Thursday, September 07, 2006

NAR's Forecast - Going Down, Down, Down in a Burning Ring of Fire

Our good friends at the NAR (National Association of Realtors) have just released their latest forecast for 2006.

Although they keep talking of the market "leveling off" and "returning to normal", let's take a look at their forecasts from the past 12 months, starting in October of last year. These are verbatim from their press releases:

October 28th, 2005
Existing-home sales are projected to decline 3.5 percent in 2006 to 6.86 million. New-home sales, seen to grow by 8.0 percent to 1.30 million in 2005, are expected to fall 4.5 percent to 1.24 million next year. The figures for 2006 would be the second highest year for each sector.

December 12th, 2005
Existing-home sales are likely to decline 3.7 percent in 2006 to 6.84 million. New-home sales, projected to increase 7.0 percent to 1.29 million this year, are forecast to drop 4.8 percent to 1.23 million in 2006 - also the second best on record.

January 10th, 2006
Existing-home sales are forecast to ease by 4.4 percent to 6.79 million this year, which would be the second highest on record. New-home sales, which should be a record 1.29 million for 2005, are expected to decline 6.0 percent to 1.21 million in 2006 - that also would be the second best year in history.

Editor's note: SUDDENLY in February, the NAR figures 2006 will not be the 2nd best year, but merely the THIRD best year, ever.....

February 7th, 2006
Existing-home sales are likely to decline 4.7 percent to 6.74 million this year, down from a record 7.07 million units in 2005, while new-home sales are expected to fall 8.5 percent to 1.17 million from a record 1.28 million in 2005; both sectors would see their third best year after the totals for 2005 and 2004. Housing starts are seen at 1.87 million units in 2006, down 9.3 percent from 2.06 million last year.

March 13, 2006
Existing-home sales are expected to fall 5.7 percent to 6.67 million in 2006 from
the record 7.08 million last year. At the same time, new-home sales are forecast to decline 7.7 percent to 1.18 million from a record 1.28 million in 2005 - each sector would be at the third highest year following the tallies for 2005 and 2004. Housing starts are likely to total 1.98 million this year, down 4.3 percent from 2.06 million in 2005.

April 11th, 2006
Existing-home sales are projected to drop 6.0 percent to 6.65 million this year from a record 7.08 million in 2005. New-home sales are likely fall 10.9 percent to 1.14 million from the record 1.28 million last year - both sectors would see the third best year following 2005 and 2004. Housing starts are forecast at 2.00 million in 2006, which is 3.2 percent below the 2.07 million in total starts last year.

May 9th, 2006
Existing-home sales are likely to fall 6.4 percent to 6.62 million in 2006 from a record 7.08 million last year. New-home sales are projected to drop 11.6 percent to 1.13 million from last year’s record of 1.28 million. Housing starts should decline 3.7 percent to 1.99 million this year compared with 2.07 million in 2005.

July 11th, 2006
Existing-home sales are expected to decline 6.7 percent to 6.60 million in 2006 from 7.08 million last year. That would still be the third highest level on record. New-home sales should fall 12.8 percent this year to 1.12 million from 1.28 million in 2005. Housing starts are forecast to decline 6.8 percent to 1.93 million this year from 2.07 million in 2005.

August 9, 2006
Existing-home sales are forecast to fall 6.5 percent to 6.61 million this year, the third highest on record after 2005 and 2004. New-home sales are projected to drop 12.8 percent in 2006 to 1.12 million, also the third best on record. Housing starts should be down 9.1 percent to 1.88 million this year.

Editor's note: UH-OH!!! In the space of a year, the NAR's forecast for New Home sales in 2006 has gone from 2nd best year to...fourth???.....something tells me existing homes will also drop to #4 (or lower) by the end of the year.

Sept 7, 2006
Existing-home sales are forecast to fall 7.6 percent to 6.54 million in 2006, the third best year after consecutive records in 2004 and 2005. New-home sales should to drop 16.1 percent this year to 1.08 million, the fourth highest on record. Housing starts are projected to decline 9.6 percent to 1.87 million in 2006.

So, after reading their forecasts, what do you think is going to happen in 2007?

And really, take my word for it: if you don't ABSOLUTELY have to buy a house in the next 2-3 years, don't do it. The values are dropping, and they're going to continue to drop. Stay where you are, or rent. You'll save yourself (and your family) 10's of thousands of dollars.


zippo said...

Oh, that's so nice. Do I see a downward trend, or do my eye's deceive me?

These guys need to be burned at the stake for "crimes against humanity"!

Anonymous said...

What's so sad is that these liars and theives are the #1 resource for the media to report on the state of housing. They cook the numbers and there is absolutely NO oversight, by any government agency whatsoever.

Caveat Emptor!

slow and low said...

What? You're implying that sales are even worse than the NAR is reporting? No way! Hey, they said that 2006 would be the second-best...OOPS!...I mean third-best year, ever. With those kind of numbers, I better get out and buy right now. Else, I might be....


Anonymous said...


That's some funny $hit, slow....

Anonymous said...

I can think of of a few resources that might be perhaps, less honest:

- Used Car Dealer Association
- American Telemarketer Association
- Collection Agents of America

Well...I guess I can't think of any more...sorry, we've reached the very bottom of the "honesty barrel".

Anonymous said...

Brilliant post. Please continue this on a monthly basis.

David said...


I am featuring it in my weekly BubbleSphere Roundup.

Bubble Meter Blog

Anonymous said...

First, I like this Blog!!

I became a Realtor after having BAD advice from so called "Pros" in the field of Real Estate (as a buyer and as a Seller), I also let my license go when I moved to Florida earlier this year (where we refuse to buy a home) because what has been happening here over the past few years is bordering “Criminal” and above all “Un-Ethical"… All my fellow agents and I were preached to regularly that Ethics are something agents are supposed to Strictly Adhere to! WHAT Happened?!

Examples of price gouging can easily be seen in places like Ocala, Summerville and Umatilla FL… How greedy do you have to be in order to list any 1000 sq ft 3 bd/ 1bth/0 car home that purchased for under $40K less than 6 years ago for over $120K today (with NO improvements or updating, other than adding a shed), My Favorite home is one that the roof is falling in on, located in Umatilla listed at over $134K that backs up to a reform school (all girls juvenile detention center, NOT noted anyplace in the listing nor mentioned by the agent in phone conversations)… Or a “Cracker House” that is in very POOR shape for only $89,900! What a Bargain!

Buyers, always ALWAYS check the county Tax records on property that you might consider purchasing! A home that has had normal up-keep and improvements should appreciate at roughly the same level as your wages do each year. I do not know anyone who has had an increase in pay of over 150% in the past couple of years to keep up with the over valued pricing going on in FL. Many Teachers, Police and other important professionals can not afford to buy or have bought using a goofy loan and will probably end up losing their home to Foreclosure. Now consider your taxes and insurance to cover the exaggerated amount! O-Boy!!!

Well, Back to GA for my family!!! We will still have fabulous weather, money to spend on our children, lower taxes, cheaper insurance (home & auto) and cash for Family Fun… Like bi-annual vacations in Florida.

FL - Paradise Lost said...

Great post, Anon. Yes, always, always, always look up the tax records on any house that you may be interested. It is truly amazing what people have their houses listed for, in comparison to what they paid. It's as if they "earned" the money by just having bought before the bubble started (or even during the bubble).

Example of a house here in Tampa that I've tracked: home bought new for $324K in 2005, now listed (after several reductions) for $489K. Home has been sitting empty for 4 months now (owners moved to east coast of FL), and they just don't seem to have a clue.

Best of luck in Georgia!

(I am partial to North Carolina myself)

Anonymous said...

So, what you're basically saying is this: this is a BUYER's market! Catch a falling knife while you can! Loose money the old fashion way - buy high and sell low!

Dragasoni said...

Hey, I stumbled across your blog this afternoon doing some bubble blog surfing. I live in the Tampa Bay area myself, and had been employed at a Real Estate company for nearly 3 years. I was laid of in March of this year because of how bad the market had become (I’m NOT a realtor, I was a staff employee). I keep in touch with some of my old co-workers, and I hear stories nearly every week about how it just keeps getting worse for them.

I can tell you first hand to ALWAYS check the tax records and ignore the MLS system. The MLS system is controlled by realtors, not the government. If I house doesn’t sell, they’ll remove and re-list it in order to make it seem like a new listing; it’s not. The actual sale prices are MAUALLY entered by the selling agent, and are often exaggerated. Again, check the tax records for your county.

My prediction is that the Tampa Bay area will see at least a 40% decline in prices by 2008, if not 60% in some areas. Sorry, but a condo that went for $40,000 in 2002 is NOT worth $170,000 today, period. Seeing as how most salaries in this area stayed the same during that same time period, or may have actually FALLEN as mine did, how can they justify such irrational increases in value?

Anyway, it was a pleasure to find you and your blog. Be cool and rent for now like I am! Feel free to email me at


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Ali, in Cali said...

I think the most alarming thing of all is that while all sets of NAR numbers continued to go down, down, down over the last 11 months, in each press release the projected new home starts figure was ALWAYS higher than the projected new home sales figure. Looks like 2007 is shaping up to be another bumpy ride...

FL - Paradise Lost said...

Great story. What I find interesting from your tale is that things were dying way back in MARCH. Again, no press release from our friends at the realtor organizations made any comments in regards to this. What a surprise!

I like your forecast - 40% drop. Although, with taxes and insurance (with a little inflation along the way), that still may make a house payment the same in 2005 $. 8^(

Ali, that is right on. The comparison numbers (previous year, quarter, month) always seem to magically change, in order to better mask an outright drop in prices. How lame.

Mikey said...

God, your killin' me!!!!

What a lynin' bunch of number benders the NAR are, particularly
Big Dave.

A couple of other hints from a Realtor and property investor.

Do you want to keep the average "time on the market down"? Every three months take you listings off and relist them for $100 less. The listing clock starts anew.

Also, you don't want the stats to reflect alot of price reductions? Again take the listing off and relist it with the new price instead on reducing the original listings.

Also, a house that sold in Augsut only CLOSED on August. It actually was sold several months earlier. So if prices are declining, August sales will reflect an earlier higher price.

Just a few "Realtor" tricks.

You can make money at real esate in the bad times and the bad times are a'comin.

The NAR is so transpartly self serving and hypocritical it makes me puke.

Keep on blastin' em!! I love it!!

Mikey said...

I couldn't resist another swipe at the NAR/Real Estate Bubble.

I got this email from a hapless South Florida Realtor:


Do you have anyone looking for lots in Marion Oaks?

Below are some lots that are priced to sell and include 4% commission to the selling office.

These prices can not be reducd any more. Please see what you can do and thank you for keeping us in mind.

Thanks for your help.

.23 acres

.23 acres

.24 acres

.27 acres

Marion Oaks is in Marion County / Ocala, Florida and these lots were selling for 1,500 to 2,5000 36 months ago. I will keep this guy
anonymous because he is a good guy
and i don't want ot embarass him.

Marion County is in the Boonies. Some schmuck wrote an article in the Wall Street Journal the Marion County Florida was an overlooked, eundervalued real estate pot of gold and this and many other such examples were the result. I believe there are 14,000 platted lots in Marion Oaks with approx 4500 house built. I could be wrong but to be sure there ain't no shortage of lots and at the presant growth rate of the county, approx 11,000 individuals per year, with all the land available mostof us will be dead before a lot in the Big MO is worth 40Grand.

This is the craziest I have ever seen the Real Estate Market. I am 55 and have been buying houses since I was 19.

Big Dave and the NAR Number Bending Team (sounds like a good name for a rock group) just make it worse.

Oh yea, the previous comment on ethics was right on the money. The NAR requires ethics classes to remain a member. Apparantly Big Dave missed his.

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