Experts cast cloud on sunny NAR forecasts
If you believe the chief economist for the National Association of Realtors (NAR), good times are just around the corner again.
NAR Chief Economist Lawrence Yun, in one of several recent upbeat pronouncements, predicted that home prices in South Florida could “easily” be 20 percent to 30 percent higher by 2013 at the Real Estate Congress & Expo in Coral Gables on June 12.
Yun carries credibility. USA Today has called him one of the nation’s top 10 analysts in terms of accuracy. And he’s challenging the market pessimism with his message of recovery.
While a Deutsche Bank housing analyst warned that South Florida home prices must drop more than 36 percent to return to affordability levels from 2000 to 2003, Yun told brokers at the Coral Gables venue the turnaround could start as soon as the end of this year.
Back in May, Yun told a group of brokers in Bradenton that the market is poised to return to normal after a bust that caused the first nationwide home price decline since the Great Depression. At the meeting, he said the market should be back to normal by 2009 and stay normal until the next boom.
Local experts aren’t buying.
Jack McCabe, principal of McCabe Research & Consulting in Deerfield Beach, called Yun’s forecast a “ridiculous prediction.”
“With the severe foreclosure problem, lenders are afraid to make condominium loans,” McCabe said. He points to job losses, and the fact that every indicator of real estate prices in Florida shows prices down 31 percent over the last 12 months, as evidence that Yun’s statement is an over optimistic prediction at best.
“You have to remember, Yun is with the real estate industry’s trade association,” McCabe said. “This is either pure propaganda or a gross hallucination. You can’t put any faith in these vested predictions.”
Michael Cannon, managing director of Integra Resources-South Florida, a real estate consulting and valuation firm, predicts it will take 12 to 18 months just for the market to adjust itself enough to begin to be able to guess when the market will resume a growth position.
Cannon is still compiling data, but, he said, it appears the South Florida real estate market has hit the decline of the rollback. Cannon has never used terms like “crash.” He calls it a “rollback” and is waiting for the rebound.
The key question on the real estate “rebound” centers on two factors: Wall Street and the financial community getting its act together, Cannon said.
“The market goes as the money flows,” he said. “The days of easy money and monopoly are over and this is the payback period.”