Lereah: It’s going to get worse.

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.

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Sorry, above should read doesn't the number that move here matter.



I don't understand your argument. Does it really matter how many immigrants "prefer" to move to Vancouver? Shouldn't the number matter? Or like with all housing bulls, numbers don't matter?


Re the Edmonton article:

Adams: "I think that the number of people who can afford a single-family (house) at the price that we have to charge in Edmonton is greatly reduced because they're just getting expensive.

Sorry to break the news to you Mr. Adams, but Mr. Market doesn't care how much "you have to charge" for a house, whether you are developer or a reseller. You get what he feels like giving you.

If you would like some evidence for this theory, why not accompany some of your fellow Albertans on one of their property-shopping trips to Phoenix.

The other "experts" are just as clueless (or dishonest).


How the real estate went from boom to buyer’s market in a blink of an eye

Ha. It's not a buyer's market until the buyer is making a smarter decision than the seller, and that's not until prices stop falling.



Your figures are WRONG. Add up to only 100% employment. Everyone in Vancouver works at least 2 jobs. Only way to pay their mortgage, even at bankers or realtor salary. LOL





The Alberta Crash at it's early stages:


"How the real estate went from boom to buyer's market in a blink of an eye

The experts explain city house prices"

Did CMHC forecast this for Alberta?

Naturally this can't happen in BC, we have natural resource.


i didn’t say more immigrants come here than ontario, only that this would be the preferred destination for most of them.

Immigrants can live anywhere they want, so the preferred destination is where the most immigrants go. Just like the preferred tourist destination for Canadians is where the most of them go, the preferred beer is the one that sells the most, etc.

Or do you mean perhaps that they would have preferred to come to Vancouver but they went to Toronto because they can afford to buy a house there but not here. Well that's really bullish for Vancouver RE isn't it.


Ok patriotz, it’s all going to zero.

"All" going to zero? All what?

Anyway the BoC rate, whatever it is, is not relevant to RE markets. Retail mortgage rates – which are determined by the bond markets and retail overhead and risk premium – are, and they're not coming down, unless we get into a severe recession, in which case the RE market will be way past the point of saving no matter how low rates go.

There was a huge drop in mortgage rates from 82 to 84 and we all know how much good that did for the market.


-A-, you make some very good points. I would like to add that employers in Vancouver are very generous and like to give big raises every year. Everyone gets at least a ten percent raise every year, so house prices can keep going up up up because our incomes are growing as fast as house prices.


Coco's new blog started up

Things you may want to know


First topic posted is on real estate.


do do:

there will be enough immigrants coming here to sustain a significant demand for real estate (rental or owned). your implied theory of massive deflationary implosion is unlikely; you do care about theories, otherwise you wouldn't have responded to my post in the first place. i didn't say more immigrants come here than ontario, only that this would be the preferred destination for most of them.


Ok patriotz, it's all going to zero. Sorry, you had to pay 20% in the 80's, but the spineless BOC does quarter percantage hikes nowadays, so it will take Carney another .25 times 64 meetings to get back there. See you in 5.3 years……..



I don't really care about Theories. You had said that Vancouver was the first choice for immigrants, but Ontario gets almost 3X as many every year. You then re-iterated that "toronto was surpassed as the first choice of immigrants about twenty years ago", which by all the data I can find is just plain not true.

Are you wrong, or am I????????


here's some math for you.

Even if all new housing is rental only and no buys to live in it.

Rentalsupply2008 – Rentersdemand2008 = vancancy2008

[Rental suppy2010 = Rentalsupply2008 + (x/2)]

[Rentersdemand2010 = Rentersdemand2008 2002+ x/2]

Renterdemand2010 – Rentersdemand2010 – Vancancy2010

Vancancy2008 > Vancancy2010

With Vancancy already at a low and going to get worse, how will rents not go up??


do do:

immigration is one thing i am quite certain on, a lot are going to come. this old man is off to bed now so i won't expand on my immigration theories. have a good night.


you can get a 500K mortgage and only have to pay 20K in interest a year! Rent for that type of property is not that far off,

"Not that far off"? You're the one who's far off – like on another planet.


It's all about rates, as usual, people. Rates are way too low so we are now seeing a saver's revolt in commodities. I would not be surprised to see oil hit 130 soon. Rice, wheat, everything is going up so why would I leave my money in an account paying 3%? Vancouver real estate is absurdly priced if you look at long term trends, but you can get a 500K mortgage and only have to pay 20K in interest a year! Rent for that type of property is not that far off, so I think we have to wait till the labour market detiorates. It could start tomorrow, but be objective, talk that van real estate is going to drop 30% overnight is a little optimistic from the renter's side, especially since the BOC has hinted two more rate cuts… Read more »



I will give you Miami being more elastic than Vancouver, but I don't believe Vancouver has this inexhaustible demand, especially at these prices (or even 70% of these prices).

I do not believe we have lots of demand waiting based on the already historically high ownership rate. How can this be??? The only way we could increase that was by borrowing from the future. Is the future ever going to arrive?

You haven't addressed the immigration point yet!!



you need to stay on the sidelines until you pass math 11. you're not ready to be a 4th liner on the home team.


So if these new people can’t afford to buy they will need to rent, thus rents2010 much greater rents2008

If they can't afford to buy the new construction will be purchased by landlords and rented out. It has to be one or the other.

Increased rental supply, no increase in rents.

As long as new construction equals or exceeds rate of household growth real rents cannot go up. No matter who is buying or not buying.


do do:

no, i'm a bit older than the typical kits renter demographic. i wouldn't describe it as pent up demand, but there are a lot of potential buyers out there. it reminds me of 2000 ish when it was a frenzy trying to find a decent rental apartment and the rental pool swelled. some will decide to rent long term, some are close to entering the market, some need their incomes or prices to adjust to varying degrees to enter the market. hard to say to what degree speculators will influence the market from here. you are obviously more bearish than me, no point arguing (ever) on real estate predictions. i do my homework on any investment grouping, you can trust me the vancouver real estate market is less elastic than miami's.



"I anticipate demand will stay quite constant."

Okay, supply stays steady then. So with rising supply… what does that mean, you think? I think I hear Langara calling…

And how is it you know what those "oodles of young couples" in Kits are up to, anyway? I'm in Kits and I have no idea what they're up to.


Canada has very little land and a huge population, therefore the scarcity of land is very real, it’s not as if with a stroke of a pen we can rezone and make more land available for new construction, this is why, although demand is high, there is not one crane in sight. Vancouver is the most desirable place on earth; its near tropical weather, and thousands of miles of palm tree lined beaches makes it the number 1 destination choice for PhD’s from all over the world who want to establish a career with any of the thousands of head offices in Vancouver. Vancouver’s stock exchange is currently in negotiations with the NYSE, FTSE, and NIKKIE to merge, and it is rumored the new Vancouver World Stock Exchange will be located on Alma & 4th. Currently the composition of the… Read more »


hmm… post does not equal what I posted.


supply < demand

So if these new people can't afford to buy they will need to rent, thus rents2010 much greater rents2008


Stagnate, There has been record numbers of FTB entering the market the last few years and the homeownership percentage is at record levels. I am not sure you can argue for all this pent up demand. I think maybe you are forgetting about the speculators? Also, these couples waiting on the sidelines; they are waiting for a 2% price drop? The market will need to get slaughtered to bring these people into the market. Affordability is indeed an issue, but if we have a record number of homeowners, and there are all these people waiting; who has bought all the houses? Maybe you notice these young couples renting because they are your age group? You are categorically wrong on the Immigration issue. http://www.cic.gc.ca/english/resources/statistics… You still have not given a good reason Vancouver is less elastic than Miami? You really think… Read more »