temporary dip and then back in the positive

[EJ]

“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.

[ybc]

“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”.

[JES]

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.

[JES]

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!

[poorgradstudent]

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.

[The-Shoveler]

Nor_LA-Temcu-SD-Guy

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

[vcguy_10]

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?'”

[Chrispy]

“….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.”

[speedingpullet]

@ 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.

[North County Jim]

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.

[The-Shoveler]

Nor_LA-Temcu-SD-Guy

Lennar latest to warn,

http://money.cnn.com/2006/09/08/news/companies/lennar/index.htm

The storm just keeps getting louder.

[cabinboy]

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.

[cabinboy]

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.

[JES]

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

[JES]

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

http://www.randomhouse.com/doubleday/currency/catalog/display.pperl?isbn=9780385514347

[Author]

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