There are few people with less credibility than the National Association of Realtor’s Chief Economist, Lawrence Yun. (Or, anyone at NAR, for that matter.) Too many times, he, and before him, David Lereah, have been cheerleaders, even when faced with data that seemingly flew in the face of what they were saying (sorry, writing not so good, right now).

I’m not telling you anything you don’t already know, I’m sure.

Having said that, I am impressed with two columns he has written, over the past couple of days.

In one, he lays out the history of the real estate market, from the turn of the century (this one) up until today.

(While reading this, I got the feeling that maybe he was just figuring this out for the first time, like by writing it all down on a restaurant napkin, last night …)

He spreads the blame for some of the “market’s” excesses. Rightfully so?

Source: Refueling the Housing Bubble? – By Lawrence Yun, National Association of Realtors’ Chief Economist

Moody’s, Standard & Poor’s, and other ratings agency raked in revenue by giving out top Triple-A ratings (an inherent conflict of interest exists when ratings agencies get their revenue from mortgage underwriters/securitizers… rather like a professor who gives out a lot of “A” grades will draw more tuition paying students to his class).

… I believe there is plenty of blame to go around due to other factors. Global capital providers misunderstood and were simply not careful about purchasing securities composed on little income documentation and of risky-borrowers. Mortgage originators just originated loans to anyone including to suspicious borrowers because they had no skin in the game …

And, again:

But the biggest blame in my view goes to Moody’s and Standard & Poor’s — the rating agencies. If they had properly assessed the risk as is their job, then global capital would have never reached subprime homebuyers and flippers. The housing boom would have stopped dead in its tracks. We do not yet know how much of the ratings firms’ assessment were clouded by their financial interest in giving out easy Triple-A grades. Many workers at Moody’s and Standard & Poor’s took home hefty bonus checks when revenue skyrocketed from providing high ratings.


Most shocking, is this paragraph:

It is also fine for people to point the finger at me.

Wait, what?

It is also fine for people to point the finger at me.

Yeah, you got that right!

In a fast changing market conditions, I too have been off on my forecast. I knew that the boom was clearly unsustainable and I made the forecast in early 2007 that home prices were likely to experience a price decline on a national level for the first time since the Great Depression. The national median home price indeed fell by 1.4%. I believe I downgraded my forecast for ten or so straight months in 2007 as it was strongly pointed out to me.


That’s a sure way to gather sympathy.

Suddenly, I feel like giving the guy a break.

This time, at least.

(** Yes, I changed the name of the post …)

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