Thursday, November 29, 2007

A simple question for Lawrence Yun

Mr. Yun,

What exactly is it that makes you think US home sales and prices will rebound next year?

* The record and swelling inventory?
* The worldwide crashing debt markets?
* The millions of REIC losing their jobs?
* The fact that renting is SIGNIFICANTLY cheaper than "owning"?
* The massive fraud-related demand that will NEVER come back?
* The congressional investigations?
* The disappearance of no-down, no-doc mortgages?
* The looming recession?
* The blowup over at Fannie and Freddie?
* The hundreds of mortgage companies that have failed?
* The tightened lending requirements?
* The complete loss of confidence amongst potential buyers?
* The sea of foreclosures?
* The massive wave of ARM resets
* The destruction of collateralized debt, CDOs and SIVs?
* The loss of buying power of the US dollar?
* The plunging consumer confidence index?

I could go on. But Mr. Yun, please illuminate us. You're the Senior Economist after all, and obviously we have no idea what we're talking about here. You must know something we don't know. Your detailed and sophisticated NAR financial models must be seeing something we can't see. You must think Manias, Panics and Crashes is a bunch of hooey. And you must have 21 great reasons too (the year round golf, right?).

So do tell. Please share with us your detailed financial modeling and statistical evidence that has led you as an economist to your conclusions. The floor is yours.

The market for existing homes is "hitting the low right now" and heading for a "modest recovery" next year, the chief economist for the National Association of Realtors said at the group's annual convention here Tuesday.

NAR expects the national median price of existing homes to decline 1.7 percent to $218,200 for this year and hold steady in 2008.

Yun said housing will start to recover next year, if only because people will keep getting married, having babies, changing jobs and retiring, forcing them to buy or sell homes. "The pent-up demand is there," he said.


Anonymous said...

I know how Lawrence Yun would answer that question. He would say that the "fundamentals" (which according to him are job growth and low interest rates) will cause the sales and prices to rebound next year.

Yes, it makes no sense. If those two fundamentals would cause the market to rebound, it would have already rebounded because (at least according to him) the job market is already strong and the interest rates are already low. Of course, with the tanking economy the odds are that the job market will get worse next year (not the same or better). I don't see long-term rates, the ones that control mortgages (not the short-term rates that Bernanke will keep lowering) going much lower either.

Regardless of his "fundamentals" that he keeps touting, he conveniently forgets the most important fundamental that determines affordability of houses, which is relationship of PRICES to INCOMES! Obviously, the house price to income ratio is still way too high to allow any stabilization or rebound. Prices have a long way down to go and/or incomes have a long way up to go before there will be any stablization whatsoever!


Anonymous said...

Most likely answer -

In god we trust!
We will never surrender!
You are either with us or against us!
Real Estate is supporting the economy!
There is a shortage of land!
Illegal immigrants are buying all the houses!

He represents the "sales people". If people are foolish enough to put down less money than our 6 pecent commission - they deserve it!

We are just doing our job making a living. Why should we care about the people who are making biggest purchase of their life based on opinion of realtor they met an hour ago!