Q&A with Lawrence Yun of NAr

Lawrence Yun of NAr is a paid industry shill who offers optimistic forecasts and spins housing market data for the National Association of realtors.

Can the credibility of the National Association of realtors fall to less than zero? Lawrence Yun, chief economist for the NAr, is following in the footsteps of the thoroughly discredited David Lareah, working diligently to reduce the already low credibility of the NAr to less than zero by continually spinning market data and offering optimistic housing market forecasts that frequently prove completely incorrect.Lawrence_Yun_bullshit

He was recently interviewed by the San Jose Mercury News about the potential for a housing bubble in the Bay Area. Today’s post embellishes that original interview by asking and answering the questions the really needed to be asked but weren’t.

Q&A: Lawrence Yun, voice of residential real estate, doesn’t see a bubble

By Pete Carey, Posted: 05/31/2014 07:42:22 AM PDT

Lawrence Yun in many ways is the voice of residential real estate. As the National Association of Realtors’ chief economist and forecaster, his predictions are followed, analyzed, praised and criticized by real estate professionals across the U.S., and noted in Congress when legislation involving residential real estate is being considered. When he speaks, he usually draws a crowd. …

Street performers at Venice Beach draw crowds too. I would go listen to Lawrence Yun speak, not because I thought he had anything insightful to say, but because I would like to witness a polished bullshit artist at work.Lawrence_Yun_liar

Q: Did you see the crash coming?A: Everything looks clear in hindsight, but during that time one had to ask the question: Is this sustainable? It was during a time when lending was opening up to a point at which there were no underwriting standards. It clearly was abnormal.

When anyone who was the slightest bit rational asked those questions, they concluded it was not sustainable. Hundreds of ordinary citizens blogged about these excesses at length, but they were loudly criticized by idiots like David Lareah, the former chief economist of the NAr as “alarmists” or “doom and gloomers.” It was even widely suggested the people who accurately pointed out that the Ponzi scheme was not sustainable were accused of being jealous over the good fortune of the fools who participated in the mania.

It was hard to say whether it would crash or taper off without price declines, but it was clearly a misalignment of all the fundamentals. During the height of the bubble, the NAR put out a brochure on subprime mortgages for Realtors to use with consumers. It said, here’s what “teaser rate” means, and here are the potential risks involved.

He is trying to diminish the NAr’s culpability by claiming they put out some literature extolling the risks of toxic lending. The real attitude of the NAr is apparent from their marketing literature. The piece below is from 2006.


Q: In the Bay Area, prices are skyrocketing again, and some fear there’s a new bubble forming.

A: It’s a little different this time, compared to 2005.

It’s different this time? LOL! I can’t believe he actually said that!


Underwriting standards are much tighter. People who get mortgages are meeting very strict standards.

That much is true. If anything provides stability to the market, it’s the solid underwriting since the bust.

Second, there are large cash transactions. People are cashing in stock options and Asian buyers are coming in with all cash.

First, the Asian buying meme is a myth, and second, what happens when China’s housing bubble bursts and those buyers become desperate sellers?realtor_clown

Any time there are cash transactions and higher down payments, the risk of potential decline is reduced. That is even though the price increase is fairly rapid and clearly not sustainable.

Q: What happens then?

A: The question becomes: Is it going to reverse and decline, or flat-line and taper off? I would say that first, prices are not setting new highs yet. The market is still in recovery mode. Together with tighter lending standards and crash transactions, that means there’s less risk. A decline in the tech economy would be the primary reason for a crash. I’ll add that any economic data that’s seeing a strong upper movement could have a temporary push downward before going up again. Prices in the San Francisco Bay Area might have a little volatility, but I don’t see a sustained decline.

There you have it, Bay Area buyers. Lawrence Yun of the NAr says you have nothing to worry about. Do you feel secure now?

Q: There’s also the emergence of the Asian buyer as a force in the market.

A: China’s economic growth is relatively speaking still solid, and it is creating millionaires right and left who want to divest out of China. I think there will be a continuing increase of overseas Chinese buyers in the Bay Area.

shady_realtorI think he is completely wrong. China’s economy is built on their real estate Ponzi scheme, and with the housing bust bursting in China, any influx of Chinese cash will likely taper off. In fact, I will go as far as to say that Lawrence Yun’s prediction of continued influx of Chinese capital marks the peak of these inflows. This will be another example where he gets it totally wrong.

Q: A major complaint here is the lack of inventory. Do you have any thoughts on that?

A: The main way to get genuine fresh inventory is for builders to build more homes.

No, the main way to get inventory to the market is to stop the banks from can-kicking with loan modifications and force them to write down their bad debts and foreclose on the people who can’t afford their houses.

Another way might be for people to decide to move out of the Bay Area, but that’s not likely to happen because of the area’s strong job growth. And building regulations in the Bay Area are stricter, broadly speaking, than in the rest of country. The only real building that can occur is in the outlying regions. That means steadily worsening commutes, unless more high rises are built.

Q: Those high rises are pricey. What’s left for the middle-income buyer?

A: People who own a home are smiling about their equity, and other people just feel shut out. Even people on six-figure incomes have sticker shock when they see home prices. It’s leading to social tensions. Many people in the middle, who have moderate incomes, view owning a home as part of the American dream, but they are denied that dream. They are also denied that ladder of advancement, where you own a home, build equity and trade up. There needs to be more supply to moderate or taper the price growth so people can use their savings to buy a home. When prices are rising faster than savings, it’s a discouraging, demoralizing situation.

The middle class is getting priced out of the Bay Area, and Lawrence Yun is right in that the building restrictions are a big part of that problem.

The questions that weren’t asked but should have been

{the following is realistic fiction}

Q: You’ve been wrong so often, why should people take your forecasts seriously.

A: Economists are wrong 50% of the time because the economy is so complex. We analyze data and do our best to spin that data optimistically to give homebuyers comfort that they are making the right decision.


Q: Do you feel any responsibility to the homebuyers who bought houses because they believed your spin when prices were spiraling downward?

A: Each homebuyer is responsible for their own decisions. I present information to help them make decisions, but I also have a responsibility to the NAr membership that wants to see more transactions.

Q: So when weighing out your responsibilities, your duty to the NAr membership outweighs your responsibility to the public?realtor_know_nothing

A: I take both responsibilities seriously, but if I am going to make an error, it will be in favor of the NAr membership that pays my salary.

Q: Do you have a formula or secret manual for spinning bad market data?

A: Providing a positive perspective is a practiced art. No matter how bad things may look, there is always a bright side. Most buyers don’t read NAr forecasts for objective information anyway; most read because they want confirmation for an emotional decision they already made. I provide the assurance they look for.

Q: Does it bother you that your forecasts have so little credibility among industry professionals and the public?

A: I would argue that my forecasts do have credibility among the buying public, at least among those who are looking for validation of their decision. It really doesn’t matter if industry professionals or people who aren’t in the market for buying a home consider me credible.realtor_and_plato

Q: So would you say your forecasts are merely dressed-up marketing propaganda?

A: There is an element of marketing to our forecasts. I doubt the NAr would employ a chief economist if they didn’t believe the work of that economist helped increase the number of commission-generating transactions.

Q: Do you see the NAr ever changing their policies to focus on providing accurate data and reporting?

A: Accurate forecasts wouldn’t serve the NAr membership. There are times when it’s not a good time to buy, and there are times when it’s not a good time to sell. If the truth be told, there would be fewer transactions, which is not what the membership wants. Since the desires of the membership to have increased transaction volumes won’t change, I don’t see them changing their policies toward spin either.

Q: Your predecessor is widely regarded as a laughing stock and buffoon. How do you think you will be remembered.

A: I worked tirelessly to advance the agenda of the NAr during a particularly difficult period. I don’t expect any recognition for my good service from industry professionals, but I think the NAr membership will favorably remember my steady guidance of the data propaganda machine.


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