Friday, September 26, 2008 and GCCAR Summit was held at the North Bethesda Marriot in Rockville, near White Flint. It was a meeting of agents from all companies and our board leaders to listen to reports on the economy , take continuing education classes for our licenses and discuss the impending use of the Sentrilock Keyboxes. It is also fun to see folks you have not seen in a long time.
I was most interested in what in what Ken Fears, Manager, Regional Economics, who speaks to NAR on housing trends had to say. Listening to an economist speak is not the most exciting thing in the world, but in today’s climate it does get my attention. This is what I took away from the lecture;
I was pleasantly surprised to hear what Mr Fears had to say. He talked about the obvious. Foreclosures, excessive inventory, and the negative climate we hear about everyday. One subject I was glad he touched on was the low use of FHA loans for first time homebuyers or buyers with lower credit scores during the housing boom is one of the problems we are now experiencing. This is because FHA, which is backed buy HUD, had guidelines for buyers that protected them and the bank in the event of foreclosure. There is mortgage insurance with an FHA loan. What mortgage insurance will do for the bank is insure them in case the buyer goes into foreclosure. The bank can collect their losses from this fund. This would have protected some of the banks from the troubles they are facing today.
He touched on the government backing Fannie Mae and Freddie Mac. He thought this was a good thing for them to be in receivership, it protects them from a corporate takeover.
One of the other things that Mr Fears talked about was that we, in the Washington DC metro area have relatively low unemployment compared to other areas of the country, so this may keep our market moving better than most. They feel we are through the biggest bulk of foreclosures to come on the market.
The reduction of new construction should help stablize our market conditions. It is predicted that the housing starts – new home construction – should be around 750,000 new home to be built in 2009. That will help the supply and demand of our real estate industry. Currently we have had too much supply. This with the Household formation trend on the upswing as a trend indicator should help stablize the real estate market in the next couple of years.
I found it interesting to listen to some of his reports. Actually, in spite of all you are hearing and reading these days, it was very positive for the most part. He felt that the key ingredient to getting the market back in shape was some consumer confidence, keeping the interest rates fairly steady because the core prices are staying steady. The rates are low and the inventory is high. It is a buyer’s market for sure.
As for the Bailout, it was not discussed. I am sure there are too many what ifs to have discussed it in a 30 minute lecture. As for me and my business, it is steady and it is good. I have been fortunate to build a large referral base and it has kept me steady in this market. Also, I don’t get so bogged down by what the television has to say. For me, I think bad news sells better for the media and they are going to make it as bad as they can. I have chosen not to make their reality mine, you should not either.
I always know the market will go up and down, that is why it is called a market. I always think it is so interesting how balanced we become when the market is down. We make sound, cautious decisions and watch our money. I wonder how far ahead of the game we all would be if we could take that good caution and use it during the upswing of a market?