Former housing industry economist who famously said there was no housing bubble now admits he was wrong

Prashant Gopal
January 05, 2009
BusinessWeek.com

David Lereah, the National Association of Realtors’ former chief economist who famously denied that the housing bubble existed even as it started to pop, is finally admitting that he was wrong.

Lereah, whose book “Why the Real Estate Boom Will not Bust and How You Can Profit From it” was published in February 2006 just before the bubble went bust, suggests in a new Money Magazine interview that his rosy outlook might have had something to do with his position as top spokesman for the Realtors. Lereah, now a private real estate consultant, says he’s bearish about the housing market and has been for a year and a half.

“I worked for an association promoting housing, and it was my job to represent their interests,” Lereah said. “If you look at my actual forecasts, the numbers were right in line with most forecasts. The difference was that I put a positive spin on it.”

The damage Lereah caused, of course, was serious, especially for the many home buyers who bought the hype. Lereah said he now expects only a modest recovery in sales activity this year.

“I was wrong,” Lereah told Money. “I have to take responsibility for that.”

UPDATE:

I just spoke with the Realtors’ current chief economist Lawrence Yun, who has also been criticized on blogs such as the “Lawrence Yun Watch” for his overly optimistic predictions.

Yun, who worked as a number cruncher for the industry group during Lereah’s tenure, said he “disassociates” himself from the way his former boss did things and is careful not to let his role as lobbyist for the group influence his work as the group’s chief economist.

“I don’t see my job as somehow spin,” Yun said. “I share the housing data and say ‘What does it mean and what it may imply about the future.’”

If people want to discount his predictions, they can, Yun said. And he doesn’t think Lereah’s admission hurts the credibility of the National Association of Realtors, though “it might hurt his [Lereah’s] credibility,” Yun said.

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