Just when you thought it was safe to go back in the water…

In a Chicago Tribune article today, David Lereah, chief economist of the National Association of Realtors, [He's leaving, but not yet gone.] gave an interestingly schizophrenic interview.  More bearish than usual, he’s still not giving up his old ways.  Here’s a few quotes:

We’re in a real estate recession. I’m projecting the first [nationwide] price drop since the Great Depression," he said. "We’re going to have negative home prices in 2007.

I feel confident I did a very good job forecasting and reflected what was happening in the marketplace.


If anybody actually took the time to read my book, rather than just comment on the title, I was insistent in it that … a frenetic boom was unsustainable. I predicted a downturn [would occur] shortly after I wrote it, in 2005.

We’re all partly guilty. But the lenders and the speculators, they had the most in it. Making zero down payments with no documentation, that’s just irresponsible.

But the Realtor, the lender, the title attorney, they all got wrapped up in the frenetic pace of the boom.

Just four months ago, it looked like we were on the road to a very nice recovery. Then the subprime [mortgage] market blew up, and that has substantially inhibited lending.  It was a monkey wrench that was thrown in; no one would have predicted it two years ago, no one.

I am the cheerleader for real estate. I will always be the cheerleader. I think it’s the best investment anybody can make.

My personal favorite:

I am going to say, look, guys, we all have to face the music. We strayed from [economic] fundamentals, and we’re paying for it. It’s not an all-out bust, not a crash in real estate, but it is a recession. This is going to cleanse the markets and in the long term this is what we have needed.

Only Lereah would find a recession to be a good thing.

I also find myself intrigued by his answer to the question of whether he felt pressured by the NAR to skew forecasts in a positive direction:

"You’ll have to talk to me about that in two or three weeks," Lereah said. "I work for NAR now."