Interest Rate Roundup

Wednesday, October 11, 2006

NAR throws in the towel on home prices

Incidentally, the folks at the National Association of Realtors just released their latest forecast for home sales, prices, and all that. Here's a Bloomberg story on the details. In a nutshell, the NAR is forecasting a 0.2% drop in new home median prices in 2006, which would be the first decline in 15 years. Also, they say existing home prices will end up rising 1.6% for full-year 2006. Bloomberg calls this the smallest gain on record.

Of course, it would have been nice for the NAR to release this useful information a year ago versus, say, this forecast from October 2005 saying that new home prices would rise 7.1% in 2006 and 5.2% for existing home prices.

And of course, there's this helpful issue of "Real Estate Insights" from August 2005. A synopsis of NAR Chief Economist David Lereah's commentary reads as follows ...

David Lereah's Economic Commentary: No Doom; No Gloom. Talk about a so-called "housing bubble" continues to be the topic from Wall Street to Main Street. But in order for the sky to fall -- for home prices to plummet -- there must be a significant drop-off in homebuying as well as a significant rise in housing inventories. The continued obsession with a "gloom and doom" scenario for housing is downright wrong.

Heaven knows I've made some bad calls in my lifetime. I get things wrong all the time. So I'm not pointing out these dramatically wrong forecasts to embarrass anyone. Instead, I'm making what I believe to be an extremely fair criticism: The NAR should have spent much less time cheerleadidenigratinggrating those of us warning about a housing bubble when things were going great. Instead, the group should have simply pointed out the obvious: A significant portion of the housing demand was "fake" investment-fueled demand, not demand from owner occupants. When it faded, so too would the housing boom. Talk about a wasted opportunity.


Post a Comment

<< Home

Site Meter