Looks like a couple of years can really change a guy. According to this article in Newsweek David Lereah, the former chief forecaster for the National Association of Realtors now says the US housing market is nowhere near the bottom. This is the same guy that published a book in 2005 (awkwardly close to the peak of the US market) titled “Why the Real Estate Boom Will Not Bust – And How You Can Profit From It“. Around the same time he gave a housing presentation where he called anyone who thought homes were overvalued and in danger of correcting ‘Chicken Littles‘. Lereah gathered quite a bit of notoriety online for his steady flow of rosy forecasts as the housing market crumbled around him.
It’s been more than a year since Lereah left NAR, so I called this week to check in. It turns out he has recently set up a new firm called Reecon Advisors, which is advising Wall street firms and institutional investors about the real estate market. “Wall Street has an intense interest in [this], because they’re looking for when is the recovery going to come, and at what point does the cycle turn,” Lereah told me.
His answer: not yet. “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. According to the latest numbers from the Case-Shiller index, the average U.S. home has lost around 15 percent of its value since the market’s peak. “We’re probably going to end up with a 20 percent [decline], but if I’m wrong it will be even more than that,” he says.