Yun Says Housing Will Be Merely Flat Next Year? Whew!

Home Prices will be flat next year, as will home sales - whew! Thank god, I was worried after a 7 year bubble it might take more than 9 months to wash out all the ills... but according to the always accurate Lawrence Yun of the National Association of Realtors - nothing to fear people.

Now Mr Yun is of course unbiased and one of my favorites, since he has been calling for a bottom and quick recovery for about as long as Mr Hovnanian. I see either the NAR has no such thing as performance reviews and/or prefers incorrect information as long as its bullish. I really start to wonder if our major industries, much like the government, overlook bad information as long as its information they want to hear. I mean it works for the government - and "yes men" are famous for trailing along with their favorite CEOs.... truly his track record is sad.

I always love how the media trot out his 'updated' predictions every 4-6 weeks and cheer. Never pointing to his previous track record (abysmal). Plus really this is probably the most biased economist in the entire country you could ask about housing, no?

I spoke about Mr Yun's track record in early October [Realtors Group Lowers Forecast But Lawrence Yun Still on Kool Aid] I will save you the time from clicking on the link - here is his history regarding 2007 sales as of early October. In reverse chronological order.

(October prediction) Yun now calls for home sales to be down 10.8% from last year.

(September prediction) 30 days ago, Yun thought it was (drumroll) going to be 8.6%, so he is only off by a factor of 25.6% in 30 days.

Here is the kicker... he thought back in February the year over year drop off would be only (drumroll) 0.6%! Don't even make me try to calculate by what magnitude that 'economic forecast' was off by.

What did Yun think about 2008 - 6 weeks ago?
You guessed it

Sales will increase (he now says flat?) and a few months before that he was calling for an even larger increase!

(October prediction)

Yun now predicts 6.12 million in sales, UP from the 5.78 milion predicted for 2007 (which goes down monthly) - thats a 5.9% increase! woo hoo!

(September prediction) Now the kicker of all kickers is that 6.12 million in sales is down 2.4% from his forecast last month, so this is his conservative number. He was even more bullish last month - what were we looking for last month? 8% increase in home sales for 08??

So let's review, completely wrong on 2007 and in the span of under 3 months he has taken down 2008 from a 8% increase (September) to 5.9% increase (October) to flat (November)

Mr Yun, this Buds for You....

Comments

[MikeHr:]

Thanks Trader Mark. I'm a realtor in Danville, California. This market was once booming, but is now much subdued as many real estate markets are in California. Naturally, people still need to move for job and family reasons. And there still is that upward climbing segment looking to move into a trophy home. The reality is that much of the real estate boom was not based on higher income, exploding population or just a hankering for a great new home. It was based on interest rates that went down to the ground and financing packages that let people move into a home based on just paying the teaser interest rate. The promise was that home prices would continue to climb. The only reason they were climbing was because of cheap credit and no money down. As you all know, that is why the real estate market is in decline now. Buyers actually have to have down payment money.

2007 Nov 16 12:13 AM

[rita the ma...:]

Yes Mikehr, and some boomers are inheriting lots of cash from their aging parents who actually knew how to save! Nursing homes cost $6K a month and assisted living can cost $10K with all the extras. So much for Mom and Dad's nest egg. Boomers say, "give us the money now Mom and we'll buy a house big enough for you, our college grad kid who won't leave and us too". Don't underestimate the matress cash that's out there and the boomers' appetite for living large.

2007 Nov 16 10:34 PM

[Jack Swanson:]

Yun is an absolute idiot, and got his job thru affirmative action, like the outsted CEP at Merrill PorkBarrel Lynch.

2007 Nov 17 06:36 AM

[gatorbait:]

correct on Yun wrong on Kool aid, it was Flavor-aid

see Wikipedia "by drinking cyanide-laced grape flavored Flavor Aid[5] (often misidentified as Kool-aid[6])".

2007 Nov 19 01:13 PM