Over the years, we’ve occasionally pointed out the absurdities of former NAR economist David Lereah. Our ire at the “Baghdad Bob” of Real Estate multiplied after he left the NAR, when he essentially admitted to being an ethicless huckster during his time there.
You might imagine we would want nothing whatsoever to do with Lereah, including his published books. You likely assume they would be all spin, no truth, less dignity. And you would be right. However, here at TBP, we are big believers in the “Teachable moment.”
The evolution of Lereah’s books show how he adapted over time to the changing housing market, a/k/a utter collapse. We learn that the content of his books are essentially the same — the first two books literally identical — only his publisher slapped on different covers. Thus, like the latest Real Estate porn, shows like A&E’s Sell This House!, we learn all about “staging” — the idea that a few superficial changes can hide even the worst money pit of a house. (Update: A reader suggests that the third book is a lightly edited version of the first two).
Thus, consider how these three books have been staged with different covers:
-Are You Missing the Real Estate Boom? (2005)
–Why The Boom Will Not Bust and How You Can Profit From It (2006)
–All Real Estate is Local (2007)
Lereah, on behalf of his employer, Realtors.org, just wanted to teach people more than how to lose money in residential real estate; he wanted to show how to lose money across different phases of the boom and bust cycle:
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Lereah’s advice for losing money was not limited to Real Estate. In 2000, he published (I am not making this up) The Rules for Growing Rich: Making Money in the New Information Economy. Fantastic timing on all accounts.
(Update: A reader informs us of Lereah’s new venture, posted here)
Over time, the public came to understood that Lereah was totally full of bullshit. The most amusing way they expressed their frustration was by reviewing Lereah’s published books on Amazon. Be sure to note the dates and the number of people who found the review helpful. I also included a sincere 5 star review from 2005 that we can only assume was a case of wishful thinking.
Here are my favorites:
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Superb work of fiction, devastating psycho-drama of highest order, July 2, 2010
This review is from: Why the Real Estate Boom Will Not Bust – And How You Can Profit from It: How to Build Wealth in Today’s Expanding Real Estate Market (Paperback)
That is, the highest order of the knight of the round table, surrounded by the government of the rich for the rich, by the rich, manipulating the psychology of the population into spending their last bits of their spending in a sinkhole plumbed to their bank accounts.
The English is passable, a bit corny, but that appeals to the masses.
It is also a book of historical importance (not import, but importance, mind you). It draws in first hand account the situation of the mid knots as the powerful orchestrate another cycle with an attendant bubble that will such up the population’s wealth and compress it into tiny golden derivatives that will end up at Goldman’s door.
Buy as many copies and give them to your children as a historical and political lesson. They go and shop till you drop, and buy a house or two on your way to and from the mall so that you can retire on the amazing proceeds it will generate for your great, great, great, grandchildren. You should also spend a lot of money insulating and putting solar panels to be used for cooling, as by the time the need to sell these wonderful, going no-where fast, vehicles, global warming will be toasting everyone’s round cheeks, the exposed ones, and even the ones covered.
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Better than Charmin, June 1, 2010
By Shrinky Dink
Amazon Verified Purchase(What’s this?)
This review is from: Why the Real Estate Boom Will Not Bust – And How You Can Profit from It: How to Build Wealth in Today’s Expanding Real Estate Market (Paperback)
I found the pages much softer than Charmin, though not as soft as Quilted Northern.
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An extraordinary, and extraordinarily important, book, February 25, 2009
This review is from: Why the Real Estate Boom Will Not Bust – And How You Can Profit from It: How to Build Wealth in Today’s Expanding Real Estate Market (Paperback)
I agree with other reviewers who have pointed out that this is, in fact, an extraordinarily important book. In particular, it provides a classic example of the mentality that underlies every asset bubble. The author pulls out every trick in the book – demographic trends, financial innovation, macro trends, etc. – to argue that “this time is different.” Alas, as we all have found out, this time was not different. What goes up for no discernible reason, must come down. If something seems to good to be true, it probably is. You can try to argue that the “fundamentals have changed”, but they rarely do. And when things correct, it can be bloody. (Alas, the difference here was that the hucksters were also able to take the down the financial system, but that’s another matter.)
But why this book is important, and why I’d suggest that every investor read it, is because it illustrates exactly the sentiments that lead to absurd behavior in asset markets. Silly assumptions. The belief that the price of some asset will continue to rise. Desperate rationalizations for those price increases. The resulting behavior is not necessarily illegal or unethical (as some other reviewers have suggested), rather it provides a classic case of the mentality that leads to excesses in asset markets. Read this book and learn from it. Because you don’t want to get caught up in this kind of garbage.
BTW, I pity the author. Not simply because so many people attack him as an idiot or a shill for the realtors, but because his timing was so appalling. Shiller, who became famous for calling the peak of the dotcom bubble, often thanks his publisher for getting his book out at the right time. This guy’s publisher was way way off. (Of course, it also helps if you’re not, in fact, an idiot. Sorry David.)
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HA HA HA HA HA, January 10, 2009
By Surely This
This review is from: Why the Real Estate Boom Will Not Bust – And How You Can Profit from It: How to Build Wealth in Today’s Expanding Real Estate Market (Paperback)
HA HA HA HA HA HA HA HA HA HA
HA HA HA HA HA HA HA HA HA HA
HA HA HA HA HA HA HA HA HA HA
*gasps for air*
HA HA HA HA HA HA HA HA HA HA
HA HA HA HA HA HA HA HA HA HA
HA HA HA HA HA HA HA HA HA HA
ha ha ha ha
ha ha hee hee hee
heh heh
*wipes tears from eyes*
Seriously though, does Amazon.com sell tar and feathers? I know they’ve got pitchforks.
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Funniest Book Ever Read, April 10, 2008
This review is from: Why the Real Estate Boom Will Not Bust – And How You Can Profit from It: How to Build Wealth in Today’s Expanding Real Estate Market (Paperback)
Lereah is a master of comedy. Often while reading Mr. Lereah’s tome i became overcome with laughter, sometimes experiencing convulsions. The convulsions were so severe that i would need to rest for shortness of breath. Thanks for your service Mr. Lereah, you’ve made a significant contribution. This books identifies you as one of the few who were ahead of the curve on the mortgage and credit issues we now confront. Also, I miss your hilarious monthly commentary on new & existing home sales–somehow you were always able to find a silver lining. Proud of you!
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116 of 120 people found the following review helpful:
Customers who bought this item also bought…, August 3, 2006
This review is from: Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade – And How to Profit From Them (Hardcover)
Your Yugo Will Run Forever and How to Set the Land-Speed Record With It.
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186 of 196 people found the following review helpful:
“He whose bread I eat is the song I sing”, April 28, 2005
By Robert M. Campbell “Author of ‘Timing the Real Estate Market”
This review is from: Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade – And How to Profit From Them (Hardcover)
Go back in time to the year 2000 when the NASDAQ was trading at 5,000. Some people said it was a bubble and couldn’t go on forever. Yet the temptation to go with the flow and make was seemed to be easy money was irresistible. Driven by the marketing efforts of those who make their living in the stock market, it was argued that prices would still go higher. If you bought into their line of reasoning, surely NASDAQ 10,000 was not too far away.
I was reminded of those times when I read David Lereah’s book “Are You Missing the Real Estate Boom.” Even after the biggest 5-year run-up in housing prices in U.S. history – where 40% of all homebuyers must now resort to interest-only adjustable rate mortgages in order to qualify for home financing – Lereah tries to convince us that the U.S. real estate market should continue to stay healthy for the next 10 years.
His arguement goes something like this: Even though housing prices are high, the combination of low interest rates, 80 million wealthy baby boomers and their offspring (“echo boomers”) will continue to fuel demand. This is not objective, unbiased advice. As head cheerleader for the Realtor hallelujah choir, Lereah is using the same tactics that have been well-honed on Wall Street: “When the ducks are quackin’, feed ’em.”
I don’t remember what Lereah was saying about U.S. housing prices in 1998 or 1999 when prices were 30% lower than they are today (and 75% lower in many of the highly populated coastal regions), but I think its safe to say he wasn’t forecasting a coming real estate boom that would last for the next 15 years.
The key to making money in real estate – and keeping it – is to get aboard a rising real estate trend early, not late. While it is true that real estate is a good long-term investment, what Lereah ignores is the cycle nature of real estate. In other words, if you buy an overvalued house late in the market cycle – and you are over leveraged and illiquid like most Americans are today – you may not be around for the long-term.
Robert Campbell
Author of “Timing the Real Estate Market”
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366 of 375 people found the following review helpful:
Better title – “Join the Greater Fools of America Club”, April 19, 2005
By NewYorkBuck
This review is from: Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade – And How to Profit From Them (Hardcover)
For me, this was more comic relief than any scholarly analysis. The author has a vested interest in the bubble not bursting, and he’s selling his soul with this book to prove it.
He spins webs of demographics and interest rates, but he never ever addresses the core issues that determine housing values. What is lost here is that housing in itself creates no value, its value is completely predicated upon peoples ability to pay for it. Ergo, housing prices for the last 100 years have tracked income remarkably closely, that is, except for the last five years. Historically, the ratio of housing price to annual income has been 2.1, with very little variation. In many parts of the country, this ratio is now approaching 10.5! Can you say “major correction?” Further, the amount of leverage used to buy homes during this boom has been increased to absolutely unprecidented levels. Even during the last boom of the late 80s/early 90s, the standard was still 30 yr fixed and 20% down. Not anymore. Last year, less than 15% of borrowers put down 20% or more! Further, the 30 yr fixed has been replaced by the IO, or interest only loan. See now, we have the same borrower capable of bidding 30-40% more for a propery without any better credit or ability to repay. Neat trick, but sadly, Lereah at no point addresses any of these fundamentals.
Our stock/housing pattern appears remarkably similar to the one Japan had 20 years ago. First the stock market busted. Right after, the real estate market rallied, and it busted too. The current Japanese real estate market is in a 14 year slide to date, and houses are going for roughly their 1980 value.
Keep talking Dave – we’ll need the comic relief soon!
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3 of 78 people found the following review helpful:
A breath of fresh air!, July 22, 2005
This review is from: Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade – And How to Profit From Them (Hardcover)
Unlike many of today’s naysayers, this book takes a shot at analyzing the current RE market and it’s future trend by assessing facts. It’s simple for others to write articles claiming a “bubble about to burst” based on an unprecedented “run up”, but this Author backs his assessment with real facts, that quite frankly, set my mind at ease and even may have even motivated me to invest in some more property! Thank you for your efforts Mr. Lereah!! This was money well spent!!!!
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Previously:
Are You Missing the Real Estate Boom? 2.0 (October 30, 2006)
Latest Lereah Book (January 4 2008)
Former NAR Economist David Lereah is a Jackass (January 6 2008)
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