Remember when real estate industry leaders were trashing the media for too many “doom and gloom” stories at the onset of the housing bust?
A well-positioned real estate industry professional was putting a positive spin on what was shaping up to be a doomed housing market.
That spin could have misled some homeowners, causing them not to take action necessary to save their home.
It was the best of times.
It was the worst of times.
The market had peaked with home equity wealth so unprecedented it became known as the “psychological equivalent of gold” – at least for those who got in the market on time.
However, from the Sunshine State to the Golden State, economic forecasts predicted boom housing markets were poised to fall like dominoes.
It was the historic onset of the greatest economic downturn since the Great Depression.
The best-of-the-best in professional media did its job and rightfully reported the so-called doom and gloom.
In good times and in bad, homeowners, consumers, anyone in or out of the real estate market has a constitutional right to all the unfettered information they can get.
With truly unbiased, useful information, many consumers could have escaped a foreclosure disaster that’s making Hurricane Katrina look like a walk on a beach.
Forget numbskull proclamations that the “Internet allows anyone to become a journalist.”
The whole idea of a professional press is to provide the kind of trained, experienced, unbiased information (via reporting, research, corroboration and editing) people must have to make their own informed decisions.
“If a time arrives when there are too many risky loans and the economy hits a recession, many homeowners could default on the American Dream and take the economy down with it.”
– DeadlineNews.Com, April 14, 2005
More – not less - information could have helped an unknown score of families at least temporarily suspend homeownership with dignity, salvage their credit and remain positioned to one day return to a hearth they could again call their own.
Unfortunately, when the press was cranking copy, as it is charged to do, some realty professionals were seeking what amounted to outright censorship.
What’s worse, at least one realty professional was delivering housing market information with an admittedly slanted, job position-induced, ‘positive spin’ that could have misled homeowners into thinking boom times would never end.
In “Confessions of a former real estate bull” CNN Money Magazine senior writer Donna Rosato recently queried the “famously optimistic” former National Association of Realtors (NAR) chief economist and former Move, Inc. executive vice president David Lereah, now a private consultant with Reecon Advisory Report, a self-proclaimed “weekly source of insight and intelligence on residential real estate.”
Word-for-word, here’s the text of the interview as it was published online.
“Q. Were you wrong to be so bullish?
A. I worked for an association promoting housing, and it was my job to represent their interests. If you look at my actual forecasts, the numbers were right in line with most forecasts. The difference was that I put a positive spin on it. It was easy to do during boom times, harder when times weren’t good. I never thought the whole national real estate market would burst.
Q. The NAR’s latest forecast calls for a slight increase in home prices next year. Thoughts?
A. My views are quite different now. I’m pretty bearish and have been for the past year and a half. Home prices will continue to drop. I think we’ll see a very modest recovery in sales activity in 2009. But we’ve still got excess inventories, a bad economy and a credit crunch that will push prices down further, another 5 percent to 10 percent more. It’ll take a long time to get back to the peak prices we saw in many markets.
Q. Any regrets?
A. I would not have done anything different. But I was a public spokesman writing about housing having a good future. I was wrong. I have to take responsibility for that.”
These comments came from a professed “economist” who, when the market was right at the top of its current tailspin, an economist who had reams of realty market data, research reports, forecasts and other documentation at his fingertips, but an economist who was putting the finishing touches on “Why the Real Estate Boom Will Not Bust – And How You Can Profit from It: How to Build Wealth in Today’s Expanding Real Estate Market,” published by Broadway Books on February 21, 2006.
Suspend for a moment the tried-and-true notions that when it comes to any investment there’s always room for caution, that there is forever the need for risk analysis and that there is an always-on abhorrence for never saying never. Ever.
Shouldn’t someone professing to be a real estate economist espouse basic economic principles, ethical business practices and some fiduciary duty in the face of the obviously unsustainable home equity growth that came in an environment of untried, untrue and unreliable assembly-line mortgaging?
If you work for an association pushing homeownership, apparently not.
If this was something concocted by a Washington, D.C. politician we’d be watching another media storm over yet another “Gate” – perhaps a “Housing Gate.”
Can’t get enough of David Lereah?
• Read the DavidLereahWatch Blog
• Read the Wall Street Journal’s”Realtors’ Former Top Economist Says Don’t Blame the Messenger.”