Paper Economy - A US Real Estate Bubble Blog: NARcasting The Future!

Wednesday, July 11, 2007

NARcasting The Future!

The National Association of Realtors (NAR) today released another downward revision to their outlook for existing home sales for 2007 along with another dose of truly preposterous spin.

In an effort to put their absurd bias into perspective I compiled all their forecasts for 2007 home sales into a chart along with a list of prominent quotes supplied with each forecast (click for larger version).

12/11/2006
Lereah "Most of the correction in home prices is behind us."

1/10/2007
Lereah "The good news is that the steady improvement in sales will support price appreciation moving forward."

2/7/2007
Lereah "After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing-home sales to gradually rise all this year and well into 2008."

3/13/2007
Lereah "Although existing-home sales will be marginally reduced due to subprime lending restrictions, they should be gradually rising this year and next."

4/11/2007
Lereah "Tighter lending standards will dampen home sales a bit, but by less than a couple of percentage points from initial projections."

4/30/2007
Lereah Leaves NAR for Move.com

5/9/2007
Yun "Housing activity this year will be somewhat lower than in earlier forecasts."

6/6/2007
Yun "Home sales will probably fluctuate in a narrow range in the short run, but gradually trend upward with improving activity by the end of the year."

7/11/2007
Yun "Home prices are expected to recover in 2008 with existing-home sales picking up late this year."

Labels: Bernanke, economy recession, Greenspan, housing bubble, NAR, national association of realtors, realtor

9 Comments:

I'm not entirely certain I understand the graph - - each data point represents a claim for CY07 total sales? At this rate, they're going to keep going lower until it's December and they're "forecasting" reality.

Why do news stories cite these mafiosos?

By A Unique Alias, at 12:45 PM
aua,

Well each data point is a forecast for total annual existing home sales for 2007.

So in December 2006 it was a forecast for the full year of 2007,

Now that we have all months through May 2007 already reported, the NARs forecast combines the current actual results with a forecast for the remainder of 2007.

The key take away is that they keep lowering their forecast but with each release they attempt to make a case that the decline is over... things have bottomed... its all up from hear on...

They are really the lowest of the low.

If you want a decent comparison, just look at how the National Association of Home Builders, particularly Chief Economist David Seiders has really embraced the reality of the slowdown.

He has some sense for his accuracy and I think for his own integrity whereas NAR is willing to say practically anything to dupe potential buyers into activity.

By SoldAtTheTop, at 1:22 PM
Jesus, Sold - - that's what I thought the data said, but I couldn't believe it.

Their forecasts are being proven, with each successive attempt, to be way too high. That should prove that their constantly lowering estimates are still, regardless, overly optimistic.

Every time they open their mouths, they're proving how they slant the data. I thought that was what I was seeing, but I couldn't imagine an organization of that breadth trying to pull that much wool over so many eyes.

In a semi-related story, my fiancee and I have started talking to a Realtor in our area, recommended by a friend of mine and recent client of his. While we don't need help finding a place, I have no qualms about capitalizing on his assistance at settlement at the cost of cutting a seller-broker's commission in half.

The realtor has given me a bad vibe, if for no other reason than the realtor business model: "Get the buyer to buy as much, as high as possible because that pays the highest commission."

I have a hard time wrapping my brain around that conflict of interest. He's supposed to be representing us and getting us the best deal, but doesn't deny for a second that that's not in his best interest.

Sorry for the rant, but as a first time homebuyer who is coincidentally well-versed in business, this whole market makes no sense to me. Why would anyone listen to what the NAR says? Why would any buyer treat their broker/realtor as anything but an untrustworthy inconvenience?

By A Unique Alias, at 11:24 PM
Is there any way to sue these economic false profits? It's annoying to think that they actually get paid to shill.

By Anonymous, at 8:15 AM
Interesting pattern. Notice the plateau. They held onto ridiculously high claims until, well, spring was over and they just gave up.

By Sold at the peak, at 5:03 PM
sold at the peak,

Yikes! sorry that plateau was my error. I didn't notice it until you pointed it out.

I inadvertently included the date Lereah left NAR as another release of a their forecast.

I fixed it...

Either way, they did do everything they could to put on a spoof for the spring.

By SoldAtTheTop, at 8:12 PM
aua,

I would NOT use a buyers broker if you paid me!

You really don't need one.

In fact, I don't think you need any of those useless middlemen but because the seller has likely listed the home through a realtor theres no real way of getting away from them entirely.

A key thing to remember though is that if you want to put yourself in the best negotiating position, you need to try to limit the number of brokers to just one, the sellers broker.

As I see it, there are 2 main reasons for this.

First, working only with the sellers broker will limit underhandedness if, for some reason, you end up in a bidding war.

Generally, if a bidding war occurs and you are submitting offers through a buyers broker who is NOT the listing broker for the house AND the other bidder is working with the listing broker, there is virtually no chance that you will win the deal.

The listing broker will either not submit your offers of "hint" their buyer so that they can always one-up your offer by some nominal amount.

I have been on both sides of this scenario and is it incredibly common even though any realtor will tell you that it violates their fictitious code of ethics.

The other reason I wouldn't use a buyers broker and limit the broker to only the sellers is that it will put you in the best position to get them to kick in half of their commission to reduce the homes price.

Normally, if they sold the house to a buyer who came from an outside broker, they would have to split the commission.

Since you are coming directly to them, they get the full commission.

In a down market, you should work as hard as you can to force them to give YOU half the commission.

This is what I mean about negotiating hard.

First, hardline the seller for the best possible price, then do what you can to squeeze the broker.

I hate to say it but this is not a time to make new friends, if your not pissing off the seller and broker, your not negotiating hard enough.

Give it some thought...

By SoldAtTheTop, at 8:32 PM
I totally agree here. There is a wicked bias out there right now...

By Albuquerque real estate, at 12:26 PM
The fact that what the NAR reports is allowed to pass as actual news or valuable insight is absurd. The people that profit from the performance of the market should not be relied upon to be objective and independent.

Remember that whole scandal with investment bank analysts pumping stocks held by their firms? It's the same thing except instead of one company its an entire industry. Ridiculous that these yahoos can continue to get away with predictions.

Those predictions are good for one thing - training your new puppy.

By Morgan, at 11:14 PM