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May 17, 2005

Realtors' economist on "indicators of a market headed for a bust"

David_lereah_nar The Wall Street Journal hosts a forum on the real estate bubble which is worth visiting.  An excerpt from a recent post, which includes comments from a presentation last Thursday by the National Association of Realtors' chief economist, is shown below.  His presentation, which I've heard in person over the past four years, was considerably different in tone and substance as the quote below attests.  We'll continue to use this blog to track the factors he suggests are "indicators of a market headed for a bust" and invite your comments.  It will be interesting to hear what local economist Karl Case, partner of Robert Shiller famed author of Irrational Exuberance, says tomorrow morning on WBUR's Morning Edition.  If you are in Boston, be sure to tune into NPR at 90.9fm.  We'll link the story as soon as the audio clip is available online.

Bubble News - Reply

This is a great news from the head of the real-estate bubble, David Lereah... seems his tune has changed bit. Local Housing Bubbles Could Burst in Next Couple of Years.

"Lereah, during a presentation Thursday at the National Association of Realtors' midyear meetings, said he expects that some hyper-extended local real estate markets will sour within the next couple of years.

'Loose lending and speculative buying – that, in my opinion, is the greatest risk that our industry faces right now,' Lereah said.

Most local 'balloons' in home prices 'will deflate rather than pop,' though 'several local markets will pop over the next couple of years,' he said.

Among the indicators of a market headed for a bust: home sales falling, price growth below historical average, more than a 6.5-month supply of housing, properties taking longer to sell, job loss in the area, rising mortgage rates, negative net migration, and rising loan-to-value ratios.

04:20 PM in Protecting yourself | Permalink


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