Tuesday, 22 February 2011 10:14

When Will the Mainstream Media Be Ready To Call The NAR The Sham That It Really Is?

The Wall Street Journal reports: US housing data may have understated extend of collapse.I can do naught but laugh. Are they serious? Don't they even bother to read BoomBustBlog? The WSJ story goes on to read...

The housing crash may have been more severe than initial estimates have shown.

The National Association of Realtors, which produces a widely watched monthly estimate of sales of previously owned homes, is examining the possibility that it over-counted U.S. home sales dating back as far as 2007.

... The group reported that there were 4.9 million sales of previously owned homes in 2010, down 5.7% from 5.2 million in 2009. But CoreLogic, a real-estate analytics firm based in Santa Ana, Calif., counted just 3.3 million homes sales last year, a drop of 10.8% from 3.7 million in 2009. CoreLogic says NAR could have overstated home sales by as much as 20%.

While revisions wouldn't affect reported home-price numbers, they could show that the housing market faces a bigger overhang in inventory, given the weaker demand.

In December, NAR said that it would take 8.1 months to sell some 3.6 million homes listed for sale at the current pace, but the number of months it would take could be even higher if sales are revised down. Any revisions wouldn't have an impact on homeowners, but it could have consequences for the real-estate industry. Downward revisions would show that "this horrific downturn in the housing market has been even more pronounced than what people thought, and people already thought it was pretty bad," said Thomas Lawler, an independent housing economist.

NAR said the data, which are used by economists, investors and the real-estate industry to gauge the health of the housing market, could be revised downward this summer. Lawrence Yun, chief economist at NAR, wasn't specific about whether and by how much the revisions could reduce reported sales, and he raised the possibility that the CoreLogic estimates have understated the number of home sales. "This is a very important issue, and we are looking at it carefully right now," Mr. Yun said.

I'm willing to go on record saying that the NAR's economic tallies and their forecasts are simply jokes. Their "so-called" economists are shills and paid for marketing figures, nothing more. I have clearly stated this in the past. Let's reminisce via excerpts from Pay Attention to the National Association of Realtors and Their Chief Marketing Agent At Your Own Risk! and More Optimistic Fluff And Spin on Pessimistic Macro Numbers – This Type Of Reporting Simply Drives The More Intelligent, Valuable Eyeballs To Alternative Media, Ex. Blogs Wednesday, December 22nd, 2010

What is actually entertaining is to here quotes from NAR chief economists in the mainstream media (MSM). At what point do these guys lose credibility? The mere quoting of some  such as the NAR’s Yun, or to a greater extent, his predecessor, is enough to permanently lose some valuable (as in more intelligent, higher paid) eyeballs to alternative media. To wit, as excerpted from Pay Attention to the National Association of Realtors and Their Chief Marketing Agent At Your Own Risk!:

On the topic of the National Association of Realtors, and their marketing gurus chief economists, I assert that BoomBustBlog’s regular constituency is much too bright to fall for the pumping of real estate by the economist of a national realtor association. For those that may be a little more trusting, or a little less mathematically inclined, I will walk through previous proclamations that have come from the NAR and their chief marketing strategists economists…

July 2008 Yun stated “I think we are very near to the end of the housing downturn,” Yun said (AP News).

Lawrence Yun, chief economist for the Realtors, said that the housing rescue bill should play a major role in helping the housing market to rebound. He said an especially significant feature is a tax break worth up to $7,500 for first-time home buyers who purchase between April 9 of this year and July 1, 2009. Yun estimated that up to 3 million first-time home buyers could qualify for that tax break, providing a significant boost to sales at a critical time. “I think we are very near to the end of the housing downturn,” Yun said.

As a point of reference..

Of course, I can go on…

In 2007 Lawrence Yun state there would be no recession in 2008, according to USA Today. Of course, in that year I took the opposite side of that trade and said very bad things were coming. As it turned out I was a tad bit optimistic: Correction, and further thoughts on the topic, How Far Will US Home Prices Drop?, and Is this the Breaking of the Bear? (Yeah, the Bear Stearns and Lehman Brother’s collapse were an easy calls if you read the balance sheets and were realistic about leverage and the real estate situation). This  was also about the time I got into it with GGP’s CFO for calling out their insolvency. He called me names, and then they filed for bankruptcy. Of course, they had an investment grade and buy ratings from the ratings agencies and the sell side: BoomBustBlog.com’s answer to GGP’s latest press release and Another GGP update coming… (among over 700 pages of analysis, review the January 2008 archives or search for “GGP” for more research).

In my post “On the Latest Housing Numbers” of  Tuesday, November 24th, 2009, I quipped.

Lawrence Yun, NAR’s chief economist volunteered,

We have seen some bulk purchases by investors, but we are not picking up that data through the Multiple Listing Service or through our release data, but we do know that there is some bulk purchases by investors who plan on releasing those properties within a year’s time, when they see a better market condition.

I don’t believe “better” market conditions are coming any time soon. We are just coming off of the best market conditions anyone will see in their lifetime. Those market conditions were predicated upon unsustainable conditions, hence they came crashing down. They are crashing down, not crashed – as in past tense. I believe we have some ways to go. That is why I am not buying real estate, and I believe that those that are jumping in now are jumping in prematurely.

Personally, I don’t consider Mr. Yun to be a credible source, either. He may be smart and capable, but the extreme bias of his employer (the ultimate real property perma-bull) and the incredibly biased reports of his predecessor color his opinions by default. He is not nearly as bad as David Lereah (who was literally sensationalist-style perma-bullish) was, but he is still not objective. See  The Reggie Middleton Real Estate IQ Test – Who believes the NAR?

This is an excerpt from that post on Tuesday, 08 January 2008

From CNBC.com: Home Sales Seen Holding Steady In Coming Months

Pending sales of existing U.S. homes inched lower in November and should hold  steady over the next few months, a real estate trade group said. (I ask, “Why should they do that? Credit is tighter, recession evidence is stronger. Supply is greater, and demand is lower. Hmmm, let me consult the book written by that ex-NAR guru for the answer.” )

The National Association of Realtors Pending Home Sales Index, based on contracts signed in November, dropped 2.6% in November, to 87.6 from an upwardly revised 89.9 in October.

Economists polled by Reuters ahead of the report were expecting pending home sales to decline by 0.5 percent from October’s originally reported 87.2.

The November number was down 20% from a year earlier.

The pending homes sales data suggests that the volume of sales will hold steady for a while before turning upwards before the end of the year, said NAR chief economist Lawrence Yun.

With all due respect to Mr. Yun, Mr. Lereah and the NAR, anyone swift enough to complete the registration form for this blog should know, by now, to discount this association’s data and opinions. They do not do the industry justice with this nonsense. Realtors should actually be the first in the protest line. It is their credibility that is being called into question, for this is THEIR trade group. Credibility is the key!


Notice how accurate that NAR prediction was for 2008!

There's much, much more to throw onto the fire...

My take: I believe that my blog’s readers are considerably above average in financial acumen and common sense. The NAR is simply not an entity to be taken too seriously, due to the obvious conflict of interest exemplified by their ex-economist, [[David Lereah]], who published some of the most absurd BS I have ever seen come from a nationally reknown organization. Examples of his work from Wikipedia: Are You Missing the Real Estate Boom?: Why Home Values and Other Real Estate Investments Will Climb Through The End of The Decade, And How to Profit From Them was published in February 2005 at just about the tippy top of the bubble (that takes some talent). One year later in February 2006, as the market is already on it’s way down, Lereah retitled his book Why the Real Estate Boom Will Not Bust and How You Can Profit from It. Lereah’s previous book The Rules for Growing Rich: Making Money in the New Information Economy touting investment in technology company equities was published in June 2000 at the onset of the collapse of the dot-com bubble.  This extreme cheerleading has died down substantially, but the overly optimistic spin is still evident with their new economist, Lawrence Yun.

I actually believe the Case Shiller graph above to be misleadingly optimistic due to my doubts about seasonality filtering and the exclusion of investor related properties (flips, see A reminder concerning popular housing indices) which are dominating the lower end of the market.

So on that note, I will present a graph that captures national economic house sales activity superimposed against the Case Shiller index,  but before I do that let’s laugh at the NAR’s ex-chief marketing strategist economist…

Publications from Wikipedia

Lereah’s book The Rules for Growing Rich: Making Money in the New Information Economy[5] touting investment in technology company equities was published in June 2000 at the onset of the collapse of the dot-com bubble.

Lereah has produced four titles on real estate investing. His most recent book, “All Real Estate is Local” was published by Doubleday in 2007. His 2005 book Are You Missing the Real Estate Boom?: Why Home Values and Other Real Estate Investments Will Climb Through The End of The Decade—And How to Profit From Them[6] was rereleased in February 2006 as Why the Real Estate Boom Will Not Bust—And How You Can Profit from It.[7] Before departing the NAR, Lereah wrote All Real Estate Is Local: What You Need to Know to Profit in Real Estate — in a Buyer’s and a Seller’s Market in 2007.[8]

NAR chief economist David Lereah’s book[6] in February 2005.

Lereah’s book[7] in February 2006 months before the real estate boom bust.

Lereah’s book on investing in information technology appeared in June 2000 as the dot-com bubble collapsed.[5]

Now, let’s put this all together to see what we get (reference each date above to the chart below. Unfortunately, I did not chart the dot.com bubble crash, which Mr. Lereah so accurately timed to the contrarian side :-) (literally, almost to the month), so we will have to leave that one out…


Subscribers have access to all of the data and analysis used to create these charts, in addition to a more granular application, by state in the SCAP template and by region in housing price and charge off templates – see

Click here to subscribe

And now for the myriad, and may I add, requisite, “I told you so’s”. Subscribers can feel free to click the various download links to review the relevant models, reports and analysis:

The 3rd Quarter in Review, and More Importantly How the Shadow Inventory System in the US is Disguising the Equivalent of a Dozen Ambac Bankruptcies! Wednesday, November 10th, 2010: All paying subscribers can download the full shadow inventory report here: File Icon Foreclosures & Shadow Inventory. Professional and Institutional subscribers should also download the accompanying data and analysis sheet in Excel – Shadow Inventory.

Banks, Monolines, and Ratings Agencies As The Three Card Monte (Wall)Street Hustlers! Its a Sucker’s Bet, Who’s Going to Fall for it in QE2? Tuesday, November 9th, 2010

The Truth Goes Viral, Pt 1: Housing Prices, Economic Sales and the State of Depression Tuesday, October 5th, 2010

[youtube MutLxFck9Ec]

Subscribers have access to all of the data and analysis used to create these charts, in addition to a more granular application, by state in the SCAP template and by region in housing price and charge off templates – see

[youtube iLKYxfxHpuY]

Reggie Middleton on Financial Survival Radio: Important Little Details Left Out of the Case-Shiller Home Price Index Saturday, October 30th, 2010

Click here for an interview I did with Financial Survival Radio

Financial Survival Podcast – Reggie Middleton Reveals the Nasty Little Detail Left Out of the Case-Shiller Home Price Index

Related links:

The Truth Goes Viral, Pt 1: Housing Prices, Economic Sales and the State of Depression

Why the Case Shiller Index, Although Showing Another Downturn Coming, is Overly Optimistic and Quite Misleading!

Those Who Blindly Follow Housing Prices Without Taking Other Metrics Into Consideration Are Missing the Housing Depression of the New Millennium

Pay Attention to the National Association of Realtors and Their Chief Marketing Agent At Your Own Risk!

The Robo-Signing Mess Is Just the Tip of the Iceberg, Mortgage Putbacks Will Be the Harbinger of the Collapse of Big Banks that Will Dwarf 2008!

Last modified on Tuesday, 22 February 2011 10:14


  • Comment Link Reggie Middleton Tuesday, 01 March 2011 02:39 posted by Reggie Middleton

    It's good to have a true professional such as yourself on board. Welcome.

  • Comment Link Chloe Monday, 28 February 2011 20:36 posted by Chloe

    Hi Reggie,

    I just came across your blog "by association" to an article -- not by Yahoo news -- but referenced in the comments section. I love how you back your commentary up with statistical data. I have been watching Bloomberg for sometime and don't believe I have ever watched one of your interviews, but I was right in with Rogers and Rubino when everyone else was laughing at their commentary back before the crash. BTW there is a great article at thetrumpet.com - "The Biggest Bubble Ever" written back in 2004 that laid out the entire scenario of the real estate crash. I used to send it out to all of my clients etc. as a real estate agent. I started selling real estate in 1985 BEFORE the "strong arm" of the NAR. I really enjoyed that time working as an agent, but stopped for a while and restored my license back in 2001. By that time the NAR had a strong hold on real estate professionals that I found insulting. I am an adult business person. No one has to guide me in ethnical behavior and integrity. Even if I should need lessons, shouldn’t it be at my option to go into the library or on the internet, for free, instead of paying thousands of $’s to join each year + pay additional for the actual courses WTH? By the time we enter the profession, shouldn’t we pretty much be self-governing on these issues? To me, it was a straight-up shake down and it was targeted not just at me but also my broker. Once I became aware of how much political clout they were gaining and how many politicians they had in their pockets on both sides, I started to really become disgusted. Then I moved to NJ and realized it would take more than $3000 (with all the "local" and "national" NAR fees) just to be able to sell real estate in the market, I was fully disgusted. Though I had months before paid all fees in my prior state of residency it didn’t even matter. I suppose $1500 and then well over $3,000 is not a large amount to an agent selling $10 million houses but, in my market agents usually made about $12-$25k with each sale – before the broker took his/her cut. It soon became clear to me that the exorbitant “fees” were a way to keep “certain people” aspiring to be agents out of the profession in certain markets. Not to mention, as I also began to witness the shenanigans of the home inspectors, mortgage bankers, appraisers, real estate agents, attorneys, etc. it was enough for me. Your blog is a platform for what I have been telling people for almost a decade and it seemed no one was listening. Many seemed to be caught up in a stupor of easy money and raw greed. I have never been so desperate that I would stoop to the level of denial as some of these "real estate professionals" believing their “economists” for God’s sake, their income is dependent on them saying positive things about the market! I am grateful I have other skills to fall back on, but realistically, I still wouldn't stoop so low if it were not even so. Keep up the good work. It really is a shame I had to dig so deep to find your blog i.e., the truth.

  • Comment Link Reggie Middleton Wednesday, 23 February 2011 19:16 posted by Reggie Middleton

    I dabble in most anything. I recommend books on valuation, crashes and forensic accounting. Graham and Dodds book, security analysis still works. Also, try "This time is different" by Rogoff.

  • Comment Link San Diego Jack Wednesday, 23 February 2011 17:47 posted by San Diego Jack

    The only thing that separates us Realtors from just a licensed agent is our Code of Ethics. And believe me, most agents need the code to keep them from being snakes in the grass.

    If I exit from NAR, then I lose the designation and the supposed benefits. I will have to rethink my associations. But like Groucho Marx said: "I don't want to be a part of any club that would have someone like me as a member!"

    Are you only in real estate investing, or do you venture in other markets i.e. stocks, options etc.?

    Recommmend any good reading to make me a better investor?

  • Comment Link Reggie Middleton Wednesday, 23 February 2011 17:37 posted by Reggie Middleton

    You're very welcome and its good to hear from a realtor who's willing to be straightfoward. The NAR is a disservice to your industry and profession.

  • Comment Link San Diego Jack Wednesday, 23 February 2011 17:28 posted by San Diego Jack

    1st visit to your site.

    I've been a California Realtor for over 20 years, and have been closely following Lawerence Yun's analysis & predictions for a long while. I have found him to be so off-target on his predictions that I find him almost unbeliveable now. And with the overstating of the sales figures, if just goes hand in hand with his ineptitude. I don't even waste my time and money going to any of his conferences.

    I am on the ground, able to see what is happening around me, and to the market in general. I constantly monitor the avaiable inventory, and see it rising, with pending sales slowing, and the lack of buyer traffic in the local market. We are in a brutal market, and it looks to worsen before improving. The amount of Foreclosure and Short Sale inventory has remained constant, at about 28% of all inventory, which tells me that the banks are witholding from the market their REO's, or have slowed down the process or taking back the non-performing assets via the foreclosure process. (Heard they are backtracking on doing so until they resolve the "Robo-signing" of foreclosure documents)

    Thanks for alerting me to NAR's false figure reporting. I havent' seen it reported anywhere, but here.

Login to post comments