temporary dip and then back in the positive

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Submitted by EJ on September 7, 2006 - 9:59am

"This year sales are slowing, homes are plentiful and sellers are negotiating," NAR chief economist David Lereah said in a statement. "Under these conditions, we'll probably see prices dip temporarily below year-ago levels as the market works through a build up in housing inventory."

"This is a normal pattern during a market correction, but home prices should return to positive territory within a few months and annual appreciation will be slower than historic norms," he added.

... but I thought housing never went down. I guess when it does it must come right back within a few months because it never goes down. I think it is funny as his predictions (wishes) for the market fail to materialize he adjusts his statements (spin) to correspond to the current data. I wonder what statement he issues after the few months pass and YoY prices are still in the red.

Submitted by ybc on September 7, 2006 - 10:16am.

"I wonder what statement he issues after the few months pass and YoY prices are still in the red."

-- that it's so unexpected and unusual?

People who builds altenate reality in their heads according to their beliefs/wishes often says "nobody thought that such-and-such would happen".

Submitted by JES on September 7, 2006 - 10:16am.

They should account for how their previous projections were wrong before they make more. And instead of providing us with the image he sees in his crystal ball, how about some solid analysis on why he thinks it will pan out this way. Like accounting for resetting ARMS for example! Businessweek seemed to think it was a big enough issue to put it on their cover recently, but this guy doesn't even mention it.

Submitted by JES on September 7, 2006 - 10:47am.

It is also curious how these forecasts always seem to predict a smoothing, a leveling, a slight up or downward trend. What a pleasant thought for homeowners! Even though my home has already gone down 5% I feel so much better knowing that it is just a short correction and that the market will soon go up again. One can sleep better at night knowing that their $800,000 house (bought with a 7-year interest only ARM, no money down) that is now worth $750,000 will someday return to the peak and beyond, albeit at a slow, peaceful rise over time. Like the ripples in the ocean the market glides along smoothly, always sturdy, always heading upward.

Looking down the street I'm not concerned about the 20+ homes that have been for sale for 6 months, all reduced, without a single offer. I'm not concerned about the fact that I live in a new community where 75% of the buyers used risky interest only ARMS and negative amortization loans. The BMWs, Mercedes and JAGs that populate the driveways of my 'prestigious' gated community in the hills are a sign of the regions wealth and the hard work of my neighbors, whom I have never actually met. The few homes that have for sale signs on the car and the house really don't bother me either, after all I'm sure they are looking to upgrade their car. My wife and I work long hours and simply don't have time to research the market or go onto piggington.com, but we do read the paper and there have been some reassuring articles as of late. Just today I saw the president of NAR quoted as saying that things are leveling and that prices will rise again. We're actually thinking about taking out an equity loan and buying a rental property right now. There's no better time than the present since there are some deals out there!

Submitted by poorgradstudent on September 7, 2006 - 11:55am.

I'm trying to think of a good analogy for "Listening to the NAR's chief economist talking about real estate prices is like..."

So far I've come up with:
"... Is like listening to a team's head coach regarding it's chance of winning before a game."
"... Is like listening to a director about whether or not his new movie is great."
"... Is like listening to a White House Press release about anything."

It's pure and simple spin, and we should expect nothing less. Hopefully people know well enough not to take it too seriously.

Submitted by The-Shoveler on September 7, 2006 - 12:08pm.

Nor_LA-Temcu-SD-Guy

Yep it's not like affordability has anything to do with it.

Submitted by vcguy_10 on September 7, 2006 - 1:37pm.

I'm trying to think of a good analogy for "Listening to the NAR's chief economist talking about real estate prices is like..."

"... Is like listening to a car salesman telling you how you really, really need and MUST have the undercoating service with your new car"

"... Is like listening to Harpo Marx saying 'who are you going to believe, me or your own eyes?'"

Submitted by Chrispy on September 7, 2006 - 2:19pm.

"....Is like listening to Jim Jones extoll the benefits of Kool-Aid."

"....Is like Tony Robbins telling you it's safe to walk on hot coals."

Submitted by speedingpullet on September 7, 2006 - 3:16pm.

@ JES - man, I hear you.
Your second paragraph is an almost verbatim conversation I had with some friends last week in L.A, including the NAR press release!

With the horrible new data on wage increases (or, not) it still amazes me that reasonable, intelligent people think that - in one of the most unaffordable places in the US (Los Angeles) - prices will still go up.

'Oh, but prices will go up slowly', they say. But if you're looking for a starter home at 800K, then saying it might go up slowly to 850K over the next few years, isn't going to make the place any more affordable if your wages aren't keeping up.

Submitted by North County Jim on September 7, 2006 - 8:13pm.

Even though my home has already gone down 5% I feel so much better knowing that it is just a short correction and that the market will soon go up again. One can sleep better at night knowing that their $800,000 house (bought with a 7-year interest only ARM, no money down) that is now worth $750,000 will someday return to the peak and beyond, albeit at a slow, peaceful rise over time. Like the ripples in the ocean the market glides along smoothly, always sturdy, always heading upward.

A priceless post! Kudos.

Submitted by The-Shoveler on September 8, 2006 - 6:51am.

Nor_LA-Temcu-SD-Guy

Lennar latest to warn,

http://money.cnn.com/2006/09/08/news/com...

The storm just keeps getting louder.

Submitted by cabinboy on September 8, 2006 - 8:42am.

This guy is a snake. Let's dissect his statement:

"This is a normal pattern during a market correction, but home prices should return to positive territory within a few months and annual appreciation will be slower than historic norms," he added.

1. Home prices have always been and always will be in positive territory. The cost of a home has never been negative.

2. Annual apprecation will be slower than histroric norms. Historic norms are right about at inflation. However, Lereah knows that average Jane perceives the historic norm to be 20% y-o-y.

So, Lereah gets what he wants. He makes a statement in the media that he could never be held accountable for in an court of law, and the average Joe believes it's all business as usual.

If I were a realtor, I'd be pissed that the talking heads of my organization are a bunch of babblers whose statements are disconnected with the challenges the realtors are facing on the street.

Submitted by cabinboy on September 8, 2006 - 8:42am.

This guy is a snake. Let's dissect his statement:

"This is a normal pattern during a market correction, but home prices should return to positive territory within a few months and annual appreciation will be slower than historic norms," he added.

1. Home prices have always been and always will be in positive territory. The cost of a home has never been negative.

2. Annual apprecation will be slower than histroric norms. Historic norms are right about at inflation. However, Lereah knows that average Jane perceives the historic norm to be 20% y-o-y.

So, Lereah gets what he wants. He makes a statement in the media that he could never be held accountable for in an court of law, and the average Joe believes it's all business as usual.

If I were a realtor, I'd be pissed that the talking heads of my organization are a bunch of babblers whose statements are disconnected with the challenges the realtors are facing on the street.

Submitted by JES on September 8, 2006 - 8:52am.

I suspect they received their media training from the former Iraqi information minister.

Submitted by JES on September 8, 2006 - 8:55am.

Look who has a book for sale. Anyone see a conflict of interest here?

http://www.randomhouse.com/doubleday/cur...

Submitted by poorgradstudent on September 8, 2006 - 9:17am.

JES wrote: "I suspect they received their media training from the former Iraqi information minister."

That is so perfect! Although war really isn't funny, the Iraqi information minister was hilarious during the US invasion. "Tanks? What tanks. There are no Tanks in Baghdad. What are you talking about? All that news coverage is faked. Yeah, that's it."

Submitted by PerryChase on September 8, 2006 - 9:31am.

If you've talking about deflection from the real issue and obfuscation, I think the master of spin in Karl Rove. Talk about a "temporary dip and then back in the positive." Lereah just had to watch TV everyday to learn the tricks of the trade.

Submitted by EJ on September 8, 2006 - 9:34am.

I must agree, Karl Rove is the ultimate spin master.

Submitted by North County Jim on September 8, 2006 - 1:17pm.

If you've (sic) talking about deflection from the real issue and obfuscation, I think the master of spin in (sic) Karl Rove. Talk about a "temporary dip and then back in the positive." Lereah just had to watch TV everyday to learn the tricks of the trade.

How often is Karl Rove on TV? My impression is that he's a fairly reclusive figure.

Submitted by PerryChase on September 8, 2006 - 2:00pm.

Lereah is now blaming the sellers for causing the slow market. This is a tactic of deflecting, obfuscating and not taking responsiblity while implying that the situation is improving. It's also denying that there's a need to deal with the tough times ahead. Denying that things are going south today, will not make them turn around tomorrow. I guess it's easier to live in a bubble than in reality.

Yeah, Karl Rove is not on TV but he's perfected this type of spin. Rove has many good students who do appear frequently on TV.

Submitted by barnaby33 on September 9, 2006 - 1:42pm.

Its like listening to the cruise director on the Titanic, "Its just a teeny tiny ice berg folks, nothing to see here."

I wonder if the Titanic actually had a cruise director?
Josh

Submitted by ybc on September 9, 2006 - 3:56pm.

Maybe Lereah should call himself the "educator" -- after all, that's what W called himself -- "Educator-in-chief", trying to help the American people to "understand" Iraq. So Lereah was just trying to fulfill his role of cheerleading the real estate market.

I thought what he said contained quite a bit of wishful thinking that was quite transparent, which was a sign by itself. So sit back and enjoy the show! (I wish that I could say the same about Iraq)

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