Worst Real Estate Forecasts!
Bob Schwartz, San Diego real estate broker -
San Diego real estate blog
Having been a member of the National Association of Realtors (NAR)
for three decades, I cannot recall the Association forecast being
anything but overly optimistic. I'm also a member of the San Diego
Association of Realtors and the California Association of Realtors;
the same holds true for their forecasts.
I believe realtor associations serve a noble purpose, but I do have
a problem with these associations putting out an economic forecast.
How can any forecast done by an economist who is an employee of
trade associations whose membership is based on real estate sales,
possibly put out an accurate forecast for real estate trends if
those trends are anything other than positive. So is the association
actually enhancing the image of the Realtor by giving accurate
guidance to the general public by issuing continual rosy forecasts?
Sure, on occasion the forecasts may provide a milk-toast opinion of
possible market slowing. This is so rare and so wishy-washy as to be
laughable. The real estate-buying public is becoming much more
sophisticated and it's my opinion that the constant overly
optimistic outlook of the National Association of Realtors is making
the association and all its members look foolish to say the least.
In February of 2005, then NAR chief economist Mr. Lereah published a
book titled: ďAre you missing the real estate boom? The boom will
not bust and why property values will continue to climb through the
end of the decade ó and how to profit from them.Ē Shortly after the
publication of this book, many real estate markets including San
Diego's, took a distinct downward trend which has continued through
to today. NARís December 2005 forecast for 2006 said existing home
sales would fall 3.7% and new home sales would fall by 4.8%. It
appears the facts were so overwhelming; NAR could not issue a
positive forecast, so they issued the mildest 'soft' market report
possible. If the general public relied on this report, they would
have been served very poorly. The data released in December 2006,
actually showed existing home sales fell 8.6%, more than twice the
NAR forecast. Plus, new home sales fell 17.8%, which was almost 4
times more than the NAR predicted.
In December 2006 the chief economist for the NAR said: ďMost of the
correction in home prices is behind us, but general gains in value
next year will be modest by historical standards.Ē It was said in
this report that existing home sales were expected to be off 1% and
new home sales to fall 9.4%. What actually occurred for 2007 was
that existing home sales took a fall of 12.3%, and not the 1%
estimated by the NAR. New home sales were down about 25%.
What is the latest NAR forecast? For 2008, the NAR is projecting
existing home sales will increase very slightly, and the median home
price should also increase. Also predicted is that new home sales
will continue to fall sharply in the range of about a 12% drop. In
the report NAR speculates that for the largest part of the market,
existing home sales, the bottom has come, and 2008 will be a turning
Based on their last two yearly forecasts, is the NAR's 2008
projection, accurate? With the Fed dropping interest rates hand
over fist, I think there is a 50-50 possibility that finally NARís
projection may be close to reality. If the housing market numbers
for 2008 come anywhere close to NARís projection will it vindicate
the necessity for the association having an economist on staff? To
me it's kind of like a broken clock; it will be correct at least
twice during a 24-hour period.
I believe the NAR should leave the forecast up to the government and
the Wall Street economists and just report the actual housing
numbers. Let's face it; it's not always a good time to buy real
estate. Let's try to enhance the general publicís perception of
Realtors by sticking to the facts, and leaving the future trends,
opinions and forecast to others.
Use of this article without permission is a
violation of federal copyright laws.
Schwartz is a Certified Residential Specialist, real estate broker
San Diego real estate & co-owner of an
Internet search engine optimization firm,
WebsiteTrafficBuilders.com, specializing in domain name
registration and Internet domain website hosting. Bob received his
BBA majoring in real estate & computer programming. Be sure to visit
San Diego real estate blog
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