Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius, and a lot of courage, to move in the opposite direction. — Albert Einstein
Mike wrote:
If you don’t have a sense of humor, you probably don’t have any sense at all.
Merry Christmas to you and your family, Mr. Shaw.
And to everyone else here.
You see, salutations can be expressed without including a condescending, gratuitous insult; try it sometime.
__
Fair enough. As you were obviously smart enough to see that the humor line was intended for you (without me saying so) I’m going to attempt to respond to the whole “David Lereah Issue” without (after all, it IS Christmas) making any snide comments towards you (or any of the other people who may share your views). First, I am not “defending” David Lereah. I don’t know him and I have never paid any attention to any specific statement or prediction he has made. I don’t even know how long he has been the chief economist for the NAR. I have no data to suggest that any of his predictions or forecasts are ever accurate and I am not claiming that they are. I will also state that I have read comments from people who have meet him and / or have listened to him speak and from all accounts the reports would indicate that he is a likable person and comes off as well informed and intelligent.
For the purposes of what I want us to look at here, we can think of David Lereah as the equivalent of a stopped clock – at a minimum, he is going to be right twice a day with the correct time. So, if the point is that he is usually wrong – lets just agree, he is almost always wrong. For me, he does not cast a “long shadow”. I don’t think most REALTORS even know who he is, or what he has to say – let alone the general public. I don’t believe that most people who live in the United States give a crap what he or anyone from the National Association of Realtors has to say about much of anything. Therefore, I don’t see how anything he may have ever said (knowingly or unknowingly wrong) could possibly have “harmed” anyone. Let me also add that I am very willing to “go after” anyone who demonstrates anti-social traits and if there was any evidence that someone at NAR was using their position to harm the public or Realtors, they would be on my radar and in my sights until I got rid of them or they reformed. Period. As the ability to differentiate between the Social and the Anti-Social Personality type is THE most important technical skill one can have – otherwise, “justice” is nothing more than a random witch hunt – a social personality would always reserve the heavy handling only for those who were clearly in the anti-social minority. There is a huge difference between someone endlessly making wrong or stupid statements and having evil or destructive intentions. Even if the dumb statement is followed up with a mindless “PR handling” – this does not establish that the person “knew they were lying” when they made the original statement.
In one of your comments, you wrote:
The Center For Responsible Lending estimates that 2.2 million homeowners will lose their homes to foreclosure in the next couple of years, in large part to realtors and lenders discarding the traditional metrics of affordability and putting them into houses they couldn’t afford.
Go ahead and crack jokes while lives and families are being ruined. I don’t find this funny at all.
I don’t disagree with you – even a little bit – that some of the loans that have been made to people (including some really terrible refinancing loans) were very unethical. The worst loan I’ve seen is the “Option ARM“. Originally designed for very sophisticated investors, it wound up being used as a purchase money loan for average working people. This is disaster in the making. I don’t believe that a knowledgeable and ethical Realtor would be recommending that one to every buyer. But I fail to see how the NAR or David Lereah are somehow responsible for any of this. Lending giant, Countrywide has probably made more of those loans than any other lender. Do I think they are bad? Yes. I also believe that smoking cigarettes is bad for people. And as much as I am in favor of no smoking in public buildings I would not be in favor of making cigarettes illegal. Ultimately – in a free society – individuals make their own choices with regard to which loan program they use and what they care to put into their bodies.
It is an admirable trait to see something wrong in the world and want to make it right. But to endlessly characterize someone as a knowing liar whose real “crime” is that he gets paid to say positive things about the residential real estate business seems like overkill. I’ve found that it is easiest to evaluate any idea or datum by comparing it to a datum of comparable magnitude. What is “like it”? To evaluate how well any particular economist does with regard to their “forecasts” – compare Lereah’s level of rightness to other economists. Was there another one who made predictions at the same time who had a significantly better track record? The jokes that I posted were less than 5% of the “Economist Jokes” I found. People have been getting upset with economic forecasts for as long as someone has been willing to make an economic forecast. My only point being – in fairness, the standard for Lereah would need to be the same standard we would have for any other economist. Unless I’m missing something, there aren’t any home buyers who weren’t going to buy – but heard a pronouncement from David that suddenly caused them to change their mind and buy a house anyway. How much home buyers paid, what loan program they used is not the business of the NAR.
Again, look at Lereah dancing. It is his good will Christmas dance for you. Everyone wish David and his family a very Merry Christmas.
And Merry Christmas to YOU, Mike!
“Some people say that I must be a terrible person, but it’s not true. I have the heart of a young boy in a jar on my desk” –Stephen King
Jeff Brown says:
“Some people say that I must be a terrible person, but it’s not true. I have the heart of a young boy in a jar on my desk” -Stephen King
Man, I wish I’d said that. 🙂
December 23, 2006 — 10:22 pm
John says:
I will also state that I have read comments from people who have meet him and / or have listened to him speak and from all accounts the reports would indicate that he is a likable person and comes off as well informed and intelligent.
A lot of people say that about GWB while most others believe he is delusional. And, your point is….?
The (r)ealtors know when it is/is not a good time to buy. They also know when they are giving someone a Tony Snow-Job because all they are really interested in is the commission and in many cases the kick-back from the builder. They could really care less about whether or not the buyer purchases a lemon (especially on as-is transactions).
However, naive little John and Mary Q. Public, especially those who have never purchased a home before, are influenced by hearing Lereah in the media first, and then the propaganda they get from their (r)ealtor. You know, the one who asks the buyer probing questions and knows what a client can/cannot afford, and then subliminally manipulates the client by creating a false sense of urgency to buy. And, some (r)ealtors get the person into a bigger home with an adjustable rate mortgage which they know the person can’t afford a few years down the road, but at that point it will be the buyer’s problem. The (r)ealtor will be long gone with their financial windfall.
Lereah gets the buyer’s mouth salivating via the media and then the (r)ealtor takes over and many times influences the buyer into purchasing a home they could never afford. But Lereah, the (r)ealtor and the broker are not liable. The buyer is liable for the contract they signed.
All of these first-time homeowners (highest homeownership in the country’s history) knew nothing about what to do or ask either a real estate agent or broker. They had to take what they were told as gospel because they knew no better.
If you fail to see how the NAR or Lereah is responsible for this and why it is a “crime” as you refer to it, then turn the issue around and ask yourself why don’t they stop doing it now?
It is no different than asking the tobacco companies to stop putting nicotine in cigarettes. They aren’t going to do it because it is their bread and butter. What they do harms the general public but benefits Big Business. And, if you can’t see that, then you really need help. But I think you do see it. Lereah is no different than a lobbyist for Big Business, but he does to the media to influence the public, rather than directly to Congress. Lereah is paid to peddle propaganda but millions of people who don’t follow him, know no better.
Lereah = bait. (r)ealtor = hook.
And then, (r)ealtor cuts & runs.
At no point in the transaction is there anyone to look out for the buyers vested interest.
Happy Holidays.
December 24, 2006 — 1:22 am
Agusto says:
John,
I don’t think that John and Mary Q public would appreciate you presuming that they don’t know what an ARM is and that they could be easily influenced by a realtor. You don’t give the general public enough credit. You paint the consumer as being to dumb and easily swindled by a smart and greedy realtor. The majority of the consumers that take and arm or negative AM mortgage know exactly what their getting into and the ones that don’t are simply not smart consumers.
December 24, 2006 — 11:16 am
Russell Shaw says:
Agusto,
Please don’t overlook that John is a genius who sees things “the others” can never see. Everyone else, except John, is unbelievably stupid.
Also, don’t try and judge John by any normal standards. If his life were examined, the fact that John will pretty much seem like a hateful failure in most areas of his life is what gives him his special insights. All Realtors are thieves and inherently dishonest: therefore, he is on a mission to let the world know how despicable Realtors really are. It wouldn’t occur to an ordinary person to use the comments section of a blog intended for other Realtors as the most effective way to get the word out to the home buying public. Well done on spotting that, John!
December 24, 2006 — 12:23 pm
mike says:
Russell,
I don’t think either of us will sway the other on the matter of David Lereah’s honesty.
In my opinion, Mr. Lereah’s statements this year 2006 completely washed away any veneer of plausible denialbility he once had. Obviously, you see it differently and this is more a matter of opinion that provable fact.
Why don’t we shake hands and agree to disagree?
By the way I agree with you re: option ARMs and a host of other exotic financing options.
Take care and Merry Christmas to you.
December 24, 2006 — 12:41 pm
Russell Shaw says:
Mike,
I’m not saying I can’t be swayed – just that I haven’t been. I am totally willing to shake hands and agree to disagree – and I am always willing to look at any viewpoint or data, on any subject.
Merry Christmas to you, Mike. I really appreciate you taking the time to help get our communication on a friendly level.
December 24, 2006 — 1:57 pm
John says:
Agusto, the last time interest-only loans were widely available was in 1929:
I seriously doubt the general public is aware of that fact.
And Russell, all I’ve said is that Lereah is a propaganda tool for the NAR. Many people in the general public are unaware of that fact, because they do not hear the other side. I am not sure how you turn mentioning that salient fact into being a soothsayer. Maybe you can explain that one to me?
And, Merry Christmas and Happy Holidays to all.
December 24, 2006 — 2:11 pm
Russell Shaw says:
“You’re doing yourself no favors with your weird posts on this blog. You’re kinda gross.”
I sure hope that posting my opinions on this blog doesn’t cost me business. I had so hoped I could win the approval of everyone. Looks like I’ve missed one.
December 24, 2006 — 2:16 pm
John says:
So, let’s hear it from the financial experts:
Russell, you apparently enjoy scapegoating the messenger. And the bigger irony is that you are able to do more mind reading about my personal life that you allege I was doing about Lereah. Or, is it that you not like it when reality hits you in the face so you attack the messenger?
December 24, 2006 — 2:55 pm
Jim says:
To all the “Johns” and “Mikes”. Grow a fricking brain and start deciding for yourself when to buy or not, and if the house is a good deal.
Most realtors are honest and will tell if the house is a good buy or not. If you see one who’s a scammer and obviously is trying to manipulate you, use common sense. Why hate the whole industry because of a few bad apples?
More regulation will not solve the problems. Until idiots stop believe the marketing hype and making stupid decisions, there will always be scammers, in ANY industry, no matter how regulated, who’ll take advantage of you. And you’ll be left with a sore a$$ and blaming the whole industry.
December 24, 2006 — 6:20 pm
John says:
WANT TO FEEL RICH?
It took years to build up the housing bubble in places like South Florida. It will take years to let the air out. Houses aren’t marked to market immediately, like stocks or copper. It takes time for buyers and sellers to adjust to new market conditions. At first, the buyers hesitate. Then, the sellers dither. Then, when weakness becomes more obvious, a few buyers come forward…hoping for a bargain in what they believe is a market still on its way up.
The government and the realtors seem to believe it is, too. New numbers purport to show that house prices are still rising. In July, house sales fell 21%…but not according to the Commerce Department, which claims that sale prices actually rose 0.3%. The NAR, meanwhile, said they went up almost a full percentage point.
What gives?
Well, the figures probably don’t take into account the incentives sellers are now offering. And they surely don’t take into account the huge number of houses that are simply not selling because owners are unwilling to take the loss. Why? Because they are still not convinced the slump will be deep or long lasting. This delays the impending bubble burst…and keeps the press reporting only the part of the reality everyone wants to see – the part that says that, as of July, those who were able and willing to sell were apparently still seeing slight gains.
Meanwhile, this chart tells another story – about homeowners’ collapsing equity. As long as the current trend continues, owners will own less of their own homes every month. They will be less willing to sell at a loss…but many will be more desperate to do so.
December 25, 2006 — 11:38 pm
John says:
Sub-Prime Disaster in the Making
A report released this week by the Center for Responsible Lending, a Durham, N.C. based research group, predicted that 1 in 5 sub-prime mortgages originated in the past two years would end in foreclosure. While most on Wall Street dismissed this survey as overly pessimistic, it actually represents a rather rosy outlook.
One of the report’s deficiencies is that it fails to account for how the foreclosures it does expect will impact those loans that it regards as safe. A 20% default rate would put millions of homes back on the market, and would also inflict severe losses on sub-prime lenders, causing them to pull in their horns and tighten their lending standards. More inventory and higher rates will put more downward pressure on home prices. Many over-stretched borrowers, who made little or no down payment, will find themselves struggling to make mortgage payments on properties with negative equity. Higher rates and lower prices will also remove the cash out options that many borrowers expected would bail them out of ballooning adjustable rate payments.
Therefore, the secondary effects of the 1 in 5 sub-prime default rate will be a chain reaction of rising interest rates and falling home prices engendering still more defaults, with the added foreclosures causing the cycle to repeat. In my opinion, when the cycle is fully played out we are more likely to see an 80% default rate rather than 20%,/b>.
December 25, 2006 — 11:41 pm
Brian Brady says:
Such lack of confidence in the intelligence of John and Mary Public.
Does anyone belive in personal responsibility on real estate blogs or is this just an excuse for a gang-bang on the real estate community?
December 26, 2006 — 2:16 am
John says:
David Lereah responds:
David Jackson, a 26-year-old information-technology specialist, has been railing against the housing industry for two years — ever since he made a vain attempt to find an affordable town house or condo in Silver Spring, Md. Unable to understand why prices were so high, he began researching the real-estate market and, he says, “came to the conclusion that there was a massive housing bubble.” So Mr. Jackson decided to remain a renter. He pays $645 a month for part of a townhouse.
Now that the housing market is slumping, “I feel vindicated,” Mr. Jackson says. “But I’m not looking forward to the coming recession.” He believes that the housing slowdown and the effects of “a mountain of debt” on consumers will pull the entire economy into a slump.
Mr. Jackson blames what he calls “the housing industrial complex” in general and Mr. Lereah, the Realtors’ economist, in particular. Since last year, Mr. Jackson has maintained a blog (davidlereahwatch.blogspot.com) devoted entirely to vilifying Mr. Lereah.
The blog recently offered a $75 cash prize for an essay containing “the most scathing criticism” of Mr. Lereah. Sample submission: “Dr. Lereah is a lying snake with the ethics of a dope-dealing pimp.”
Mr. Lereah says he doesn’t object to the blog. “There are people who believe it’s the end of the world” for housing, he says. “They blame me for being positive.”
December 26, 2006 — 11:25 pm