Finally, Truth from the NAR (sort of)

It's amazing to read the spin from the NAR. They always find a way to say the housing market is strong! Check this out:

"[David Lereah, the chief economist for the National Association of Realtors] says we should expect a drop-off of subprime originations through 2008 which may mean that half of high risk borrowers will fail to secure loans. This, if it happens, will depress home sales. What he sees is more likely, however, is that these buyers will be serviced by a newly revitalized FHA and from lenders stepping into the breech to make loans meeting Freddie and Fannie standards and offering "fair and affordable mortgage options to subprime borrowers." He, like The Mortgage Bankers Association, the National Association of Mortgage Brokers and other advocacy groups have warned again overkill by regulators and Lereah does so as well, asking for responsible lending practices as opposed to practices that cause a credit crunch.

He warns we should expect that 10 to 25 percent of households that fit the subprime profile will be unable to secure a mortgage under today's stricter lending standards but that "many of these households will probably, over time, purchase a home when they have attained the financial capacity to do so... So the long-term health of the housing market will probably stay in tact (sic)." In the short term Lereah expects that home sales will fall by 100,000 to 250,000 annually during the next two years due to tighter underwriting practices."

Hmmm...well at least they're no longer saying the subprime mess isn't going to affect the housing market at all. But a drop in home sales of only 100,000 to 250,000? If 25% of households in the subprime market can't secure a mortgage, is that only going to result in 100k in lost sales?

Full article: http://www.mortgagenewsdaily.com/4102007_David_Lereah.asp