The Trouble with Lereah

Well, David Lereah’s new book is officially out… slightly modified subtitle from what fellow BubbleMeter blogger reported last fall but likely the same overall concept, namely how to profit from residential real estate.

In fact, that theme seems so essential to Lereah that it has, in one form or another, worked its way onto the front cover of every real estate book he has ever written.

First, there was his 2005 release titled “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 You Can Profit From Them.”

Then quickly came the 2006 revision, “Why The Real Estate BOOM Will Not BUST – and How You Can Profit From It.”

Finally, now his newest installment “All Real Estate Is Local: What You Need to Know to Profit in Real Estate - in a Buyer's and a Seller's Market.”

Having not read any of his books, I’m certainly not qualified to make any real criticism of them, but what I do know is that Lereah has worked vigorously to promote the idea of profiting from residential real estate.

What’s wrong with that you say? This is America isn’t it?

Even if Lereah were to use every available means at his disposal to promote half-truths in an effort to create viral hype in the nations home buying population, isn’t that his right?

Buyer beware ... There’s a sucker born every minute and the like.

Well, I’d argue that Lereah and the National Association of Realtors have actually crossed significant ethical boundaries in an endeavor that I see as essentially analogous to the less-than-principled process of home sales itself, but on a grand scale.

We are all keenly aware of the extent to which many real estate agents will go to “make the deal happen” regardless of the fallout to the parties involved.

But in this case, what’s at stake is not a quick commission on the part of the agent or a reasonable deal for the buyer or seller; it’s the stability of the American economy and the future for many millions of its residents.

By narrating the events of the nations housing market in an “always and excessively favorable” light, the NAR and Lereah, through a lazy and willing traditional media, have played an important role in driving the “flipper nation” to the stratospheric heights that peaked in 2005.

Remember, the NAR is not a new organization.

It’s nearly 100 years old and as such has been collecting and analyzing housing data for many decades.

All the NAR leadership, including Lereah, are well aware of the fact that, in general, residential real estate appreciates roughly in line with inflation and incomes providing a reasonably stable, long term, “investment” but far from the “profit-laden” thrill ride they have made it out to be in recent years.

As Lereah himself stated last year, “Keep in mind that over time, home prices rise at the rate of inflation plus one-to-two percentage points -- buyers in most of the country who plan to stay in their home for a normal period of homeownership can pretty well bank on those historic averages, but people who purchased last year with the intent of flipping are likely to get burned.”

housing+bubble NAR realtor david+lereah housing home+sales economy recession greenspan bernanke

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