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Special Edition: Mr. Yun, You’re Fired!

November 14th, 2011 by Bill Collins Leave a reply »

Economist or Cheerleader? The NAR’s Chief Economist Hurts the Organization with his Lack of Credibility, Undercutting Good Initiatives of the NAR

This past week, the National Association of Realtors (NAR) held their 2011 Realtors Conference & Expo.  During the conference and the period leading up to it, the NAR distinguished themselves with thoughtful commentary related to the housing crisis and actions which need to be taken, along with actions to be avoided.

On October 13th, Moe Veissi (the 2011 President-Elect of the NAR) testified before the House of Representatives Committee on Financial Services and intelligently defended the “American Dream-homeownership” along with the federal government’s “…vital role in the success of our nation’s housing system”. has discussed the failings of both Fannie Mae and Freddie Mac (the GSE’s) and their role in the housing crisis along with pointing to the well documented research of the GSE’s by Gretchen Morgenson (“Reckless Endangerment”) and others.  At the same time, we have repeatedly warned against reckless proposals which would remove government support for housing and exacerbate the continuing crisis.  In his testimony, Mr. Veissi addressed this:
“Those who advocate for legislation that effectively constrains, shuts-down the secondary mortgage market functions traditionally served by Fannie Mae and Freddie Mac, removes government participation from the conventional mortgage market, and/or relies only on private capital to operate the secondary mortgage market need only examine the current miniscule activity in the jumbo and manufactured housing mortgage markets in order to understand the implications of private capital as the sole participant in the secondary mortgage market. In both of these markets, mortgage capital became nearly non-existent, which prohibited creditworthy borrowers from access to the funds required to purchase a home”.

The NAR issued a press release on that same day which discussed Mr. Veissi’s testimony along with their support for a bipartisan resolution (H.R. 2413) which Mr. Veissi said “…gives the federal government a continued role to ensure a consistent flow of mortgage credit in all markets and all economic conditions”.  Links to Mr. Veissi’s testimony and the NAR press reease are found here: Testimony of Moe Veissi, 2011 President-Elect, NAR

Government Plays Valuable Role in Homeownership, Say Realtors

On the eve of the NAR conference they put out a press release titled “Realtors Ready to ‘Seize the Day’ for America’s Home Owners” in which current President Ron Phipps said:
““For the first time in generations, the American dream of homeownership is being threatened.  We need to keep housing first on the nation’s public policy agenda, because housing and home ownership issues affect all Americans.”

Links to this press release and the NAR’s “Five-Point Housing Plan” are found here: Realtors Ready to ‘Seize the Day’ for America’s Home Owners

2011 Five-Point Housing Solutions Plan

At the same time that the NAR was warning of the seriousness of the housing crisis, however, the message was muddled by the nonsensical statements made by Lawrence Yun, the NAR’s chief economist.  Particularly alarming were his statements from a November 11th press release in which he said:
“Tight mortgage credit conditions have been holding back home buyers all year, and consumer confidence has been shaky recently.  Nonetheless, there is a sizeable pent-up demand based on population growth, employment levels and a doubling-up phenomenon that can’t continue indefinitely. This demand could quickly stimulate the market when conditions improve.”

“Housing affordability conditions, based on the relationship between median home prices, mortgage interest rates, and median family income, have been at a record high this year.  Very favorable affordability conditions will dominate next year as well, which will probably be the second best year on record dating back to 1970. Our hope is that credit restrictions will ease and allow more home buyers to take advantage of current opportunities.”

“Home prices have yet to show a definitive stabilization pattern in most areas. Still, given an over-correction in prices, there likely will be moderate appreciation in 2012”

“Once home prices turn positive on a sustained basis, consumer confidence will rise and help the broader economy to improve.  If we could maintain sound and reasonable mortgage underwriting standards, the market would be able to avoid a future big boom and bust cycle, but mortgage standards remain overly stringent.”

A link to this press release is found here:
Gradual Recovery for Housing and the Economy Expected in 2012

After Mr. Yun’s optimistic forecast, much of the print and online media broadcast the good news that the housing market was on the way back.  The message: All of the concerns highlighted by the NAR and others could now be forgotten and we just had to wait several months until next year.

Many have not forgotten the gross overstatements of sales made by the NAR over a period of several years, along with their acknowledgment and promise to provide corrected figures.  Well, we are still awaiting these corrections and many outside of the appraiser and real estate community distrust the NAR because of this.  One example was the following letter to the editor in yesterday’s Newsday:
“That’s strange, the forecast 2 years ago said house prices would rise last year! Where can I get that forecaster’s job?”

While Appraiser News has had other issues with the NAR such as their promotion of BPO’s (broker price opinions) and the blame given to appraisers for appraised values coming in less than contract prices, it is disappointing that much of the good work that the NAR has recently done promoting and preserving homeownership is being undercut by the recklessness of Mr. Yun.

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