What a shame that we have to spend so much time and effort on- and off-line answering the National Association of Realtors’ economist’s “predictions.” Noah is spot on:
The NAR has unsuccessfully predicted housing trends for 70% of 2007! For the past 9 months, count ’em NINE MONTHS, the NAR had to downwardly revise their housing predictions; which were unsurprisingly too bullish.
Thank goodness for local real estate blogs to provide cogent, pertinent analysis. The credibility of the NAR’s economist is whittled away every day by himself and real analyses. Here is the most recent “forecast.”
As the CR says:
I think their forecasting model is broken.
Related reading – the Big Picture and the Calculated Risk.
Where is the harm is providing honest, clear information? There are always different ways to spin information, and it’s understandable that the NAR (and part of me thanks them for this) wants to present the information in the best possible light. But do they have to do it in such as way that the reaction is one of laughter, smirks and a shakes of the head?
The question is – does the NAR’s economist have either credibility or relevance on which to trade?
*note that this is not a personal attack on the man, but the office’s “predictions” and track record.
Update 11 December 2007: A point of clarification based on an off-line conversation. The market is not the media’s fault. The media plays a significant role, as does the NAR. The NAR has, and should recognize, their potential to build credibility for themselves and their members by being the trusted source of information, rather than being perceived as saying whatever it takes to increase transactions.
The NAR is not a bad organization – The NAR lobbies extremely well on behalf of homeowners and Realtors – witness HR 3648 and the NAR’s support of this bill.
With many families affected by resetting interest rates on subprime mortgages and the ongoing rise in foreclosures, NAR has been working to help more homeowners and their families keep their homes. “Clearly it is unfair to tax people on phantom income when they most likely have no cash with which to pay that tax,†said Combs. “Realtors® don’t just sell homes; we build communities, and NAR is committed to efforts that will help make the nightmare of losing a home less burdensome for families.â€
The current tax code requires a lender who forgives debt to provide a Form 1099 to the IRS stating the amount the borrower has been forgiven. This disclosure applies whether a short sale, foreclosure, deed in lieu of foreclosure or any similar arrangement relieves the borrower of the obligation to pay some portion of his or her debt. If the property is sold at foreclosure or is sold for less than the amount borrowed, that difference is considered income and is subject to the tax.
Update #2 11 December 2007:
I’m not the only one who thinks that NAR’s credibility is at stake/gone:
Among the best comments I’ve read:
I would think realtors would want to be informed as well. As the lone voice of prosperity when there is absolutely no cause for it, the NAR only serves to remove itself from revelance. I am surprised news wires even bother to pick up their forecasts any more.
Upon first reading your headline, I thought you were critical of realtors but after reading the article I figured it out. I have stopped reading any economic forecasts that come out of NAR due to their obvious bias and lack of objectivity. Fortunately I have a background in economics and statistics and can formulate a more realistic forecast of the current trends. But I believe the NAR misinformation regarding the future of the industry is doing a disservice to a lot of realtors. I don’t think they see it that way though. I believe they fear a loss of members would result from a realistic forecast during this down market. And less members means less money.
Jim, NAR is damned if they do and damned if they don’t. There is an expectation by you and those other 1.3 million members and certainly by the media and Wall Street that NAR provide some analysis of home sales data, but for the very reason you suggest — real estate markets are inherently local, subject to fluctuations and aberrations difficult to predict from Washington DC — NAR’s numbers are a moving a target. They’ll always be a moving target. It’s the local analysis that you and a few others do well that gives them context.
Lawrence Yun is a good guy. Cut him a break. He’s been in the top position for a whopping three months. He’s already shown that he’s not one of those “It’s-always-a-good-time-to-buy” boosters. If you’ll look at his analysis of market conditions, I think you’ll find it as solid as anyone else’s from a macro point of view. Unless of course, you’re more inclined to believe the partial and incomplete analysis that we continue to see in the media.
And by the way…I give you credit for providing ‘ cogent, pertinent analysis” of your local market. I enjoy your blog and your perspective. But I would note that too many other bloggers seem to be caught up in the Limbaugh-style group rant against NAR and aren’t really adding much to the dialogue except vitriole and self-righteous nonsense. In the blogosphere, I guess everyone can be an expert…for 15 minutes, anyway.
Tony and Scott – thanks so much for stopping by and for the comments.
Tony – I agree with everything you say.
Scott – I wish that NAR would stop making predictions. Too many Realtors spend too much time building up credibility lost by the predictions that NAR makes.
That NAR is finally acknowledging that all markets are local rather than “the market is great!” is almost comforting.
As far as Lawrence Yun – he’s in a no-win position, and I feel for him. His paycheck comes from the NAR, and their opinions are clearly biased – and more and more of consumers are aware of that bias.
My aggravation is more with the lost credibility than with the unreasonable predictions.
Regarding the rants against the NAR – I agree with your frustration as well. The NAR is broken, but is fixable – that fix will come from the leadership within and from those who criticize without. There are too many good people within the machine, but the machine seems to have lost its pliability and adaptability. (That’s why I do what I can when/where I can and encourage others to do the same)
You’ve saved me some time here Jim as I was starting a post documenting the NAR headlines over the last 18 months and their eroneous market projections despite access to top notch data. Talk about “head in the sand” outlooks! Now Yun and the NAR just look stupid. I’m hoping it’s just appearances but I have real doubts.
The future and survival of the NAR depends on the MLS and traditional brokerage model. Listing information is definitely moving toward an open forum and as the traditional brokerage model slowly erodes, NAR slips further toward the clif edge. I smell fear.
Warren Buffet and Home Services, as well as all the other major players in the brokerage arena, are the self-professed members whose interests are at the heart of our NAR. As long as their interests are based in the status quo, then that is the position that the NAR will fight tooth and nail for. If those interests happen to filter benefit to the individual Realtor, then that is just a secondary benefit.
Blogs have started the discussions on split commissions but it will not happen while these mega financial brokerage machines have their stakes at risk. The day Warren Buffet divests himself of Home Services is the day the wall will start to crumble from the chinks bloggers started.
That the NAR needs a new business model is about the kindest thing I can say. Their educational programs are so pitiful as to be embarrassing to admit to having one of their designations. It could be so much better!
Keep up the good worD.
Good post, Jim and I’ve appreciated all the comments. You’ve hit the problem right on in that I have to waste my time defending my own credibility by distancing myself from NAR. It’s a trade association that often makes me proud and you’re right to point out some of the issues they’ve been on the right side of. But they hurt their credibility on other issues with their economic forecasts.
Scott has a point about Yun’s brief tenure. And, while he’s clearly got a more realistic approach than Lereah, that’s not saying much! I think NAR’s approach may have worked better ten years ago, but the consumer is more sophisticated now and spin almost always plays badly these days.
I think Jim’s right about the need for NAR to stop making predictions. Any economist’s predictions are more likely to be wrong than right given the complex data sets they’re dealing with. The national picture is too complex for today’s models to be much good at prediction. I’d be reluctant even at a local level to go much beyond a quarter in any predictions.
Thanks for the great discussion!
Ah, for once I agree with Michael Cook! Who cares? NAR is a fact of life and too much breath is wasted on their antiquated practices. It’s like our grandparents telling us how to blog- they have no idea what they’re talking about, but they’re willing to dispense advice. Let’s all just smile and nod (and move on).
Jim, Jim, Jim. Please tell me you realize ALL media, reports, studies, etc. are bias. The Wall Street Journal is probably the most anti-REALTOR bias source of information out there. They want all money to flow away from housing and into the stock market – that is in their best interest. If Yun is guilty of anything, it is trying to bring some balance (or maybe counter-balance) to the overly negative discussion being driven by the Journal.
By the way, your blog is bias (as is mine), but I think we are both smart enough to digest ALL the facts and make up our own minds. If you want to get upset about this type of thing, blast the average Joe who is not paying enough attention to see the bias in EVERY piece of information. Blogs have helped expose and check the mis-information out there. Yun’s predictions may be overly rosey, but give me one “fact” he states that is not true? Give the Yun hunt a rest. Three months ago is was a mid-level data cruncher for NAR who was so bright that he rocketed to the top spot when given the opportunity. He’s not the problem.
And THAT is my bias opinion.
Dave –
Thanks for the comment. We all have biases, but the acknowledgment of those biases is key.
Again, my beef is more with the office itself, and not at all with the person. I have no doubt about his qualifications.
The consistent overly-rosy predictions do more harm than good, in my biased opinion. 🙂
I wish more people would read the NAR’s predictions as well as bubble blogs, Calculated Risk, WSJ, etc., think and analyze critically and then come to their own conclusions.
I also wish that more people would vote.
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