Real estate forecaster Gary Watts conceded today that he “got it wrong” when he failed to predict the current housing slump and then later predicted that home sales would rebound by late 2007.
“Here it is, four decades of forecasting, and I couldn’t believe I got it wrong,” Watts said after delivering his 2008 Mid-Year Economic Report to the Orange County Association of Realtors in Irvine. Watts blamed his misdiagnosis on a failure to account for Wall Street’s impact on the mortgage market.
“I apologize for not knowing what Wall Street did to our mortgages,” Watts told about 360 attendees during the associations annual membership meeting at the Irvine Marriott. “I had no idea how Wall Street restructured these loans.”
Watts, a Mission Viejo broker, is the second major booster in Orange County to concede to failing to foresee the market downturn. Irvine real estate consultant Walter Hahn — who had forecast a $1.4 million median home price here by 2015 — admitted last year that he failed to account for the extent of bad loans issued during the boom years. The median home price, or price at the middle of all sales, fell to $485,000 in May.
Watts once earned the nickname “Scary Gary” for predicting the 1990s housing downturn. But he remained upbeat about the housing market until last fall, although he previously conceded that he had been overly bullish about the market in 2007.
Watts said today, however, that the tide of foreclosures likely will mean that the housing market will remain soft into 2009. He noted that short sales, or sales with asking prices below the owner’s mortgage balance, are taking at least six weeks to gain approval from lenders, forcing even more homeowners into foreclosure.
“It’s just inevitable that (foreclosures are) going to spill into the 2009 market,” he said. While a rebound still is possible this year, Watts said, he called the market too difficult to predict.
On the plus side, Watts noted that the weak dollar makes U.S. housing attractive to foreign investors, that price declines have allowed first-time buyers back into the market and that pent-up demand from fence-sitting buyers should reduce housing supply.
He also believes that subprime lending gets a bum rap for causing the housing slump. Rising subprime delinquencies merely acted as a catalyst, tipping a range of bundled “structured investment vehicles” into increasing trouble that alarmed Wall Street investors.
“It was so complicated. It’s a nightmare. A real estate credit crunch usually lasts six months, and this one, we’re in it almost a year, and it’s still not straightened out,” Watts said.
Read previous posts about Watt’s predictions:
Let the beatings begin….
Up until a few months ago, Gary was still cheerleading at various Real Estate conferences touting the rebound. Why did it take relentless bad news and 25% price reduction so far for him to see the light? How can people like Gary call themselves professionals? They have led countless number of people into financial ruin.
Do these self-appointed experts ever look at affordability? Walter Hahn admitted his mistake earlier in the year but still had the audacity of forecasting a median price of $1.4 million in 2017 instead of his original 2015 timeline. Gary, Walter and the likes have no credibility and no shame.
A novice like myself was able to see that it was a bubble with prices going up 300% in a few short years and an astronomical income to buy a median priced home in Orange County. Welcome back to reality , Gary.
They are still calling this a “credit crunch?” This is a necessary and inevitable correction to the insane appreciation of the bubble years. Credit (and out national addiction to it) is the primary issue - it was far too easy to get insane amounts of credit - but there are so many more factors that contributed to what is going on here. Mike, you’re right - there is no shame. He’s blaming his mistake on not understanding the financial market? That he didn’t understand how “Wall Street” works? “Wall Street” is a great shorthand when you’re talking to people who also don’t understand how the finance world works. It’s a way of saying “Those fat cats in New York screwed this all up for us. They messed up the mortgage market and put us all in this bind.” It’s a great way to shift blame away from yourself and your industry.
“A real estate credit crunch usually lasts six months”
LMFAO
I cant even believe hes got the huevos to
come on here with his lame ass excuses-
trying to blame wall street LMAO all the while
he was right out front cheerleading the mania
from day one- pathetic
Mike-
You know, if inflation runs amok, and rises 300%-400% by 2017, then Walter Hahn could still be correct.
Just wanted to point that little tidbit out.
After all this and he still doesn’t get it.
No matter what the market doe’s I say he is a pathetic RE pro.
I guess he doesn’t read the writing on the wall unless it supports his views.
His smirk is scarier than the century 21 guy.
Wow..read the article entitled broker watts forecatss the back half of 2007. He says the sub prime crises is a media hype and overblown…wow.
Jon, you can’t give someone with a complete lack of vision the microphone..again!!
Anyone who buys a home from this guy is ____!
He looks a bit like “Radar” on MASH doesn’t he? Only his “radar” doesn’t work.
How could you not see the loan mess coming as an RE pro? Are they that out of touch with the lending market that they don’t understand borrowing fundamentals?
How could you not understand that back-to-back-to-back increases in prices of 30% a year couldn’t last?
How come Lasner doesn’t interview me as a “professional”?
Amazing.
check
I’m still consistently amazed that no one saw this coming. They are either lying or they are very stupid. When my nanny and her gardener husband bought a house for $525,000 in 2005, I knew we were in trouble. Are these guys so detached from reality that they couldn’t see it.
I was all set to admire the man for having the decency to man-up to his errors, but instead …………..
—
Watts blamed his misdiagnosis on a failure to account for Wall Street’s impact on the mortgage market.
“I apologize for not knowing what Wall Street did to our mortgages,” Watts told about 360 attendees during the associations annual membership meeting at the Irvine Marriott. “I had no idea how Wall Street restructured these loans.”
—
Is this called the double-shuffle or is it an example of a red herring, or does he still not get it?
Where is the recognition of the issue of affordability? Others saw it.
Oh well. Nasty old Wall Street. How could they have done this? Investors believed they were investing in mortgage-backed securities backed by mortgages that people would be able to continue to pay on. How did so many get into these mortgages? Any realtors use any of Gary’s pie-in-the-sky predictions to show buyers that it was the best time ever to buy real estate?
Mr. Watts and his cheerleaders are intelligent enough to foresee this RE downturn, but were and still are trying to deliberately mislead the market (gullible potential buyers) for their own selfish financial gains.
All I can say the the current disaster and the balony that came from the RE “profession” was nothing short of “Breathtaking”!
He’s just licking his wounds, yet still not admitting fault. Blame it on wall street, coward.
Then again, he is a salesman.
Just thought I’d pass along some of the sound financial advice from a local builder…see below.
William Lyon Homes recognizes that smart buyers are listening to the latest talk about whether now really is a good time to buy a new home. In fact, according to news headlines, this may be the best time to buy a home in years!
The May 6, 2008 morning edition of The Wall Street Journal featured the story The Housing Crisis Is Over. In this story, Cyril Moulle-Bertaux, managing partner of Traxis Partners LP, states that “it is very likely that April 2008 will mark the bottom of the U.S. housing market.”
He writes, “Homes on average are back to being as affordable as during the best of times in the 1990s.” and adds, “Numerous households that had been priced out of the market can now afford to get in.” That’s great news for many Americans who have been waiting to buy a new home!
The Journal article even notes that there is the very real possibility of prices going up in the next six months as the number of available new homes goes down, and how waiting to buy could hurt you.
What does this mean to you?
If you’ve been thinking about buying a new home, you’ll find some amazing opportunities available right now at William Lyon Homes’ Southland neighborhoods. This is your chance to take advantage of great prices, lower mortgage rates, and more purchasing power than ever before.
Let us help you find a new home you love, financing that fits your needs, and achieve your dream of homeownership in today’s buyers market.
Hard to beleive that 360 humans still actually sit and listen to this guy.
BTW OC housing downturn is way more than a year old already.
Mike Wizowski said it right; Gary Watts is a coward. He wants to blame his incompetence on Wall Street.
Since this blog came into existance in early 2006, many bears predicted the bubble, easy credit and forthcoming resets. They had as much information as Gary Watts had. Gary Watts did not see it coming because his head was up in his ass. Don’t blame it on the Wall Street.
BTW, there were many players in this game including mortagage companies, realtors and cheerleaders like Gary Watts himself. So why single out Wall Street?
Again, only a coward can blame his incompetence on others.
The guy’s a baffoon, plain and simple. Even the few realtors I know no longer pay any attention to him. Two years ago, they couldn’t get enough.
breathtaking. breathtaking. breathtaking. i love that word. that is my state of mind when i count the extreme money i made by beach buyers. the old adage in real estate is so true. they cant make any more land by the beach. sorry so many missed out on owning a beach home. not all is lost. work hard at your job. you may become the big boss and hit pay dirt. when you do i will help you get in that beach location.
Watts: “I had no idea how Wall Street restructured these loans.”
The man’s a slug.
This downturn had thousands of people calling it - he knew exactly what the potential was.
Wall Street’s impact was not nearly as great as the defaults and foreclosures.
He’s got no backbone - zilch.
Look at the piss-ant smile. The guy has no shame.
“I had no idea how Wall Street restructured these loans.”
It’s a pretty damning confession when a supposed real estate expert, extensively quoted by the media, admits he didn’t know the basics of mortgage securitization. Maybe he thought the money grew on trees.
Holy “F-Bomb” … you have got to be kidding me! A perfect time to repost the weekly score, and show JUST HOW WRONG GARY HAS BEEN.
Per DataQuick, Single Family Median Home Price:
2006 ~ Month End
$690,000 = Feb ~ Watts 15% “In The Bag” for SFH
$695,000 = Mar
$705,000 = Apr
$705,000 = May
$700,000 = Jun
$699,000 = Jul ~ Watts revises forecast to 11%
$685,000 = Aug
$680,000 = Sep
$665,000 = Oct
$660,000 = Nov
$665,000 = Dec
2007 ~ Month End
$675,000 = Jan ~ Watts forecast 7% SFH
$675,000 = Feb
$695,000 = Mar
$720,000 = Apr
$695,000 = May
$734,000 = Jun ~ Peak of O.C. Housing Bubble
$718,000 = Jul
$710,000 = Aug
$655,000 = Sep
$650,000 = Oct
$655,000 = Nov
$600,000 = Dec
2008 ~ Weekly ~ Month End
$583,250 = Jan ~ Watts declares “Pent up Demand”
$575.000 = Feb
$570,000 = Mar ~ Thoughtful declares “bottom”
$555,000 = Apr
$537,000 = May
$531,000 = 06/05
Per DataQuick, this loss represents a $203,000 decline in single family home prices from the June 2007 high. And the beat goes on … and on … and on!
“Fifteen percent is pretty much in the bag for Orange County in 2006,” he says. “It’s impossible for prices to go down this year.” ~ Gary Watts, February 13, 2006, Fortune Magazine
“I think we probably are not going to see 15 (percent), but I think 11 or 12 (percent) is still realistic.” ~ Gary Watts, July 21, 2006, Orange County Register
“Cyclical housing downturns have always occurred. The good news is these situations do not last forever. The cycles tend to run approximately 27 to 36 months, so this cyclical downturn should run its course by summer.” ~ Gary Watts, Impact Real Estate 2008 Housing & Economic Forecast
Oh Gary, you’re a funny, funny, man. 8)
Bill,
If the information on housingtraker is correct. and it usually is, we are just now getting started with the crash in the OC real estate market.
the greaseball needs to get a new job where he will be addressed as GARCON!
Gary was selling the market hype. The speculator bears are selling fear and panic. Lots of similarities. Greed is the motivating factor for both groups.
Gary?
Gary who?
While a rebound still is possible this year, Watts said.
I think he got it right this time.
With 40%-50% drops in price.
O.C. Register spent so much time and resource to promote his agenda and forecast.
Lesson: you made an ultimately decision, you pay the price, not Gary Watts and National Association of Realtors.
Two years ago in Feb ‘06 the median home price in Ventura County was $680,690 and Gary Watts said “17% is in the bag.” He didn’t get it wrong last year. The last time his prediction was right was at the end of 2004 about 2005.
Give us a break, “Wall Street” yeah right. And how does Mr In The Bag explain Charlotte and others still up? Ain’t dey dun never here’d ’bout Wall Street in them there parts?
This is hilarious! You couldn’t write a funier script than this, even though this is just the first step in Mr. Watts 12 step recovery process.
But honestly, that cheeseball hula shirt and the creepy smile have to go. He isn’t instilling confidence in anyone with a look like that. There’s just something about middle aged waspy guys in OC in overpriced casualwear that just really creeps me out. (And I’m a middle aged waspy guy in OC too, so I know the demographic well!)
I would much rather buy, Buy, BUY! from that delusional Mr. Kunz in the newly redesigned Century 21 gold blazer, than from this GARYS Fashion Island manequin reject.
But don’t stop the online mea culpa’s like this Mr. Lansner! They are just too hilarious to believe!
Troy,
You know you want to wear those shirts….you know you do. You like the look and only fear it might not send the right message. Step up. Do it without the smirky smile and you’ll be fine.
I understand ….. it’s not the look, it’s some of the people who affect the look trying to be the Joe Cool they never were and never will be.
Kind of like the latter day Porsche and BMW drivers that bought one because they believe it to be cool….they admired the few that stepped outside of the norm and drove a car for what the car was and now they want one because others might think them to be the type of person who was the person they admired.
Man, do I hate to see that type of thing happen. I bought a new mercedes in ‘71 and had countless people ask why - why, when I could have bought a new Cadillac for the same price?
Drove a Porsche when people told me I could have a nice car with air conditioning for the same money:)
Rolex made a fine watch, fought the move to quartz and held to the same designs……people that knew quality bought a Rolex. The wannabees noticed and bought Rolexes and now they are a “status symbol”. Many are avoiding them because of the message they send….along with the outrageous prices the Rolex is able to now command because of the people that will pay for the “image’.
Go buy a nice silk shirt, some Top Siders and a BMW, just keep your attitude, you’re no phoney. You couldn’t smirk like that if you tried………..screw ‘em.
You know the old saying: When the most diehard bulls become bears, it’s time to get bullish !!!!
How does Wall Street restructuring loans have anything to do with people defaulting on their loans and prices going down? Really, I would like to know how restructuring loans and SIVs have caused his forecast to be wrong. Does he even know what he is talking about?
I wish he would wear a clown costume with a C21 jacket while admitting what a jack*** he is.
When watts can’t find a way to spin the mess positive you know there is a problem.
Worst apology ever!
I’m fascinated that the usual bulls have gone entirely silent here. They are just…. gone. Too funny!
G’night gang! See ya tomorrow.
Why was it so difficult to predict for the “experts”, while it was so obvious to us ignorants.
I remember going to a Gary Watts seminar a few years ago and he said the the affordability index was meaningless and that everyone in the OC was RICH…. Yeah, when mortgage lenders are do 100% stated income financing, what people report to Uncle Sam and REALLY make for income the affordability index is not going to work. He got that wrong too!
graphrix Says:
June 23rd, 2008 at 11:48 pm
–How does Wall Street restructuring loans have anything to do with people defaulting on their loans and prices going down? Really, I would like to know how restructuring loans and SIVs have caused his forecast to be wrong. Does he even know what he is talking about?–
Wall St. bought all of the loans and packaged them together: sub-prime, alt-A, and prime. They sold them to investors in the same bunch. Completely different risk factors associated with each type of loan in each bunch. Now, since Wall St. packaged them this way, investors are weary about investing in them, causing the credit markets to dry up, causing the lack of funding available to people who need to refinance, causing the foreclosure crisis to get worse since there is a very minute mortgage market.
How you cannot see this is frightening.
Hey Lansner,
I am looking forward to a good laugh from your rebuttal article featuring “Thomas logic”.
Ironic that the photo shows Mr. Watts has “Crystal Balls” in the palm of his hand. LOL!!
It’s hard to tell from the photo, maybe it’s the lame shirt, but does Gary Watts have a mullet?
Maybe Sighburdood can tell us.
When the news about the subprime crises was all over the news last August, and the subsequent information about the mortgage industry, Gary MUST have dismissed it altogether in order to determine there is pent up demand in early 2008, and the bottom was near. Here was an opportunity to learn about what was going on, and he threw it out the window.
Clearly, Gary did not listen to the facts behind the housing crisis, because it conflicted with his agenda (keep making more money).
An alternative explanation is that he DID believe it, and he knew EXACTLY what was going, but as long as he could convince stupid buyers otherwise, he was in business!
Please stop calling this guy an expert. He is nothing but an opportunist. He preyed on the misinformed.
Gary, you are one of the RE people that I LEAST respect.
Orcian (formerly BubbleLee)
What a villain! I knew that headline was facetious the moment I read it.
So let’s start a thread of insincere apologies. I apologize for paying any attention at all to anything about Gary Watts.
[Now Imagine with this post is a photo of a guy, me, with a menacing grin holding a bag of something that smells bad away from his nose.]
I’m sure he also predicted that internet stocks would continue to increase, the Iraq war would last 2 years, and that June would be a good time to visit Cedar Rapids.
Bill-
Steve Thomas isn’t going to like those new inventory numbers. I can’t wait to see the spin on that! For some reason that 2005 “demand” isn’t translating into 2005 sales volume. Maybe our esteemed Wharton-educated blogger can look into the discrepancy.
When the most bullish turn bear, it’s time to buy. When the most bearish turn bull, it’s time to sell.
If you follow this strategy in buying/selling, you may not buy at the absolute bottom, or sell at the peak. However, over the long run, you’ll do very well. Fact is, you won’t know the peak or bottom til months, or years have passed. You can’t time the market.
Those who buy/sell based on recommendation of experts often loose their shirt & end up broke. Those who afraid to buy/sell worrying that the botton/peak is not in place yet often end up w/ nothing.
he sounds like Larry the Cable Guy, “Lord, I apologize…”. disingenuous? you bet! at least he came out of hiding.
maybe future Gary the Cable Guy if the current market continues…
lol- Watts is such a permabull clown. he lacks the ability and imagination to think outside the box and see the bigger picture. but, but, but OC RE will never go down!?!
“I’m sorry….” but not really because “a rebound is still possible this year”.
Nice going, Mr. Watts. You’re unsubstantiated forecasts ruined the financial lives of many, but were so ridiculous they undoubted saved many others.
How is it possible that your credibility could action go DOWN even further after a public apology? Normally only politicians in Washington are capable of such achievement.
You’ll excuse us, won’t you Mr. Watts, if we don’t follow your pie-in-the-sky real estate forecasts and disingenous apologies for the foreseeable future?
S - Eating - Grin
na na na na , na na na na na, hey heyaaaaa, good bye …(bulls..hit)
give the guy a break, how can a guy who is supposedly an “expert” know what wall street does with the mortgages. I mean it’s not like they report that stuff on every major news headlines every other day in the past two years. He’s probably too busy selling all those homes in OC rather than watching the news, with all those pent up demand and RICH people in OC.
Who’s the more foolish: The fool, or the fool who follows him?
–Obi-Wan
;)
sweet vindication
Even if all the fence sitters jump in there will not be enough demand for houses. Remember during the bubble not only prices run up through the roof, but there was also a construction boom. The resulting situation was an excess (glut) of houses that sit empty now since the easy money evaporated and the tide of foreclosures is just begining. Well folks this ride will continue a little bit longer….
After looking at all the comments on this blog I’m becoming more
and more disappointed with my fellow man. Nastiness and meaness
seems to be the order of the day!!
Most of you don’t even have a clue what you are talking about and
you certainly don’t know the real estate industry!!
Like most bloggers today you talk the talk but can’t walk the walk!!
You just seem to enjoy putting people down to get your anger out!!
buy on bad news and sell on good news. build your future now, if you can hold for at least 5 years, your real estate cycle will come back to pay you back $$$
thats life anywhere.