscription he would like on it.

"Here lies an honest man and a realtor," responded the Impos.

"Sorry, but I can't do that," replied the stonecutter. "In Florida, it's against the law to bury two people in the same grave. However, I could put `here lies an honest realtor'."

"But that won't let people know who it is!" protested Impos.

"Sure it will," retorted the stonecutter. "People will read it and exclaim, "That's impossible!"