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NAR's Lawrence Yun Predicted in 05 "close to zero" chance of a price drop.

If a prognosticator expects us to listen to their fortune telling predictions, they should be held to their past predictions.

Over at the Bubble Meter, he uncovered a quote from NVAR's website where Lawrence Yun in 2005 said that there was "close to zero" chance for a price decline in DC.

Why do I bring this up?

1) I question whether Yun or NAR could be held liable for such claims. If a JP Morgan analyst said something like this about a stock, there would be a class action lawsuit against them if they were not only wrong, but so far off.

2) I still maintain that NAR (and Realtors) should get out of the prediction business, it hurts all Realtor credibility.

Also recently I saw a quote where Yun admitted to some losses for people that bought in 2005 in some of the hottest markets, but that they were only losing about 1-2%. Meanwhile I went to a community yesterday that was full of new construction homes purchased for $700,000. There are now 5 foreclosures starting at $450,000, and not one has sold!

1% losses? Yeah right.

- Written by Frank Borges LL0SA Broker FranklyRealty.com

Posted by FRANK LL0SA- Northern Virginia Broker .:. FranklyRealty.com on 11/29/2007 04:59 PM

Comments (18)

market timing, dont trust nar

18 Comments on NAR's Lawrence Yun Predicted in 05 "close to zero" chance of a price drop.

NOV

2007

In a conversation we had today the question about what NAR does for us came up. there was a notable pause while searching for an answer. seems they are good at collecting annual dues. Am sure there's more...

Cheers

Frank, if economists and polititions could be held to their predictions and promises, it would bring down our whole way of life. Prognosticators know that the public will never hold them accountable - because no one remembers what they said last year or the year before.

I agree in principle, however lets not forget that Yun has the daunting challenge and responsibility of providing comments when asked to do, as we (NAR) are considered the experts on the housing market. As are Stock Brokers for funds and investments. This does represent a huge marketing responsibility for NAR and for the few that he has got wrong, he has got many right.

I think in my opinion Lawrence Yun and the NAR are becoming more disciplined and they are utilizing more methods to improve speculation and insight accuracy.

Thanks

Nathan Holman, A Proud Member of the National Association of REALTORS.

Find out More: www.homehuntingaz.com or www.holmanandholman.com

WOW! Great point. Thanks for going back in time to find it. I wonder which predictions that we're hearing now will turn out in 2009 or 2010. I love this kind of history post. Thank you!

Cheers! Jess Rankin, Pickering Group

Frank,

Yun knows a lot about real estate and the national economy, so why is he trying to predict future events. He and all the other experts should know that the business of predicting is strewn with dangerous land mines. Timely point.

Nathan,

Stockbrokers might tend to have more BUY than SELL ratings, but what firm do you know of that says across the board BUY BUY BUY? The same mantra. Misleading data too. I don't know where they get there numbers to see a 2% drop. Show me a listing in Arlington that had a comp sell for $500k last year, and over my dead body would I take the listing for 2% lower or $490k

If they were more realistic and 60% of the time said UP and 40% down, that might be passable. Even 80/20. But this 99.99% (which is how I equate "close to zero") garbage.

The market can't be predicted. Not even whether to list in Dec or Jan. List Today? Or Wait Till Jan or Spring? Debate!

Frank

Agree totally predictions are fraught with risk and by nature are speculation, but my point was Yun's obligation to comment... The NAR are regularly asked by institutions and even Government on "what does the future hold?

Our government has a board of economic advisor's, most corporations do as well, all of which do serve a purpose and that is to open our eyes to the possibilities, and the risks, the trends and underlying events.

Greenspan is another great example. Armed with this, because none of us can foresee the future, we have to decide on actions like do I List Today? Or Wait Till Jan or Spring? ! and todays world demands information regardless of the fact that it can be speculation in nature.

The fact that the NAR was consulted to make comment does speak volumes as to the regard that people and institutions have towards it. It is the authority on Real Estate in my opinion.

It's always better to cite actual statistics and decline to make predictions - I certainly don't make predictions to my clients (How long is this market going to last? Sorry, I don't have a crystal ball any more than you do. Our current inventory is x which is a y months supply of homes.)

Thank you Nathan,

Yes they are asked to comment. My comment is for us to stop answering. If I understand Japanese companies, they do not make short term (1-4 year) forecasts. Instead they do what is best for the ten year period. Um... like home ownership.

NAR should say "Sorry, it is policy to not put into place forecasts".

My 2nd problem is the forecast is always UP. THey are the "expert" because they are high up in the organization. But they are no expert. They are dead wrong. They didn't predict the HUGE run up, they didn't predict the freefall. They are useless in predicting and need to stop.

Try "Housing is a long term investment, it doesn't matter what it will be next year, and we don't really know"

As for the government and companies. They too would be in the hot seat if they were ALWAYS looking upward and onward!

Off the record, one association told me that behind closed doors they looked at the figures and facts that came in. They then said around this round table of local experts, "how can we spin these numbers to look good"

WHAT THE HELL IS THAT?

Frank

When asked about what I think the market is going to do, my comment is always something like, "if I had a crystal ball." I agree though that real estate is always a "good thing."

NOV

2007

I do business from Mineral To Alexandria - he should come ride with me for a week. Then I would be interested to hear his opinion.

Teri,

I don't believe that you think that.

So you are telling me that if a young couple walked into your office and wanted to buy you would always say it was a "good thing." Even if they wanted to HURRY and buy a unit for $400k in a building that had 100 units still left to sell, and they are selling about 1 unit a month, and this couple plans on moving in 18 months?

Of course you would tell them to rent. The risks would be way too high and they would lose thousands.

Was it a "good thing" for those people that went into foreclosures? NAR said the chance of goig below ZERO was near zero.

As an agent, we need to watch what we say, as people ARE listening, and they do believe statements like that, and they can get into major trouble for it.

Frank

Kevin,

Who is the HE you refer to?

Frank

I am glad to say that I have always added something to the effect "if I knew all now and tomorrow i would not be here now" And advised clients not to buy or sell based on some day some things but on where they are now and what their needs are now

Frank, by in large I think investing in real estate is a "good thing." Right now, yes, I would say it is. I've owned real estate since the 60's and purchased in a crummy market in the 80's here in Arizona. Since I still own that property - yes, it is a good thing. I would always protect any of my sellers or buyers with the truth about the market as I attempted to do in 2005-2006. I either tell them, "now may not be the time to buy" or "now may not be the time to sell." Of course it all depends.

I like the here and now idea just above mine. :-)