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NAR's "Baghdad Bob" Confesses

You remember "Baghdad Bob" from the Iraq War, right? Iraq's information minister who repeatedly claimed no American troops in Baghdad as US tanks patrolled only hundreds of yards from his studio. Well the NAR's very own Baghdad Bob, former Chief Economist, David Lereah was notorious for his bullish optimism during the peak of the housing bubble now admits in a Money Magazine article it was just spin.

As chief economist for the National Association of Realtors, David Lereah was famously optimistic. Now a private consultant, he’s abandoned what he calls the “positive spin.”

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 inline 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.

Who could have guessed? Yes, that's sarcasm, but unfortunately, due to his title as Chief Economist for the largest housing related organization the vast majority listening took the spin as truth and continued to propagate the (dis)information. This is similar to all of those "Chief Economists", and "Analysts" at investment banks that will produce report after report for public consumption about how great things are while their internal analysis is very different. Their job titles are crafted to make them sound independent while at the same time their jobs are really to be their companies propaganda ministers.

What's really ironic is this spin was happening at the same time the NAR was trying to promote Realtors as a trusted source of information. Seems kinda counter productive doesn't it. More importantly how does this spinning really benefit the real estate industry? Are Realtors really better off in having a housing market of booms and busts as opposed to a more stable market?

Posted by Matt Heaton on 12/29/2008 02:52 PM

Comments (61)

nar, economy

61 Comments on NAR's "Baghdad Bob" Confesses

DEC

Matt,

I don't know that all of believed the NAR, I for one think the association has really lost it's direction and is of little benefit to it's members any more. They have at times demonstrated theme selves to be just as greedy and crooked as these huge Wallstreet firms now begging for a bailout.

I actually spend more time trying to convince people that I can be trusted even though I'm a Realtor than getting any actual benefit from belonging to an association that is required because my brokerage is a member.

Brian: While there were plenty of us that did see through the NAR spin, the problem is the vast majority of public sees it as fact and not spin, but you nailed it, I simply fail to see how many of the NAR's actions in the last few years benefit their members.

Who knows Matt with the way AR is growing maybe you guys can start a new association that is actually worth something to it's members. I'm in!

It's sad that our national association can't see the difference between promoting "housing" rather than it's own members. Sounds like more of the "housing for all" promotion circa 1998-9. How many unions do you know that think they're promoting the industry rather than it's members?

This kind of mixed-up mission is what led to the temptation to make wrong-headed evaluations of facts and to incorporate "spin". And it's continuing today as each month's numbers come out. I get into trouble when I post sales stats because the "industry" wants to say things are great.

Matt,

All REALTORS® lost a bit of credibility during those times because of the actions of NAR. How many times did we really need to hear that the market has reached the bottom and things are turning around.

Rich

I like your title. That is very appropriate.

NAR because it is national has to make blanket pronouncements. Unfortunately there is no such thing as a US real estate market. I keep trying to explain that to the local press. Markets are so fragmented that even here in North Texas there are numerous markets. Some are doing well and some are not doing well. We lived through the real estate crash in Texas in the mid-1980's. Unfortunately it took us almost ten years to stabilize the WHOLE market. Our good fortune at the moment is that we had not had the run up in valuations seen in other parts of the country. Therefore, we have not had the sharp drops in value seen in some other areas of the country. We do hope that everyony moves toward recovery sooner rather than later.

Ted, I completely agree with your comments. It just doesn't make sense to make grand statements about the housing market as a whole when it is really only certain states or areas that are bringing down the markets.

Matt- And we wonder why the public ranks REALTORS below used car salesmen.

Just tell the people what they want to hear. Never tell the truth as that may scare someone.

Hopefully, you did not pay your $40 to their political cause this year. We had one agent that paid $5,000. I guess he does not hear the tanks either.

Whatever happened to Baghdad Bob? Selling real estate?

Locally, the New Hampshire boards were much more conservative. I think NAR did a disservice to Realtor(r) with this disinformation! Yet, we have to pay extra for their Realtor(r) image campaign. We should all get a refund from NAR!

Hi Matt, Yes, he was giving out some really bad information. Our current guy Yun, is a bit better but not a lot. He probably gets marching orders on what he can say from the bosses.

I say bring him back I liked the glass half full better than empty. I have not heard a positive spin on the market in over a year.

"it was my job to represent their interests" True, true ...and thanks now here, drink your kool aid and everything will be just fine...

Timely post that is spot on. The current Chief Economist is continuing in his predessor's efforts to put a positive spin on the numbers. Reasonalby well informed people just laugh at it. Their practice of spinning is an embarassment to our membership and it undermines the general credibility of NAR members.

Hi Matt, The NAR actively promoted Lareah's line under the guise of helping the membership. What they accomplished was to set the ( already dubious ) reputaion of agents back a long, long way ! NAR has lost its' focus and moral underpinnings. When does AR plan to announce its own flavor ? May I be a founding member ?

lol on the "drink your kool aid" comment!

Great post Matt. I love the connections you made!

I do agree that NAR puts a positive spin on info and so does CAR (California Assoc. of Realtors) and I also think that neither organization can speak to local markets. I happen to believe that each one of us needs to take the information (which if perused, is accurate) and interpret it for our clients. That is part of your job! That is what the public relys on you for. To lay the blame at the feet of a national organization is nothing more than a cop out. The media claims the sky is falling everyday where the real estate market is concerned. Do you really think that NAR should be doing the same thing? How would that help? As for NAR not doing anything for members -- what about combating the negative spin the media puts on the same info? How about spearheading the economic stimulus package and help driving down the mortgage rates? I could list more but I think you get what I'm driving at.

It's one thing to have to counter what the local media is saying, but it's even harder when I must do that for "my national organization". Remember when one of their ads said that home prices were increasing 20% per year? They later did a remake to add in a line that "all markets are local".

I wish they'd stop quoting national numbers, because they never match what's going on here and it freaks people out, actually causing buyers to hesitate when there's no need to do so. They're doing more harm than good for our business and our image.

As the old adage says, you can prove anything with statistics.

I also heard that 64.53% of all statistics are made up. ;-)

Ah ha!!! I knew it. I knew that no sentient person could believe the dribble that comes out of the NAR economic statements and prognostications.

Of course, Lawrence Yun walks around with his foot in his mouth trying to convince folks that real estate is still a good investment. You just have to hold it for 10 years.

The NAR is completely discredited as a spokesman for many.

Thanks Matt. I've been ranting and raving about Lawrence Yun's statements and the NAR public relations publications for ages.

Hi Matt

It's a sad state of affairs that NAR chief economist used such poor judgment. David Lereah role was to report and create and marekt report. Both David Lereach and NAR have let their membership down and have created a credibly gap between NAR the membership and the public.

Lou Ludwig

Brian: You did indeed nail it.

Matt: I saw this article too. I guess it shouldn't surprise anybody - nor should it now that Yun is still moderate for 2009 which I expect to be another storm.

Mat, It is very sad to actually read his statement but certainly not unexpected. I really don't have as much problem with his "positive spin" as I do the fact that NAR expected him to do it. Why not just be honest? That's all folks really want.

Matt............glad to have you aboard. the bandwagon has been rolling. i will not steal your thunder. i have written about these dimwits for some time on my blog. it pains me.............greatly..to be called a Realtor when I see who sets the standards and what they claim I represent.

Dang Matt, you blew the whole thing for me! And here I was so trusting of all the NAR information. Man, I'm so deflated. Where will I turn? Oh, my oh my. Rethinking my entire life now ...

I have been reluctant to use NAR data all along for that very reason. No one who can think for themselves would rely on NAR data. I always figured anyone that I cited NAR data to would just turn me off as a result. Too bad that we can't rely on the NAR to give us the straight story when we need it. Isn't that what a real trade association should do - be helpful to its members?

I'm with you all the way. We get blasted with their public relations "blogs" that are really jibberish...they send out their forecasts just to help give the organization credibility. They do have a lobby that can be influential and they have saved us money (as realtors) on specific legal disputes, however. Somehow we need to get NAR to lighten up on the opinion/statistics blogs.

Just another Political machine that has lost touch with it's members. Sad!!!

I think NAR needs to take a long hard look at their mission statement and retool the organization. Member oriented they are not. This revelation isn't much of a surprise... it would be nice to see them adopt a no-spin policy toward reporting housing stats.

Matt,

I'm not sure but I guess it would be better to have a stable market instead of way up and way down. It's very cyclical..similar to the stock market but a slower process. NAR just seems to create what they want us to see in their world.

My mother wouldn't call it spin. She calls it like it is...lies. And it does not help our profession to lie.

Maybe you can be a guest blogger on NAR Wisdom, Jay's blog! Good stuff...we'll not good but you know what I mean.

It made me crazy. The organization that was supposed to protect MY interests was undermining me every step of the way. And I don't think that they have it figured out quite yet, either, that they are turning all of us into laughing stocks.

Is Lawrence Yun any better? He said in the last copy of realtor.com magazine that things are improving, that housing sales are up in almost every market, yaddah, yaddah. He didn't mention that housing sales are up because of FORECLOSURES. How is that showing an improvement. People losing their houses at a greater rate than ever before is not positive for any housing market. NAR needs to stop the bullsh-- and speak the truth. I want to puke every time I hear a realtor say the worst is over and everything is a bed of roses. Yeah right, When foreclosures level off, then yippee.

I can assure you that there are no REALTORS in the outskirts of Baghdad.

Matt- NAR is like a union, never did like having to belong just because of the mls. I think they are going to have a rude awakening. I coach several agents who do not belong to NAR or their state or local boards and yet are still top producers in their communities, no one has ever asked them if they are a member of NAR before they list. It does not hurt their business one bit. Katerina

Maybe he was just trying to prop up sales of his book . . . "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".

Yeah, that's right, read that title again. How many copies would sell if he told the truth about the impending implosion? Of course, consumers are smarter than that, which is why out of 50 ratings on Amazon, 33 are 1-star ratings! Of course, the book did get a favorable review from David Berson . . . Chief Economist for Fannie Mae.

It truly is an embarassment to us as professionals that someone like that "speaks" for us.

Whats even more comical is how Realtors continue to do it everyday and get all pissed off when they see the media reporting the facts. How many times do you see article on AR blasting the media? It happens almost everyday. I don't get it...we have been going through one of the most difficult periods on record and Realtors want to tell everyone what a bed of roses it is. The mantra is "every market is different". Ya everyone might be a little worse than the next one at the moment.

TO everyone unhappy with NAR data: You have to use the nearest entity to your locale. I can't use NAR data. I can't use Texas Association of REALTORS(C) data. We have the North Texas Real Estate Information System (NTREIS) and the Collin County Asociation of REALTORS(C) whose data I can use or at least I can extract data from these to show clients how individual communities are doing. In addition to the community the client is in, it is also useful to be able to show data on sales in adjacent communities, in neighboring counties and across the region. I can actually improve a client's outlook when I show her that her community may be better off that most of the others in the area.

Seems ironic that we as members follow a strict code of ethics...what happened to the big guys of NAR? Aren't they under the same COE? All anyone ever wants is straightforward advice, answers and direction. Sad that we pay out so much money and have to keep fighting for our own integrity as Realtors®

Happy New Year MATT!

The data was accurate, it was the interpretation of that data that was questionable. We also have to remember that it is nearly impossible to apply national data to local markets. This underscores that real estate is local.

This sounds like a sad state of affairs for NAR.Hate to see this form a group that says "it represents us". Geeze.

Unfortunately Yun the new economist is the same way. He sees the bottom forming every month

Matt, NAR is just one more lobby group, just like the NRA and the Tobacco Institute and all the other guys out there trying to make their guys look good, or at least not evil. Christopher Buckley's book Thank You For Smoking is a great read and accurate picture of what these guys do for a living.

Oh my not baghdad Bob. It's always good to verify information

DEC

Hi Matt, This is going to get interesting. You're pretty much spot on as usual. They were trying to calm the public's fears by giving positive spin on the situation but you can't do that in this day of age. People will find out the truth. Whether it's on youtube or facebook. Everyone is talking, and they are talking the moment a news story goes public online. This was a really bad move by NAR and one that has really hurt their reputation of late. They should have just told the truth. A Stable market is better than a boom or bust. Great read as always. You never cease to amaze us. Thanks for all your awesome articles. It's easy to see how you got to a million points. (that was a little joke, really little, see there it goes). :) Keep up the good work and we can't wait to join your new sports network next year. All the best with that and if this network is any indication of your success there, then you will most likely make it big yet once again.

Sincerely, Active Castellum ( Castellum Realty llc - Lancaster PA Real Estate )

This just in......NAR spokesman fluffed housing numbers.........sun also rises in east.......film at 11.

Every time I read something from NAR on this topic, I would think, " who are they kidding?". Just the other day, I was bemoaning the fact that I pay money to an organization that distributes misinformation.

To say I am disgusted with NAR is to put it very lightly, they are as useless as the useless appendages on a boar hog. With the information that's easily available to anyone, what are we paying for, a cheesy magazine full of bad info, and RPAC to put forth the agenda of a few. I fervently hope that they will become increasingly irrelevant to everyone, as they are to me, except as an embarrassment. I think it might be nice to be just a REAL ESTATE AGENT, for a change. I think with technology becoming a the larger part of our business the day may not be to far away.

Bhagdad Bob was only a small part of the problem. NAR should have stood up against the zero down financing that was encouraged by the Clinton administration, but they didn't. Pointing a finger at one place rather than all the culprits is unfair.

Bottom line, we all need to take responsibility for our own actions. Until we do both as individuals and a country things will continue to swirl around avoiding the truth.

NAR is not helping the public's opinion of Realtors. I overheard someone say REALTORS are ranked below used car salesmen.

I'm sorry, not, but I have to take responsibilty for my actions everyday, if I don't I'm out of business. Unfortunatly, we can't say the same for NAR.

To refine your comment a little Kristal; NAR should have stood up against zero down financing to unqualified and marginally qualified buyers began by the Carter administration with the Community Re-Investment Act initially passed in 1977.

The Clinton administration just refined it and made it even less restrictive in terms of qualifying. Basically if you could fog up a mirror you could get a loan.

The NAR is counterproductive. They widen the gap between sellers' lofty expectations, and buyers' fear that R/E prices are a slowly-deflating ponzi scheme.

Col. Swindle

Seems to be yet another version of "I vas only folloving orders!"

The whole system is busted and it starts at the top: when the President of the US uses spin and false information to launch a four year, $3+ TRILLION boondogle war that has thusfar killed 4000+ American soldiers, can anyone really be SHOCKED at some NAR flack being dishonest?

Until member vote with their withholding of annual dues and patronage, nothing in NAR will change.

At NAR, just as in most trade organizations, facts don't count as much as protecting the status quo, which has a hapless lobbying organization collecting millions in dues from a membership it no longer efficiently serves while trying to exclude others from sharing in the revenues by fiat. When those in charge won't change, the market does it for them.

Matt,

Spin is becoming too much of a household word nowadays. In real estate, mortgages, economy etc. The result, people begin to doubt whatever they hear or see and that's not good.

DEC

And who could forget the multi-million dollar ad campaign by the NAR in November of 2006 where it's a great time to buy and sell real estate to go along with the positive spin??

"The Outlook is for Home Prices to Increase Next Year"

"Right Now May be One of The Best Times to Buy a Home"

"Most of the Negatives in Housing are Probably Behind Us"

No wonder more media outlets are using Zillow and/or Case-Shiller stats then the "Voice of Real Estate".

Unfortunately there is a whole new slate of Ad campaigns scheduled to start up soon.... And we pay for all of this.

JAN

The obvious question is:

Is NAR on AR? Do they read what we are saying?

They are going to have fewer paying members, even those still in the business if some things don't change!

I also loved Maureen post about the NAR float at the Rose Parade....a bit too close to "rose colored glasses" I'd say.

JUN

Karen - They will have fewer paying members because the economy won't support as many REALTORS. They will still get paid by all those who are required to be members in order to have MLS access.

Matt - I loved the analogy. I remember actually finding Baghdad Bob very comical. I really liked him sort of... Even in the midst of it all, he just kept doing his job. Now that things have been shaken up around us for the past few years, we all need to do the same thing... keep doing our job.

Of course, OUR JOB isn't to spread mis(dis)information. Our job is to keep our clients aware of what is really going on so they can make good decisions. I don't ever try and convince anyone directly that they should buy a home, sell a home, or make any other decision. My job is to help them see other sides they may not have considered.

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NAR's "Baghdad Bob" Confesses

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