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If there is one economist on a long list that I particularly abhor it’s David Lereah of the National Association of Realtors. This shill insists on trying to pull the wool over people’s eyes about the reality of the housing situation–even getting the NAR to run ridiculous full-page ads pleading to convince people that it’s a fantastic time to buy a house. In fact it continues to be a horrendous time to buy property (unless you plan on staying there at least a decade) given the gross over-valuations, huge overhangs of inventory, and more property waiting to come onto the market from millions of over-extended users of exotic loans that are now facing foreclosure. The realtors don’t care about that though, they are getting desperate and they need people to buy houses so they can keep getting paid.

CBS MarketWatch does a great job calling out the NAR and Lereah in particular, exposing him for the cheap huckster/cheerleader that he is. He unfortunately gives economists everywhere a really bad name, by selling out his predictions for the sake of his bottom line rather than actually telling the truth. Article follows:
Realtors’ economist stayed sunny all year

Commentary: David Lereah saw bottom in first quarter, second quarter …
By Rex Nutting, MarketWatch
Last Update: 5:31 PM ET Jan 25, 2007

WASHINGTON (MarketWatch) — There are two universal truths at the National Association of Realtors: 1) It’s always a good time to buy or sell a home; and 2) We’ve seen the worst of the housing market correction. The second truth was in the script used throughout 2006 by David Lereah, chief economist for the NAR, even as sales plunged by 8.4%, the fastest decline in 17 years.

With annual sales of 6.48 million, 2006 was the third best ever, but after five years of steady increases, it was a rough year for the industry. Through it all, Lereah never stopped smiling.

At the beginning of 2006, Lereah was projecting home sales would fall about 4.4% to 6.79 million. In the end, however, the decline was about double what he’d projected. For 2007, Lereah is currently projecting a decline of about 0.9% to 6.42 million.

Here’s what Lereah was saying throughout 2006 and into 2007, and what the market was doing.

January 2006
Lereah’s forecast: “The market is in the process of normalization.”
Actual sales: Fourth-quarter sales fell at an annual rate of 12.6% to 6.94 million annualized.
Lereah’s post-mortem: “The level of home sales activity is now at a sustainable level, and is likely to pick up a bit in the months ahead.”

April 2006
Lereah’s forecast: “Home sales will move up and down somewhat over the remainder of the year but stay at a high plateau.”
Actual sales: First-quarter sales fell at an annual rate of 8.6% to 6.79 million.
Lereah’s post-mortem: “This is additional evidence that we’re experiencing a soft landing.”

July 2006
Lereah’s forecast: “The market should even out just below present levels.”
Actual sales: Second-quarter sales fell at an annual rate of 6% to 6.69 million.
Lereah’s post-mortem: “The market is stabilizing.”

October 2006
Lereah’s forecast: “We expect sales activity to pick up early next year.”
Actual sales: Third-quarter sales fell at an annual rate of 22.2% to 6.28 million.
Lereah’s post-mortem: “This is likely the trough in sales.”

January 2007
Lereah’s forecast: “The good news is that the steady improvement in sales will support price appreciation moving forward.”
Actual sales: Fourth-quarter sales fell at an annual rate of 2.3% to 6.24 million.
Lereah’s post-mortem: “It appears we have established a bottom.”

Conclusion

It’s unfair, of course, to single out Lereah’s forecasts. He wasn’t the only economist who was surprised by the extent of the collapse in housing in 2006; some were just as wrong on the other side by predicting the housing bust would bring down the whole economy.

But Lereah was the only one who presented his opinions alongside an economic indicator that’s treated as an objective gauge of the housing market. Along with his bully pulpit comes extra scrutiny.

Lereah was traveling on Thursday and unavailable to comment. The senior economist at the NAR, Lawrence Yun, said in an interview the most recent sales trends show almost no movement up or down since August or September.

“In hindsight, we did not anticipate how strong the demand from speculators had been,” Yun said of their 2006 forecast. “Now, with the speculators out of the market, and with low mortgage rates and steady job growth, we anticipate an improvement in sales.”

It’s possible that Lereah may be right, finally. The bottom must come some time, why not now, some 19 months after the bubble peaked?

But it’s also possible we could be far from the bottom, as in the housing bust of 1978-1982, when it took 42 months for the market to recover.

If so, it could be a long year for David Lereah.

A profoundly sad but accurate editorial from the Providence Journal:

It slowly dawns on Americans that their lives are changing. For more and more of us, “the American Dream,” which we assumed as our birthright — founded on infinite plenty, a bottomless cup of creature comforts, and fair rewards for hard work — is fading.

The material components of the Dream were steady jobs, inexpensive mortgages and other credit, cheap gasoline, secure pensions, and flag-waving confidence in imperial America — an invulnerable power, which could do no wrong. But the deadly albatross of Iraq, gasoline at over $3 a gallon, weak growth in jobs and pay, by companies that won’t share productivity gains with workers, and export their work to Asia, have produced the sharpest drop in consumer confidence since the recession of the early 1980s.

The Dream — powerful, pervasive, energizing, defining — has been the holy writ of the middle class. But today, ask the 20,000 union workers about the American Dream at bankrupt Delphi who face permanent layoffs, while thousands of others confront the prospect of pay cut in half. Or ask the thousands more union and salaried workers with jobs at risk at General Motors and Ford — once the world’s auto-and-truck leaders, now with 40 percent of their home market taken by Toyota and Honda. Or ask the retired guys who’ve been told by the company they served for decades that they’re being stripped of their “assured” pensions and health benefits.

Those young home owners lured by cash-free adjustable-rate mortgages to buy homes beyond their means confront rising interest rates, corrosive debt, and possible foreclosure. With the real-estate market sagging, their home equity shrinks.

Adding insult to injury, the redistribution of our dwindling wealth under Bush widens the gap between the “wealth aristocracy” and the rest of us.

The American consumer economy is operating on two tiers. On top are the relative handful of CEOs and investment people, immune from assault. The Republicans’ gratuitous tax cuts on investment income have significantly lowered the tax burden on the richest Americans — earning more than $10 million — by an average of about $500,000. Mr. Bush continues to press Congress to make permanent cuts for the privileged while the national deficit goes through the roof.

The rest of us are in a squeeze as inflation is driven by energy costs, medical care, and prescription drugs. Home-foreclosure rates are growing; they jumped an average 13 percent a month nationally at the end of 2005, with highs of 30 percent in Massachusetts, 61 percent in Texas, 70 percent in Arkansas, 145 percent in New Mexico, and 210 percent in West Virginia.

As for America’s standing in the world, the fog of the endless Iraq war has cost us friends that it took two world wars to win. Americans who felt pride in our triumphs see the leverage and reputation of this nation squandered.

We are reduced from a beacon of hope to a saber-rattling thug. The Bush foreign policy is nonexistent. The radical right exploits the formless “war on terror” — which can’t be won — to retain power by keeping us afraid.

Our ebbing strength inspires reckless challenges from rogue national leaders. In the power vacuum, Iran and Syria unleash their puppets in Lebanon. Kim Jong Il, of nuclear North Korea, blithely ignores Washington and launches his rockets. Iran’s Mahmoud Ahmedinejad cold-shoulders blustering Washington and continues to enrich uranium. He and Venezuela’s Hugo Chavez make threats against our petroleum supplies.

Competition by Asian industrial powers for shrinking oil reserves further threatens the assumed right of this NASCAR nation to cruise free and easy.

Then there is climate change, which Bush and the carbon-based energy giants want us to shrug off.

All this converges in a “perfect storm.”

We high-consumption Americans, who haven’t been asked to sacrifice much of anything since World War II, are unused to belt-tightening and uncertainty. The ultimate question — mostly unaddressed by politicians, pundits, sociologists, and psychologists — is how will we behave when it dawns on us that the glory of the American Dream hath departed? Will we conduct a search for strong, visionary leaders within the democratic process who will refashion the Dream in line with reduced expectations?

When dreams fall apart, humans often respond with rage, hysteria, hopelessness, and fear. How many more will find false comfort in the preachments of dangerous demagogues, who offer certitude by finding scapegoats? How many will seek solace in radical religious frenzy, pronouncing wrathful judgment on America while rooting out “the godless”?

Will the great ideas that have animated America vanish with the retreat of the good life that came to define the American Dream? With what shall we replace them?

Jerry Landay, a retired CBS News correspondent living in Bristol, writes on current issues.