Wikinvest Wire

If Lawrence Yun wanted to be more helpful...

Tuesday, April 22, 2008

In the National Association of Realtors' monthly report on existing home sales, where sales fell 2.0 percent in March (now down 19.9 percent on a year-over-year basis) and home prices continued to tumble (down 7.9 percent from a year ago), NAR chief economist Lawrence Yun had the following comments:

Though mortgage rates are at historically low levels, some borrowers are facing restrictive lending practices in declining markets. At the same time, many buyers continue to bide their time with a large number of homes to choose from, while other potential buyers remain on the sidelines.
If Lawrence had wanted to paint a more accurate picture of current conditions, he might have said something like this:
Look, everyone is scared to death right now - lenders, buyers, realtors - never, ever in a million years did we think that prices would drop like this. I mean, who wants to buy a house that is probably going to lose $20,000, $50,000, or $100,000 over the next year? If you can buy a foreclosed property at a steep discount, have it at. Otherwise, stay away.
Here's the chart:
High inventory + low sales = falling prices.

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8 comments:

Anonymous said...

I 100% agree with you. Can this guy be real. Looking forward we are in a big world of hurt. Just wait as the numbers come out for HELOC, Pay option ARM's and auto loans going into default that no one is talking about much.In the next 6 months it will be crazy. By they way how in the hell can the stock market still be this high. can no one see through the clouds and see what is coming. they are all clowns

David said...

http://lawrenceyunwatch.blogspot.com

Nick said...

Well, at least he's factually accurate this time... that's something, right? Rates are low historically, and most potential buyers are biding their time or staying on the sidelines.

What boggles my mind is later:

Yun offered a caution. “With elevated inflation, the Federal Reserve should be extra careful about further rate cuts,” he said. “Mortgage interest rates, which do not move directly with Fed funds rates, may rise measurably and hurt the housing recovery if inflation gets out of hand."

... huh? Of course rates are going to go up as people realize the government's only politically feasible reaction to the correction is inflation. There's got to be some way to make money on the lag time between what the government is doing right now and whenever banks realize that 6% MBS aren't going to be worth much with 10% inflation...

Bob said...

Inflation was a problem in 70's and 80's because labor had wage power. When prices went up, wages went up, and then prices went up, etc.
It won't be a problem now, and by the end of 2008 economists will be worrying about deflation.

When the recession takes hold what will the stock market do? The net flow for retirement accounts is moving towards liquidation as more people retire. MBS at 6% might look like a good idea in 6 months.

annemr said...

The chart shows the number of houses that sold, not the prices. So your comments reagrding how low the prices have fallen is not demonstrated by the chart - which is months of invesntory and number of houses sold. If you actually look at localmarket conditions, there ares till - even in gasp..California..that are appreciating. In Denver, where I live, Adams County, East Aurora County are in the tank, but Cherry Hills is up 1.5% in price, Highlands Ranch was up .5%. Nationally, the price declines are being driven by places where there was a HUGE subprime issue - inland California, Nevada, Arizona and Florida, plus the job loss price declines in Ohio, Indiana, Illinois and Michigan. Try to stay away from gross generalizations - because truly, real estate is a local business. Want a place that is still appreciating is a big way - go the Charlotte, NC.

I CAREFULLY track all this tuff.
Anne

Anonymous said...

What a delusional twit you are Anne. It is realtors like you -- with your perpetual positive mental attitude -- that helped get us into this mess!!

CMB

Anonymous said...

Mr. Yun have predicted lots of things, but none of them have come to the real life. He predicted the same tings last year, the fourth quarter house market will runoff. Now he made the same prediction again. You know what by doing that, some day this cheif will make a right prediction. I wonder which school he graducated?

Anonymous said...

Anne you are wrong. Colorado led the foreclosure wave starting 2 years ago and has been in the top 5 for rate of foreclosures ever since. Check the price momentum in the areas you site, down isn’t it. Calling out Cherry Hills is a joke, a small wealthy town of 4000 people in a metro area of over 2 million. Most of the price movements in that area are for LAND value not home value. The homes aren’t increasing in value it’s being built. Buy a lot for 2million do a 2million build and sell it for 5million isn’t a 150% price increase.

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