Lereah culpa: "None of us realized the magnitude of it..."

Remember David Lereah? The bullish NAR economist and author of "Why the Real Estate Boom Will Not Bust"? Of course you do. Newsweek has an interesting interview with him here. Money quotes:

"We're not at the bottom ... we're not there yet. The leading indicators are still very bad. Pending home sales are still in bad shape. Mortgage applications are low … There's still supply out there in abundance … This thing is going to get worse before it gets better."

More: ""[I] just didn't realize the scope, the extent, the magnitude of the loose underwriting—not looking at incomes and wages, just providing so many mortgage loans based on [expected] future price appreciation rather than the creditworthiness of the borrower," Lereah says. "That got so out of hand, and none of us realized the magnitude of it until it was too late."

Now, then. That clears everything up, doesn't it? Of course it doesn't. Banks and lenders were throwing mortgages at borrowers like throw beads at a Mardi Gras parade, and the NAR "didn't' realize the magnitude of it"?  Sorry, not buying it.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Hat tip: JW, via comments
Photo Credit: Getty Images

Comments

[toby]

No, it was worse than a Mardi Gras parade, cause for a mortgage, you didn't have to take your top off to get one.

[mark g]

I'm sure his view changed the split second he was no longer under the NAR umbrella... these NAR numbskulls are running around with bubbles in their heads... now that they are popping, the synapses are re-connecting in their pea brains causing a bubble hangover...

[John]

Man, as much as I think we're a long way from the bottom, if David Lereah's saying the same thing, I may have to reconsider. That guy's wrong about EVERYTHING.

[pugtv]

If anyone has it, please post the NAR's response to Lereah's comments on this blog. Specifically, I'd love to hear what Baghdad Yun has to say.

[JW]

I loved this part of the article where Lereah says:

"We're not at the bottom," he says. "[People] want it to be near the bottom, but we're not there yet. The leading indicators are still very bad. Pending home sales are still in bad shape. Mortgage applications are low … There's still supply out there in abundance … This thing is going to get worse before it gets better."

Lereah says that the industry may begin to see a slight uptick in sales later this summer, which could signal the start of the recovery. Home prices, however, will continue to fall."

For once, he told the truth. Of course, the interview turned the corner at the end where Lereah said that it was a good time to buy a home. Old habits die hard.

[liz]

To say that "you didn't realize the loose underwriting standards" makes him sound like an absolute idiot. Everyone in the industry knew that the underwriting standards were slutty--were loose--or had no standards.

He should have said I thought real estate would continue to appreciate so then it would be okay, but to say that he didn't know makes him sound stupid---

Nobody knows anything--these analysts, pundits etc.... idiots!!

[jb]

I don't know the veracity of these charts but it claims to show that David Lereah knew about the bubble back in August of 2006. How many rosy housing pronouncements did he make after that date? That would be interesting to find out.

http://tinyurl.com/68yawn

or

http://www.californiahousingforecast.com/
commentary/2008/1/20/nar-in-2006-prices-outpaced-
income-prices-do-fall-san-diego.html

[Cal]

Most realtors simply dont know, or want to know, financing issues. They all claim thats the loan officers job. So these real estate "experts" can't help protect you in what is the most important part of the transaction. I think it is completely plausible that the head NAR economist had no idea what was going on, he is simply a reflection of his constituency.

The argument is either they had no idea what was going on.. therefore they aren't exactly much use or much of an expert.. or knew what was going on and didn't care.

I own a copy of "Why the Real Estate Boom Will Not Bust" which I got for a tremendous discount in late 2006 (not surprisingly) I have put it on my bookshelf and promised myself I can't read it until 2010.

[MyLessThanPrimeBeef]

This reminds me of the Liar Paradox.

A man says he's lying. Is what he says true or false?

And that's where we are with what we are hearing these days. We have no basis for believing any of it.

Better to be safe than sorry. Don't believe any of it.

[TrojanDLA]

An NAR "economist" is an economics expert by trade, not a real estate agent, so if he is actually more a real estate marketing executive, then he's certainly NOT an economist.

Clearly, his Ph.D. was for sale.

[E]

If the bubble blogs made his Mom cry, then we should assume he read the bubble blogs. (Not just his dear old Mum)

If he read the bubble blogs...he knew.

I question anything that comes out of his mouth.

[jonM]

Of course the NAR knows very well that real estate will crash, they just dont know when. But the money keeps flowing in, why mess with a good thing. They were trying to sustain the good times as long as possilbe by disseminating lies; finally it comes to an end.

[jb]

I actually dont blame the NAR - it is not their money and why should they care? I blame the BANKS who Ben B now wants to rescue with our money. They employ an army of risk-assessment professionals who could not see this coming??? We refuse to pay for their blunder - F you Ben.

[150 Multiple Choice Questions]

Wow, I read things like this and my first thought is that I hope he doesn't realize and meteor is about to fall on him.

This guy is the worst kind of scum and I find it hard to believe he wasn't lying the whole time and that he didn't know what was going on. He chose to continue to lie because it was his job. I'm surprised David didn't say that's why he left the NAR... oh wait, no I'm not, that would take a man to admit. It would probably also make him liable which is why he's still lying and saying he had no idea... Meanwhile, the NAR keeps calling a new bottom every week and continuing the lies and misinformation. Does David have a comment on the NAR? Of course this softball article writer doesn't ask him any real questions and even defends him. In fact, Lereah discusses the balloon "popping" in the article, wasn't Lereah the clown who said it wouldn't "pop" but would be "air escaping the balloon?" or some other idiotic spin?

I guess if the Daniel McGinn did a passable job instead of repeatedly saying how he feels sorry for Lereah, (is that what reporters are supposed to do?) we'd know.

Any Wall St. firm that gives this clown money is getting what they deserve.

[ladybug]

Toby, thanks for the laugh!!

[TMH]

Asleep at the wheel.

[keith]

Lefty, do you have a comment?

[John T Watts]

Lots of us, not having a crystal ball, did not sell when the market was at it's peak. We moved out of state in June 2005 and held onto a house in California thinking it would continue to increase in value as well as give us an income as a rental. Big mistake. The property has dropped over 100k in value and we have also had to reduce the rent to keep it rented. But it also looks like people don't have a crystal ball with regard to waiting for a bottom of the market. It looks like maybe there are people hesitating to buy because they think the market will continue to drop forever. Some of those people are going to miss out on the right time to buy. Maybe it's better to be out there looking for a good deal that will be a good deal even if the market drops further. If you are not out there looking you may end up missing it.

[jbunniii]

It's amusing to see that he owned 10 dwellings. He was definitely drinking the same urine that he was dishing out to everyone else. He should consider changing his name to David Urea!

[Passportholder;-)]

I needed that laugh tobey ;-)))

[Eugene]

I don't understand why the mortgage brokers have become the only scapegoat throughout this mess. I think the Fed should also be blamed for being so aggressive with rate cuts.

But most importantly, the primary cause for the mess are the homeowners that bought too much home that they could not afford. Just like how everybody else is not buying the idea that Lereah "didn't know the scope", I'm not buying the idea that homeowners were "preyed" upon and didn't know what an ARM loan was. Bullsh*t. Homeowners took a risk, and they got burned.

[Eugene]

BLAME THE HOMEOWNERS WHO BOUGHT MORE HOUSE THAN THEY COULD AFFORD. LET THEM BURN.

[arcticblueice]

Prepare yourselves, for the time of leanness has come upon America and England who have chosen to forsake our living God of Israel and His Law. Stop spending money on things you do not need. The illusion of wealth is gone. The U.S. federal government is insolvent. The people of England and America are stone broke. Stop using credit. Make the choice not to be a slave to debt my friends. Christ will show you a more excellent way to live and be satifisfied. Repent! The Kingdom of God is at hand! Believe on the Lord Jesus Christ and thou shalt be saved. Materialism is idolatry and you cannot serve God and your possessions. Mortgages, car payments, and credit card debt is only a path to perdition. Open your heart, your soul and your mind to the love that Jesus Christ has waiting for you. Only He can fill your emptyness and heal your pain. What you are missing in life you cannot ever buy my beloved. Ask Jesus for forgiveness and to come into your heart today before its too late. The worst is yet to come.

[Cal]

We definitely need arcticblueice to be a guest blogger.