Wednesday, February 01, 2006

Lereah changes metaphor - Real estate is now a ship, not a balloon

Chief NAR Economist David Lereah has adopted a new metaphor for the housing market. The real estate market has morphed from a balloon, his prior metaphor, into a large ship. I suppose the balloon metaphor was too similar to the bubble metaphor, thus needing to be replaced with something more benign. I'm surprised he didn't use the words "luxury ship" or "cruise ship", as both would elicit good feelings in most readers. This newest quote appeared earlier today in conjunction with the terrible December pending home sales index figures.

U.S. pending home sales index drops in December

David Lereah, the group's chief economist, said pending sales may edge higher in the coming months based on recent mortgage applications data that showed a spurt of renewed interest among homebuyers in response to a dip in mortgage rates.

"Changes in the overall direction of the housing market are akin to a large ship making course corrections -- it takes some time for the driving factors to materialize as a change in the sales level," Lereah said.

David surely seems to be a master of metaphor.. Or is he?

Turns out the housing market may more like a large ship than Mr. Lereah planned for..



Caveat Emptor,
Grim

43 Comments:

Anonymous Anonymous said...

This guy really is a clown and I'm sick of hearing about him.

Grim - Not sure if this is possible, and maybe you'll need help from the many readers ... but I'd like to see a breakdown in Bergen County of the biggest bubbles.

What areas MAY get hit hardest? What areas will be scathed?

And while other states (ex. Fla) have had homeowners/investors financing with no-money down and gimmick loans, is that also the case in North Jersey? (Maybe I missed that post).

I believe Fla had something like 33-39% of new homeowners in 2005 buy as investors/speculators.

2/01/2006 03:54:00 PM  
Anonymous Anonymous said...

grim called it the titanic before. i guess they are reading the blog too.

also now that interest rates are going up there will be a rush of buying. with the increased number of homes on the market the market will soar even more. so buy now. do not wait!!

Ha...God next they will tell us that the decrease in home prices will be good because then more will buy later, so buy at a higher price.

Since rates are going up, refinances will drop creating the need to get more loans to make money which will lead to more bad loans, that will need to more foreclosures, that will lead to a gult. Then people will leave NJ and who knows.

Folks, lets watch what the Real Estate Industry folks tell us next.


CDF

2/01/2006 03:55:00 PM  
Blogger grim said...

anonymous @ 3:54,

Ask and ye shall receive.

Otteau Report - Bergen County Q4 '05

You can use that to come to your own conclusions on how Bergen will play out. Don't be misled into thinking some areas will decline more than others, or the other way around.

grim

2/01/2006 04:33:00 PM  
Blogger RentinginNJ said...

I actually like the analogy.

Refinancing to reset the clock on teaser mortgages = Rearranging the deck chairs on the Titanic.

It’s not going to stop the ship from sinking.

2/01/2006 04:52:00 PM  
Blogger grim said...

Mortage rates tick up this week..

Weekly Home Mortgage Rates

Bond yields up rather dramatically the past few days as well..

grim

2/01/2006 04:56:00 PM  
Anonymous Cassandra said...

this more narrative report from Otteau also of interest:

http://www.mercerrealtors.com/ottau_jan06.htm

2/01/2006 05:28:00 PM  
Anonymous Anonymous said...

LOL!
This guy is amazing. Sell his soul for a raise and paycheck.
The number of people he is hurting is enormous.
Some lawyer needs to put a muzzle on this shyster.

2/01/2006 05:36:00 PM  
Blogger Marinite said...

Nice catch Grim. The Titanic it is (or will be).

2/01/2006 09:21:00 PM  
Anonymous Anonymous said...

Regarding Bergen County; the area I am in Englewood Cliffs...within a 3 block radius there are 11 finished or nearly finished homes...spec jobs done by Johnny come lately builders. None have sold in well over 12 months.
The $ (risk capital) was easily available to play the "buy the old pos, knock it down, build new , flip it to a sucker, and make a million" plan. The exit for these dummies is nearly closed...I love it. I also suspect there will be some "accidental" fires in unoccupied homes for sale.

2/01/2006 11:20:00 PM  
Blogger David said...

Funny. We need a blog devoted just to Lereah called Lereah Watch.

David
Bubble Meter Blog

2/01/2006 11:36:00 PM  
Anonymous Anonymous said...

well, I signed up to two foreclosure listing sites and I am noticing quite an increase in foreclosure listings on a week by week basis.

Most of the listings are in the counties west and south.

These lenders preyed on poor people and gave them unaffordable dreams of home ownership and now it is all crumbling down.

The early ones have been able to dump their unaffordable homes at market prices, even coming away with hefty profits.

I am trying to buy a home, but I think there is still another few months to go before drastic price drops....or at least homes with realistic prices.

2/02/2006 07:55:00 AM  
Blogger Richie said...

Hopefully the captain goes down with the ship.

-Richie

2/02/2006 09:35:00 AM  
Blogger Hobo-Kenny said...

Anyone have any direct knowledge of Wyckoff and Glen Rock? Looking for a starter home in one of these towns and am seeing little activity on the homes for sale in these towns and prices are being reduced every couple weeks it seems. New listings are coming in under 500k which is good news but just curious if this is going to keep declining or this is just a winter thing?

3/18/2006 05:40:00 PM  
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Anonymous Anonymous said...

. Noise does not sell well. Let the Realtor� and buyer talk, free of disturbances. Background "soft playing" music is okay, but the wrong sounds will turn buyers off. Noisy children and animals are roadblocks to a contract � and traffic, trains, and planes must be dealt with honestly, if they are part of the deal. Go here for more ideas.

6/20/2006 03:50:00 PM  
Anonymous Anonymous said...

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6/21/2006 01:48:00 PM  
Anonymous Anonymous said...

Even if you sell your home "as is, subject to inspection" � you can do a lot to . A top-notch Realtor� will probably hand you a list of at least a dozen things you can do to help improve your sale. If they don't, well, maybe you need to .

6/21/2006 09:06:00 PM  
Anonymous Anonymous said...

With the , you don't have strangers coming through your home, day after day, often week after week, at times which are not always convenient. Your home must look great ... truly great ... for one weekend only .

6/23/2006 09:54:00 AM  
Anonymous Anonymous said...

Hint #9 for . Bathrooms Sell Homes: Check and repair caulking in bathtubs and showers. Make the room sparkle!

6/23/2006 06:51:00 PM  
Anonymous Anonymous said...

Hint #13 for . Three is A Crowd: Avoid having too many people present during a showing. Potential buyers need to feel at home, not like intruders being hurried through the house.

6/23/2006 09:15:00 PM  
Anonymous Anonymous said...

Potential buyers have to say "yes" many times to purchase your home ... but a single "no" over a seemingly minor item can kill the deal. You can do something about this.

6/24/2006 01:10:00 PM  
Anonymous Anonymous said...

watch "absorption rates" closely. It's a time-tested yardstick for home sales. Does it prove that the Housing Bubble has already popped? You bet it has.

6/25/2006 08:15:00 AM  
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Anonymous Anonymous said...

Someone knows how to bring a lot of into your home, over a single weekend. Opportunity attracts them. Emotion captures them. Competition excites them. Their wallets open. Top dollar for your home pops out in an open bidding process that concludes on a single Sunday afternoon .

6/26/2006 11:07:00 PM  
Anonymous Anonymous said...

Hint #11 for . You Can Sell Pride Of Ownership. Cleanliness counts. Potpourrie works. So does a nice-smelling stew simmering on the stove. Happy buyers often tell us: "I liked the smell of the home." And you'd be surprised how many people walked away from a "perfect" home because "the owners were smokers."

6/27/2006 09:58:00 PM  
Anonymous Anonymous said...

Your blog was fun to visit. Not exactly what I was looking for. But fun. BTW, while the broad brushstrokes of successful marketing remain the same on the cyber battlefield of selling homes today, the rule book has changed. That's what we deal with on our websites. ... .

6/27/2006 10:27:00 PM  
Anonymous Anonymous said...

Pop goes the Housing Bubble? A Florida subdivision -- -- characterizes the area, the problem, and the answer.

6/29/2006 02:30:00 PM  
Anonymous Anonymous said...

In this "cooling off" real estate market, suggest that the average residence is shown about 4 times a week during the first 3 weeks of a real estate listing. After that, an unsold home goes "stale" ... it gets shown less .

6/29/2006 04:58:00 PM  
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Anonymous Anonymous said...

Hint #8 for . Clean Your Closets: Neat, well ordered closets look bigger, suggesting that storage space is ample. One of any home's biggest deal-killers remains: "Not enough closet space."

6/30/2006 07:30:00 PM  
Anonymous Anonymous said...

Hint #12 for . Harmonize The Elements: FM radio or stereo on softly, TV off. All lights on, day or night. Drapes open in the daytime, closed at night. If it's hot, cool it!

6/30/2006 07:32:00 PM  
Anonymous Anonymous said...

The average home is currently on the for about 4 months before it goes to contract. Around 15% of initial real estate contracts never make it to a successful closing ... something goes wrong, and the frustrated seller puts the home back on the real estate market .

7/03/2006 08:59:00 AM  
Anonymous Anonymous said...

The No. 1 sellers' complaint on the is the "showing" process ... the line of people trudging through their home, inspecting their lives, in search of who knows what .

7/03/2006 01:16:00 PM  
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Anonymous Anonymous said...

Hint #6 for . Clutter will clog a sale: Display the full value of your space by removing all unnecessary articles. Consider storing things you don't need all the time.

7/04/2006 09:34:00 PM  
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7/05/2006 06:51:00 AM  
Anonymous Anonymous said...

You can do a lot to For example, curb appeal sells: do some landscaping. Plant some flowers. Remember that the front door greets buyers. Make sure it offers potential a bright, warm welcome.

7/06/2006 02:37:00 PM  
Anonymous Anonymous said...

The average home is currently on the for about 4 months before it goes to contract. Around 15% of initial real estate contracts never make it to a successful closing ... something goes wrong, and the frustrated seller puts the home back on the real estate market .

7/06/2006 06:29:00 PM  
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