Sunday, February 19, 2006

It's Official!!! NAR Says a "Transition To a Buyer's Market" Underway...

The nations' number one Real Estate cheerleader, chief economist at the NAR David Learah, has changed his tune on the state of the Real Estate market.....again. According to this link, Mr. Learah is quoted as saying,"It's a seller's market transitioning to a buyer's market." Sellers are reluctant to drop their asking prices, but a lot of them might have to "because the buyers now have a little more control, a little more power."

In case you haven't kept track, Mr. Learah had indicated over the past few months that;

1. There is no housing bubble.
2. There is a housing balloon, not a bubble.
3. That there will be a soft landing, not a crash in prices.
4. That the balloon was actually a ship.
5. That the Real Estate market was now cyclical.
6. That sales of existing homes are falling faster than expected.
7. Now, that there is a "transition to a buyer's market."

Remember also the prediction for 2006 that "home-price appreciation could drop to single digits this quarter, and will only be 5% for the year, down from 13% in 2005."

This raises the question, should one really listen to what the NAR says and predicts? First, read this story. I will let you be the judge.

"What NAR predicted in January 2002: Dr. David Lereah, NAR’s chief economist, said: “Total sales will be fairly even this year, with existing-home sales projected to reach 5.23 million in 2002, down a negligible 0.5 percent.”

What actually happened in 2002: There were a total of 5.6 million existing-home sales in 2002, up 5 percent from the previous record of 5.3 million in 2001.

NAR was off by 6.4 percent and got the direction of the movement wrong.

What NAR predicted in January 2003
: “We project 5.34 million existing-home sales, which would be the second-best year for each of the sale series,” said David Lereah, NAR’s chief economist.

What actually happened in 2003: There were a total of 6.1 million existing-home sales in 2003, up 9.6 percent from the previous record of 5.6 million in 2002.

NAR was off by 14.2 percent.

What NAR predicted in January 2004: A growing economy will help to sustain strong home sales in 2004, but housing activity isn’t likely to match last year’s record, according to the National Association of Realtors. “Existing-home sales should come in at about 5.85 million in 2004, still the second-best on record,” David Lereah, NAR’s chief economist said.

What actually happened in 2004: Existing single-family home sales surged in 2004, well above the previous record set in 2003, according to the National Association of Realtors. There were a total of 6.7 million existing-home sales in 2004, up 9.4 percent from 2003. This is the fourth consecutive annual record.

NAR was off by 14 percent.

What NAR predicted in January 2005: After four consecutive record years, home sales should ease but remain close to record levels in 2005, according to the National Association of Realtors. Sales should decline about 2.5 percent to a total of 6.48 million in 2005.

What actually happened in 2005: There were 7.1 million existing-home sales in all of 2005, up 4.2 percent from 2004.

NAR was off by 9.6 percent, and guessed the direction wrong. "

Based on their track record, I would not place much value in what comes out of the NAR. As I learned about twenty years ago, there are no one handed economists, as they always have to be able to say, " on the other hand...."


At 8:26 AM, Blogger David said...

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Bubble Meter Blog


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