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Posts Tagged ‘David Lereah’

Lereah: Pickin’ On The Underdog By Using His Mom

March 6, 2007 | 10:49 am |

Recently, Fortune Magazine interviewed David Lereah, one of the more polarizing figures associated with the housing market. He is responsible for the slew of market stats that hit the media every month and but what he is most criticized for is his interpretation of those stats. In fact, I met him personally in the green room of CNBC before a television spot and while he seems like a nice enough guy, I observed that he seems to say the same things in person that he does for reporters.

In many ways, his interpretations spurred the real estate blogosphere on for the shallowness of analysis and self-serving delivery of information. On one hand he represents a trade group and the consumer should understand this. On the other hand, he missed a golden opportunity to build goodwill between the consumer and the NAR.

In his recent interview, he attacks David Jackson of David Lereah Watch and Bubble Meter, one of the leading housing bubble blogs. The David Lereah Watch blog is a home spun effort (note typo in the title) by someone who got tired of the misinformation. I like both of these blogs.

Lereah even used his own mother for special effect:

The worst was that my mother read one of those things, and she almost started crying. And I had to say, Mom, you have to have thick skin. I’m going to be in the public and make statements about real estate, and if someone doesn’t like what I’m saying, they have every right to say something opposing me.

Lereah claims the David Lereah Watch blog refers to Lereah as Satan. Lereah calls Jackson a 26-year old that could not afford a townhouse. However, Jackson was proud of the fact that he doesn’t get personal and denies calling Lereah Satan.

However, Lereah doesn’t seem to use great ethical judgement in his market interpretation commentary so I am not sure what Jackson expected to begin with. His blog had to be noted by Lereah sooner or later.

The fact that Lereah even brought up Jackson’s blog up in the interview to try to get sympathy for the beating he has taken by the blogosphere, tells a powerful message about the ability of the consumer to tell their side of the housing story through blogs.

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[List-o-links] 2-1-07 From The Tank: GDP is PDG Sans Inflation

February 1, 2007 | 12:01 am | |

Since this week is all about stats, impressions and spin, here are a few shot from the turret of The Tank.

  • [100 Bottles of Beer on the Wall [PIMCO]](
  • [A Rudolph House Gets Brutal Treatment [The Architect’s Newspaper]](
  • [Why Penis Will Make This a Most-Read Story [Michael Lewis – Bloomberg]](
  • [Long Island Housing Costs Skyrocket []](
  • [Stricter Standards Sought for Lenders, Brokers [WaPo]](
  • [Remember normal? [LA Times]](,1,3958659.story)
  • [How Jobless Rates Forecast the Super Bowl [Norris Blog-NYT]](
  • [NAR’s David Lereah: His Own Words on Housing [Big Picture]](
  • [As the rich get richer, the livin’ gets easier [Lloyd-SF Chron]](
  • [HouseMath 2.0](


Edict From New Orleans: Keep The Housing Market Above Water

November 13, 2006 | 11:52 am |

The National Association of Realtors held their [annual convention in New Orleans]( this year and with that came a series of press releases, most notable was their [housing forecast about future prices and sales volume [CNN/Money]](

  • Existing Home Sales – will fall 8.6% total in 2006 but will only fall 0.6% in 2007.

  • New Home Sales – will fall 16.8% in 2006 and another 8.7% in 2007.

  • Existing Home Median Sales Price – will increase 1.9% this year and 1.7% next year.

  • New Home Median Sales Price – will drop 1.1% this year and increase 1.3% next year.

  • Inventories will continue to expand.

NAR attributes the positive forecast due to low mortgage rates, stable employment, low inflation and more competitive (lower) pricing by sellers. This contradicts the projections of most analysts, which are not as optimistic, suggesting that its going to [take three years to absorb the excess inventory [MW]]({35A757AB-9FED-4D0E-9EFA-A73E84A788A3}). [Building permits, for example, are down more than 20% [JB]](

I am not sure how their chief economist David Lereah forecasts these trends but they don’t make sense, or at least when using the reasons he provides. NAR actually forecasts slightly higher mortgage rates and rising inventory next year. What is thje catalyst that reverses the currenbt trends. In other words, what will change to cause these forecasts to occur?

I understand these are national numbers and local markets will behave relatively independent of each other, but thats not what is being presented here. Its a rehash of the theme brought up in the [NAR recent ad campaign [SFGate]](

According to [a recent Gallup poll, homeowners are still optimistic about the value of their home [Free access on 11/13/06 only – main details below](

  • 66% say the value of their home increased in the past year, while 23% say it stayed the same and 10% say it decreased.

  • 41% of Americans expect the value of their home to increase during the next year; 43% of homeowners say the value will stay the same and 13% say it will decrease.

  • 27% say they have seriously considered selling their home in the past year. Of those who have considered selling their home, just 16% say they acted on this option. The majority of those who have thought about selling their home, 52%, say they have delayed putting their home on the market, while 29% say they have decided against selling their home altogether.

  • 71% of men and 61% of women think the value of their home increased this year.

  • The optimisic outlook for next year was relatively similar across all income groups. 39&% of people with incomes of less than $30K, 45% with incomes of $30K to $74.9K and 41% with incomes of $75k or more thought the value of their homes would increase next year.

  • The housing outlook changed by region: 35% in the east, 42% in the midwest, 47% in the south and 39% in the west think that property values will increase next year.

I suppose if you keep saying something long enough, it becomes reality. After all, value is influenced by perception. Public relations 101. For all the criticism of NAR and its distortion of certain housing realities, its efforts have largely proved to be effective. Whether or not this is a good stimulus for the housing market is another matter.

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Bubble Bloggers Clamp Down On Some Respect

November 6, 2006 | 12:01 am |

A few years ago, as the housing market was going full steam and as blogging began to catch on, the bubble blog genre was born. As [NAR]( squandered public relations capital with the consumer, the bubble bloggers pressed on. Every day, their ranks grew and so did their commitment to the mantra: There is a housing bubble.

Their content is often a one-sided argument in front of a friendly fan base, probably consisting of mainly renters, but providing an incredible rate of participation. Their intentions and concern seem real. Its good stuff. Once the hyperbole is filtered out, there is some useful insight, especially from the reader comments. NAR has not figured them out – NAR has met their match.

Lately, [mainstream media has taken notice and been been fascinated with the bubble bloggers [SFGate]](, especially the the big four: [Housing Bubble Blog](, [Bubble Meter]([David Lereah Watch]( and [Housing Panic]( There are also many other bubble blogs that are just as worthy. As far as I can tell, none of the big four have any special real estate or economics backgrounds or training. They are simply concerned citizens with a message to deliver. All the more interesting that their journalistic counterparts are beginning to recognize them as a media force.

But I wonder: If NAR is running an ad campaign admitting there is some market weakness, but spinning it into an opportunity play for buyers, will that change the slant of the bubble bloggers? Will they meet the Realtors halfway suggesting there will be not be a housing crash?

Are you kidding me? The NAR advertising move is going to provide more fodder to the bubble bloggers for months to come. The NAR keeps serving it up on a golden platter.

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Congress Gets Shakespearean: Housing To Be Normal, Or Not To Be Normal

September 14, 2006 | 12:01 am | |

[Congress set out to dig deeper into understanding whether or not we are in a housing bubble [Reuters]]( and to further understand the state of US mortgages. Late edition hat tip to [Lansner](

Democratic Senator Charles Schumer of New York mused: “To paraphrase Shakespeare: Is there a bubble or isn’t there a bubble? That is the question.”

They tapped the following experts:

Richard Brown of the [Federal Deposit Insurance Corporation](
The Federal Deposit Insurance Corporation (FDIC) preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for at least $100,000; by identifying, monitoring and addressing risks to the deposit insurance funds; and by limiting the effect on the economy and the financial system when a bank or thrift institution fails. Not a whole lot of careful mortgage underwriting going on these days.

Patrick Lawler of the [Office of Federal Housing Enterprise Oversight](
OFHEO promotes housing and a strong economy by ensuring the safety and soundness of Fannie Mae and Freddie Mac and fostering the vitality of the nation’s housing finance system. They were asleep at the helm during the Fannie Mae accounting scandals.

Dave Seiders of the [National Association of Homebuilders](
NAHB is a trade association that helps promote the policies that make housing a national priority. This is a trade group so its not providing neutral insight so I would take any opinions they provide very lightly.

Tom Stevens of the [National Association of Realtors](
The core purpose of the NATIONAL ASSOCIATION OF REALTORS® is to help its members become more profitable and successful. This is a trade group that has been spinning a weakening housing market until about a month ago. I would take any opinions they provide very lightly. Have you noticed that David Lereah, their chief economist, who has polarized public opinion about this, has been largely silent recently? President Tom Stevens has become the spokesman.

So now we have these four individuals testifying about the market: 2 represent government entities that have been largely dormant and 2 represent trade groups that have been the housing markets biggest cheerleaders. I am not sure anything that can be said will be useful to Congress. More of a PR op.

For a summary of comments and prepared statements:
[Mr. Bubble Goes To Washington [Lansner]](

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NAR: Declining Prices Will Spur Sales?

September 7, 2006 | 10:14 am | |

Thats a pretty weak position to take.

Over the past 12 months, the National Association of Realtors trade group has extolled the strength of the housing market and spun this assessment until aparrently it can’t spin anymore.

David Lereah, their Chief Economist, who released the [NAR Pending Home Sales Index which showed dropping volume [WSJ]]( He finally asserted that sales prices would decline slightly over the next few months.

Sales have stalled partly because “the sellers are not bringing prices down fast enough,” Mr. Lereah said. “They’ve been very stubborn.” A drop of 5% to 10% in California and southern Florida “probably would be enough to bring sales back,” he said.

“The quicker we can get negative prices, the quicker we can get sales coming back,” Mr. Lereah said.

Source: WSJ

Now the sellers are to blame?

The number of transactions will not increase until buyers sense that prices have stabilized. Lereah is clearly wrong on his take. Its not some erroneous magic number for prices to fall like 5% or 10% so that volume will pick up. Who knows what the number is? It might be higher or lower than that. It might be 0 for all we know.

Buyers simply want safety and affordability and hat varies by market.

To recap: falling prices do not stimulate people to buy. Prices fall when buyers are not buying.

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(Mis)State(Ment) Of The Housing Market: Following The Arrows

August 28, 2006 | 11:38 am |

In Shawn Tully’s myth buster piece [Getting real about the real estate bubble [CNN/Money]](, he sounds fed up with the housing bulls and after 5 years of biting his lip, he gets to vent with a lot of hyperbole and exageration, but its food for thought.

  • Myth #1: As long as job growth is strong, prices can’t go down
  • Myth #2: The builders learned their lesson in the last downturn. They won’t swamp the market with new houses when the market turns
  • Myth #3: Low interest rates will keep values rising, or at the very least, put a floor under prices
  • Myth #4: restriction on development in the suburbs ensure low supply, and guarantee rising prices

This seems to be real estate spin in reverse. All of the arguments, while generally accurate, seem to take the most extreme arguments and make it the position of all housing bulls. Well, I should say, housing bulls are non-existent these days. None can be found, even David Lereah, the chief economist at NAR has changed his stance. A housing bull today can be defined as someone who doesn’t think there will be a market correction.

None known.

Bears/Bulls – Middle of Road
Richard Beales of Dow Jones Market Watch makes the case in the other direction (well, not all the way) in his article: [On Wall Street: Housing data not as gloomy as bears think](

  • The post-bubble outcomes in the UK and Australia and been a relative non-event.
  • The current economic environment, while weakening, is in much better shape than 15 years ago.
  • Fixed rate mortgages still dominate, despite rise in riskier mortgage types.
  • Weakening economic conditions are driving mortgage rates down.

These arguments are basically the points Mr. Tully refutes in the previous list.

Which way?
Which way to lean right now is anybody’s guess right now. On a purely anecdotal level, I have found that the late summer months, with a slow news environment and vacations, that negative interpretation of real estate seems to win out. To the contrary, the spring market tends to be portrayed in overly optomistic tones because things are happening.

Whatever the direction, there are already predictions that the Fed will start lowering rates in 2007 in response to a [potential recession [Seeking Alpha]](, scarcely 6 months after stopping its measured approach, because it overshot the economy, and along with it, housing.

We should learn a lot this week, which promises to [deluge us with economic data [MW]]( before the Labor day weekend.


With A Landing So Soft, Why So Worried?

June 14, 2006 | 12:05 am |

Besides my previous post about the [Global Insights/National City]( report, there have been a several more in recent days.

Here goes:

  • [Freddie Mac sees no crash in housing market [Reuters]]( or could they mean [Freddie Mac sees slowdown in U.S. housing market [Reuters]]( posted an hour earlier by the same reporter.

  • [White House advisers predict soft landing for economy [FT]]( Mr Lazear expressed confidence that rising US interest rates would not push the economy into a sharp growth slowdown. He said that while new home starts had fallen sharply, house prices continued to rise, albeit at much slower rates than in the recent past.

  • [Soft landing in housing seen by Harvard study [MW]]( Climbing interest rates and cooling speculative demand is putting pressure on the housing boom, but as long as jobs continue to be created and builders curb production, the sector will experience a soft landing, according to Harvard’s Joint Center for Housing Studies.

Hmmm. Freddie Mac sees a slowdown in housing, the White House economists see a soft landing and Harvard sees a soft landing. Sounds consistent to me. Freddie Mac and White House reports have limited credibility because of their functions. Harvard’s studies are a favorite of mine but I am still not sure of the message. Afforability is weakening, the economy is not doing much and housing continues to appreciate most in the more active markets and volume is dropping off. Soft landing?

There is so much soft landing talk that I am getting a little concerned. Since when have you known so many people make the right call about a complex economy?

I yearn for the old days when the NAR told us what we wanted to hear which they did until a few months ago and we were in a state of peaceful bliss. Now we know more stuff but its comprised mainly of PR housing surveys and reports.

In [Seth Joyner’s “I Want My Bubble Back!” post on Motley Fool]( he addresses the state of housing spin. NAR’s about-face on the housing bubble can be summed up in this quote by David Lereah, the Chief Economist:

Experiencing a slowing from a hot market is a good thing because we need a solid housing sector to provide an underlying base to the economy, and slower appreciation will help to preserve long-term affordability.


But this is a time for the Fed to pause on rate hikes because we have some interest-sensitive housing markets that have become vulnerable.

Seth blames the uncritical press for letting the housing spin go on so long. Given the new public awareness of the proliferation of spin exposed in the blogosphere, I can only imagine how much longer the NAR denial would have continued without such scrutiny. However, I think the press is an easy fall guy on this matter and has been the key target of the real estate industry’s scorn. Its ironic that Joyner makes this the basis of his argument but at the other end of the spectrum.

Herein lies the conundrum.


Waking Up At Sunset: NAR Declares Housing Boom Over

June 12, 2006 | 12:01 am |

Former Fed Chairman Greenspan, even while out of office, seems to still speak for the US housing market these days when [he announced in a May 18th speech [Matrix]]( that the the housing boom was over.

Two weeks later, the NAR concured. They acknowledged that the housing boom was over in their press release of June 6th [Home Sales Settling Down and Appreciation Slowing [NAR]](

When I read the release on June 6th, I was really dissappointed since the NAR should be a leader on housing market issues, not simply provide a politically correct response when they are forced to. There has been endless rhetoric and spin on the data that they have been releasing over the past 6 months and frankly, I didn’t have the energy to comment on it. Now that I have had time to consider it, I am very annoyed. The quotes in the release are in stark contrast to what had been said to date.

The housing boom has ended but sales at historically healthy levels will continue, and price appreciation will return to normal patterns across much of the country, according to the National Association of Realtors®.

David Lereah, NAR’s chief economist, said home sales are settling into a slower pace. “In recent years we were occasionally challenged to find appropriate superlatives to describe surprisingly high home sales,” he said. “Now the housing market has cooled, but 2006 is still expected to be the third strongest on record. In this case, experiencing a slowing from a hot market is a good thing because we need a solid housing sector to provide an underlying base to the economy, and slower appreciation will help to preserve long-term affordability. But this is a time for the Fed to pause on rate hikes because we have some interest-sensitive housing markets that have become vulnerable.”

I think NAR has been worried that any admission of market weakness would indicate that a crash was looming. Hence [David Lereah’s classic quip [Matrix]](

Do you think the housing market could ever crash? I’m getting tired of all these doomsayers. We live in houses, and our houses are not going to crash.

Yet it was another missed opportunity to reconnect with the public and does more damage to their credibility. Leadership on this issue would have been a whole lot cheaper than a new ad campaign. The last one focused on how brokers were interconnected with their community and follow a [code of ethics](

As the housing market cools and membership drops (probably quite sharply over the next two years) from attrition due to lower sales volume, lets hope that the NAR leadership becomes interconnected with the American public again. They have access to and publish a lot of great data, which should mean they are more on top of whats happening than their press releases seem to show.

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Dusting Off All The Housing Market Cliches

May 23, 2006 | 12:01 am |

In [Housing Takes a Deep Breath [BW]](, Businessweek interviews David Lereah, the Chief Economist of the National Association of Realtors. He is one of the most polarizing figures in real estate today. Despite his title, he’s really an advocate for the Realtor trade group giant and he’s just doing his job, which is certainly fine. But lets recognize what the job actually is and not pretend it is something its not.

Whats grates on my patience is that his view points are out of step with what is really happening. I am not a gloom and doomist but it does the consumer a disservice to lay on so much spin.

The advent of the blog culture has called this practice into question. NAR has missed a tremendous opportunity to gain the public trust during this period of market change.

[tired cliches in bold. I wanted to take the opportunity to point them out only because there were so many in such a short interview -ed]

Now he says the housing market is just taking a breather. “We’re going to drop significantly, but it’s not a balloon bursting,” Lereah says. “This is a soft landing for the housing markets.” He expects total home sales to drop to 6.62 million in 2006, from 7.07 million in 2005. Meanwhile, he thinks prices will continue appreciating this year, but only by around 5%, compared with 12.5% during 2005.

Why? Lereah says the growing economy will boost the market, offsetting the negative impact of rising interest rates.

  • Why do you think prices will continue rising? The economy is growing and there are job gains, so consumers have the financial wherewithal to purchase homes.

  • Are you worried about the drop in non-owner-occupied real estate values in certain cities, such as San Diego? That’s not going to spread. The health of a local economy tells us whether a real estate market is in good shape or bad shape, and most of those are very healthy.

  • Do you think banks have been lending too aggressively? The last two years of the boom were exaggerated because of lending.

  • Why do you think mortgage rates will go to 7%? I don’t see the Fed taking rates up higher.

  • Do you think the housing market could ever crash? I’m getting tired of all these doomsayers. We live in houses, and our houses are not going to crash.

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[Getting Graphic] Further Evidence That Housing Has Shifted Gears

May 16, 2006 | 12:01 am | |

Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s).

[Some Markets Start to Cool As Inventory Levels Rise; Low-Cost Cities See Uptick [WSJ]]((

Home prices were higher in many U.S. markets in the first quarter of 2006, but the pace of growth is cooling.

In its latest report of home prices in 149 metropolitan areas, the National Association of Realtors said the median price of a single-family home in the U.S. was $217,900 in the first quarter, up 10.3% when compared with the same quarter a year ago. That’s a smaller increase than in the fourth quarter, when the median price of a home was up about 13.6% year-over-year.

David Lereah, NAR’s chief economist, said in a statement that home prices are rising less rapidly because the inventory of homes available for sale is rising. “With the supply of homes picking up very nicely in many areas of the country, pressure is coming off of home prices.” Mr. Lereah also indicated that the trend is continuing into the current quarter, and that he expects price-appreciation will be “returning to normal rates of price growth in the single-digit range.”


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Commentary: Stop Whining About The Media’s Housing Coverage

April 13, 2006 | 9:05 am | |

Sometimes, its easier to blame someone else for your troubles, especially someone you love. I’ll explain.

Red Light Theory [defined: You tend to remember all the red lights you stopped for and forget about the green lights that you didn’t.]

On one hand, the investor and real estate brokerage community can place a lot of blame on the media for poor or simplistic coverage of the housing boom, bubble, soft landing, etc. There are plenty of examples.

NAR has made a lot of mistakes in this regard by feeding them with endless stats that seem to contradict or confuse when compared to the text of their press releases. David Lereah, their economist/spokesman, has become the poster boy for anti-bubble speak spin.

However, there has also been equally insightful and excellent coverage of the housing market. Access to data is almost immediate and dissected ad nauseum. I think the issue is more about the source and bias of the data fed to the media and some of the lax reporting associated with it.

The source of some of the national data that is regurgitated locally is often made by brokers who don’t really understand what they are saying or are frustrated by their weakening ability to spin the results. For example, in the last media cycle after the end of the first quarter here in New York, prices did not fall. Somehow this became proof that there was not a housing bubble or it was proof that housing was still strong. In economic terms, I’d call that a credibility leap. One fact doesn’t support or link to another.

The media has a way of equalizing spin with reality. And thats good thing for the consumer.

In Michael Calderone’s post [Why Not Blame The Media? [NYO]]( he makes this point with utmost clarity:

But it’s always interesting to hear a Florida real estate investor blame the media because he can’t make a quick flip. Of course, it’s alright when headlines mention a “red-hot market” but any reporting on “cooling off” is just no good for business. So, instead of blaming rampant construction, increased speculative buying, why not take a jab at the media.

The result? Despite the investor and the brokerage community’s frustration with the media coverage, the market has not caved in at this point. There are no guarantees however, but if you believed the headlines last fall, we should have been toast by now. On the other hand, if you believed the headlines two years ago, we should be seeing double digit growth right now. It cuts both ways.

But the media has moved on to other headline topics for the most part but the consumer still has a strong appetite for housing coverage.

Sure, the purchase decision is an emotional one, but consumers still tend to vote and make decisions on economic terms (ie vote with their wallet) and often don’t make that final decision from a tabloid or other big media headline. I feel its a cop out to say that:

Investors and brokers should not flatter the media as having that kind of influence on the buyers out there. Consumers really are smarter than given credit for.

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