Funny Forecasts and Vested Interests

In my posting on October 23rd ("The Future(s) of San Francisco Real Estate"), I said I'm skeptical of real estate experts because they often have built-in incentives to present the market in a favorable light. Here's a good example, which I'd forgotten about until today.

In February of 2005, David Lereah, chief economist of the National Association of Realtors, published this little gem of a book: "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".

For the record, new home sales peaked less than six months later, in the summer of 2005. The Case-Shiller 20-market composite price index peaked the following summer, in July of 2006. I've made my share of bad predictions but Lereah's was spectacularly bad and spectacularly self-serving.

It's not that I don't trust any experts. I read and respect the work of serious academics. All others, I take with a grain of salt.