Besides having a lot of admiration for the never ending contrarian ideas of Stephen J. Dubner, a la Freakonomics, it provides a great excuse to use “Freakin'” in public and not get scolded or lose my temper.
He gathered 5 real estate veterans to get their take on the questions: Is it finally time to believe in the housing bubble? And how much should the average American care?
He solicited comments from:
Robert Shiller: author of Irrational Exuberance and one of my economics’ heroes, who seems to be more optomistic than his introductions before various interviews would seem to suggest:
It is not clear whether the boom has come to an end; there is still investor enthusiasm out there.
Lawrence Yun: the new chief economist for NAR, who has taken the torch from his predecessor by dissappointingly finding obscure positive elements to expound upon that conflict with each other.
All real estate is local, and there are many local variations…The national median price was 1.1% lower in the second quarter of 2007 than its comparable period the year before….If people want to call the 1% price decline a bubble collapse — well, everyone has an opinion
David Lereah: the former NAR chief economist who gave this job title a bad name. He missed the opportunity to make NAR a trusted resource during the housing boom and post-housing boom periods, re-inventing phrases like “housing expansion” and balloons. A number of my agent colleagues were embarrassed by the things that he said during his tenure.
Bubble is the wrong imagery for today’s housing markets. Bubbles inevitably “pop.” A more useful image for the housing markets is a balloon. Balloons expand and deflate.
Barbara Corcoran: the former head of one NYC’s largest brokerage firms that bears her name. She was a brilliant marketer who really needs to re-connect with the market today. I am thinking that what worked 10 years ago doesn’t work today because I doubt that people believe she is running around the country snapping up property like picking apples from trees. But then again, I don’t understand marketing.
I’m yahoo-ing, low-bidding, and snatching up deals wherever I can find them…I’m grabbing as many over-priced, over-stuffed, and over-rated homes as I can get my greedy little hands on.
Aviv Nevo: one of the authors of the controversial Madison FSBO article who raised a lot of eyebrows with the study for his sharp insight, but also its limited applicability to the national market (not his fault at all). BTW, have you been to Madison lately? and is Jocko’s Rocketship near the football stadium still there?
I don’t know if it is time to believe in a housing bubble, and, frankly, I am not sure the average American should care.
Amir Korangy: founder and publisher of The Real Deal, to whom I have a particular bias, being in their publication a number of times, but for good reason: its a go to resource that is growing fast and has seemingly bigger than a Manhattan White Pages (8 pages of Millers, last time I checked).
Real estate prices are a local phenomenon based on employment, industry, and other factors including climate, quality of education, cost of living, immigration, and crime. Therefore, if the concept of a national housing market is ultimately a false construct, there simply cannot be a national housing bubble.
So why am I rambling about all these commentators in one column by a really smart contrarian economist? Because it speaks volumes about the residential housing market and how we see (or don’t see) it. The commentary represents a world filled with mixed signals, spin (cherry picking), more spin, limited applicability, out in left field silliness and rational thought, which leaves us freakin’ hungry to read more.
Oh, and by the way, I don’t think there was a quorum on the state of housing here.
Tags: Robert Shiller, Lawrence Yun, David Lereah, Amir Korangy, Barbara Corcoran, Corcoran