Too much sugarcoating from Realtor associations?
How much trust should the public place in the housing reports sent out by the National Association of Realtors? It’s a legitimate question: The association exists to further the interests of real estate agents. How honest is it when it comes to reporting bad housing news?
The association’s former chief economist, David Lereah, was long criticized for being too much of a cheerleader for the real estate industry. His critics accused him of denying the signs of an impending housing bubble even when the evidence was clear to everyone else that the residential housing industry was heading for a serious down market. For more about Lereah from a dedicated critic of the economist, check out the wonderfully entertaining and informative blog David Lereah Watch.
Lereah is gone now, but there’s still some serious spinning going on at the Realtors association. For more evidence that the association and its officials may not be completely realistic when it comes to our current housing woes, you can read this story in today’s Chicago Tribune. In it, Treasury Secretary Henry Paulson, during a speech at Georgetown University’s law school, predicted that the country will see just more than 1 million foreclosures initiated this year. Paulson also said that sales of existing single-family homes are down nearly 25 percent from their peak in 2005, and that the inventory of unsold homes has increased to levels not seen since the early 1990s.
In other words, it was a pretty bleak look at the housing industry.
How did Lawrence Yun, the new chief economist for the National Association of Realtors see it? His take was decidedly more … optimistic. In the Tribune story, he claimed that Paulson’s speech will spur the federal government to enact more aggressive reform measures that will, in turn, restore momentum in the housing market and boost consumer confidence.
Perhaps Yun needs to open a lemonade stand. It appears he can fashion lemonade out of even the sourest of lemons.
Yun is quoted in the story as saying, “Federal policy efforts will be a big message that the worst is bottoming out.”
Really? It sounds to me that Paulson is saying the worst is not yet here. In fact, that’s what Paulson is quoted as saying just a paragraph later in the Tribune story: “The ongoing housing correction is not ending as quickly as it might have appeared late last year, and now it looks like it will continue to adversely impact our economy, our capital markets and many homeowners for some time yet.”
So, when the next optimistic housing report comes out from a real estate trade association, remember to ask for a second opinion.
Tags: David-Lereah, Lawrence-Yun, National-Association-of-RealtorsRelated Stories
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