December 30, 2008
Welcome to 
Eyeball 2009! This is our holiday gift to you: Two weeks of outlooks on local real estate conditions! A new vision every day of the week at noon through Jan. 6! Our 9th guest is …
John Most, president and CEO of the Most Agency in Newport Beach, is a Madison Avenue type who learned he could thrive in the ad game without living in New York City. Remember the Grey Poupon ads? He produced some of those, as well as ads for Minute Maid, A1 Steak Sauce and Diet Sprite. He also worked for years for Prudential, and most recently has handled ad campaigns for the National Association of Realtors. He notes that the views he expresses here are his own and “do not reflect the position of my client, the National Association of Realtors.”
Eyeball: It’s been a couple years since you helped NAR launch “It’s a great time to buy or sell a home” campaign. Knowing what you know today, do you think that campaign was premature?
John: I think it’s a lot like Monday morning quarterbacking. It’s all about the information you had then vs. the point in time you are picking for comparative purposes. At the time, with no comparison point, the decision was sound and the information and facts we provided and portrayed were true. Hey, Even Alan Greenspan agreed with us…back then!
But if you compare to the 2006 market to today — this point in time — you’d be correct that our timing could have been a lot better.
Our new campaign does note that sometimes family conditions outweigh market conditions and that a home should always be considered a long-term investment in your future. The financial talking heads over the past two years have homeowners convinced they should look at their home as if it were a stock: that you should evaluate the value daily. I disagree.
[ More Eyeball ‘09 HERE | Eyeball ‘08 | ‘07 ]
A home has been, should be and will always be a place to raise your family FIRST. After that, it provides security to your future and it is a large part of most people’s retirement planning. Remember, you can’t live in a stock.
Eyeball: What are the prospects going to be for buyers and sellers in 2009?
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John: I think it will all depend largely on three factors:
- The credit market and availability of money to lend people.
- What the interest rate is — there is an awful lot of talk about a 4%-4.5% interest rate. NAR is advocating that rate for ALL home owners, not just first-time buyers. I think that will significantly improve the housing market and in-turn, the economy.
- For seller, more interest in the homes they have to sell — but they must be priced fairly to the market conditions. In Orange County, the drop has not been as precipitous. Many longer term homeowners, I believe, will still sell in the upcoming months with a nice, reasonable profit.
Eyeball: What’s the OC housing outlook for 2009? Why?
John: I believe the market will actually improve significantly. Why? I believe the negative press, which has been so anti-real estate and so Pro-Obama will do all they can to present every small economic improvement in a more positive light than they did in the Bush administration. I expect consumer confidence will grow during the year and that the real estate market will benefit … IF … money is made more available from the ill-advised bailout and the interest rates go to 4.5% or possibly lower.
In addition, the OC area has a great start. Single-family home sales in OC are up in October vs. a year ago (+94.8%). This is the fourth month in a row they have been up, year over year.
Eyeball: What’s the chance we bottom in 2009? What might it look like?
John: I personally think the bottom is here now. But practically speaking, you won’t know the bottom happened until about four months after the fact. The bottom will be defined largely by interest rates and lenders putting money into the housing market for buyers who are out there. There is incredible pent-up demand that can’t be acted upon due to the crunch.
Eyeball: What do you fear the most about the real estate market?
John: I fear that all of the funds that have been intended to help resolve the marketplace situation will not get there and that consumer expectation of “deals” is still a little out of whack. Largely, the market needs to flush out the foreclosures to get real pricing and inventory stability in the housing market. It appears we may be getting through that.
[ More Eyeball ‘09 HERE | Eyeball ‘08 | ‘07 ]
Eyeball: What gives you hope?
John: The easy answer is what most people will tell you …Obama. But in reality, I have great hope in the American people and their ability to weather the economic storm and make the right choices.
Eyeball: What surprise or surprises will we be talking about at a year from now?
John: I think consumer confidence will be vastly improved for little more reason than the press will be giving the new administration a lot of room to succeed without any questioning. I think the market will be far better than predicted because I think Congress will push to drive rates lower to help the housing market. And they will start focusing on the banks and their credit card interest policies. A major overhaul is needed there.
And you’ll want to come back …
- NEXT UP: Investor/lender Bruce Norris
- THEN: Investment adviser Ryan Kelly
- All of Eyeball 2009 to published date is HERE
Originally posted here.
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December 27, 2008
Welcome to Eyeball 2009! This is our holiday gift to you: Two weeks of outlooks on local real estate conditions! A new vision every day of the week at noon through Jan. 6! Our ninth guest is …
Rich Cosner is president of a Prudential California Realty chain of 9 offices in Orange County and the Inland Empire. PruCal’s parent company is owned by famed inevstor Warren Buffett’s Berkshire Hathaway. Cosner, a 35-year real estate veteran, is on the board of the Anaheim-based Pacific West Association of Realtors, the state’s largest local Realtor association.
Eyeball: What’s the OC housing outlook for 2009?
Rich: The market will begin to stabilize in 2009. 2008 sales have actually increased over the same period in 2007.
From Jan. 1 to Nov. 30, the Southern California Multiple Listing Service reported 21,115 closed properties. For the same period in 2007, there were only 18,638 properties closed. This trend is similar across the entire state of California with sales up this year over the prior year.
The low point of sales then in the past decade was in 2007. The challenge of course has been pricing declines. While statistics alone would tell us that prices are down about 25% in the past year, this does not take into account the mix of properties selling. Because of challenging financing for most of 2008 in the higher price ranges where jumbo loans are required, there was a high fall off in the number of sales.
Conversely, because prices on the lower end of the scale dropped, the first-time homebuyer came back into the Orange County market in a big way. This changed the “mix” of homes sold with many more selling under $500,000 and with fewer homes selling in the higher ranges, the averages are not the best indicator of overall price drops.
[ More Eyeball ‘09 HERE | Eyeball ‘08 | ‘07 ]
You need your real estate professional to be area specific to show what prices were one year ago versus today. A “countywide average” while interesting to talk about, is meaningless to any one particular home seller or home buyer. I expect the sales of properties to increase in 2009 over 2008 by about 8% to 10%.
Eyeball: What’s the chance we hit bottom in 2009? What might it look like?
• Click to vote on '09 pricing!
Rich: We bottomed out in 2007 for the actual number of properties sold. I do believe we will see the bottom of the pricing cycle in 2009. This is primarily because of the drop in available inventory. On Dec. 4, 2007, there were 16,349 properties available for sale in Orange County in the SoCalMLS. On Dec. 12, 2008, there were only 11,551 available properties.
With 4,798 fewer properties on the market the “glut” of properties of the past few years has been worked off. Some of these properties sold. Some of the homes were simply taken off the market but the end result is that a buyer in Orange County today has far fewer properties to choose from than a year ago.
Assuming this trend continues, the supply and demand metrics will bring buyers’ desires and sellers’ desires more into balance. When there is a glut of inventory, buyers pretty much have the upper hand and have many home choices if a homeowner rejects their offer. When there is balance in the market, which we are beginning to see, both buyer and seller need to negotiate fairly with each other.
The California Association of Realtors is predicting a price drop in 2009 of an additional 6% on the statewide average selling price. I believe this is an accurate prediction and we will then see prices beginning to increase in 2010.
Eyeball: What do you fear the most about the real estate market? Why?
Rich: The fear is the national economy. While I have concerns about the jobless numbers rising so quickly, my bigger fear is related to a lack of mortgage funds. Liquidity is a critical component of the real estate business and without mortgages it would grind to an ugly halt very quickly.
The government is acutely aware of this and whether you agree with the bank bailouts or not, a prime motivation of the effort was to keep liquidity in the banking and finance system. The efforts being made by the government to make FHA a viable housing program again have been impressive. They also need to continue to work with Fannie Mae and Freddie Mac to ensure they have the ability to continue to buy mortgages.
Eyeball: What gives you hope? Why?
Rich: I have much hope. I do believe the worst is behind us. As of this writing, we are seeing interest rates in the 4.875% range. Yes, 30-year fixed-rate mortgages for under 5%. Homebuyers are very astute in California. They will quickly realize that an incredibly low interest rate, a safe 30-year fixed payment mortgage and the lowest housing prices in years will make the home of their dreams possible. Homes they could have never dreamed of purchasing a few years ago are now within their reach.
[ More Eyeball ‘09 HERE | Eyeball ‘08 | ‘07 ]
In the larger sense, the government knows that to “fix” the economy, they must fix housing. These low rates will get the sales moving and provide a floor under the market which will become a foundation to grow on.
Eyeball: What surprise or surprises will we be talking about at a year from now?
Rich: If I knew the answer to that now, it would not really be a surprise. I think we will be pleasantly surprised by the vigor of the market when we look back at 2009 in one year. Foreclosures will be down, sales of homes will be up, prices will have stabilized and will grow in the years after 2009. Short of some national financial catastrophe, I think there will be plenty of smiles to go around looking back at 2009.
And you’ll want to come back …
- NEXT UP: Marketing expert John Most
- THEN: Investor/lender Bruce Norris
- All of Eyeball 2009 to published date is HERE
Originally posted here.
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December 27, 2008
TOUSA in Vegas
‘Tis the season for bargain hunting. (Remember when it was time for excess?)
Might the bargain-basement acquisition bug pop up at O.C. builder Standard Pacific? Stan Pac says …
“Although the homebuilding industry is experiencing challenges at this time, we believe that there may be attractive land and corporate opportunities worth considering. We continuously review acquisition and other strategic opportunities which could enhance value for our stockholders. To this end, the Company is engaged in preliminary discussions and the exchange of information with TOUSA, Inc. regarding a possible transaction. There can be no assurances that any transaction will occur, or as to the timing, structure or terms of any transaction. That said, the Company does not anticipate having any further comment unless and until a definitive agreement for a transaction is reached.” (MORE)
So, who is TOUSA?
- “a leading homebuilder in the United States, operating in various metropolitan markets in 10 states located in four major geographic regions: Florida, the Mid-Atlantic, Texas, and the West.” … “We market our homes under leading local brand names including Engle Homes, Newmark Homes, Fedrick, Harris Estate Homes, and Trophy Homes.” (MORE)
- HOLLYWOOD, Fla., Oct. 14 /PRNewswire/ — TOUSA, Inc. (Pink Sheets: TOUS) and certain of its subsidiaries, today announced the filing of their Plan of Reorganization (the “Plan”) and related Disclosure Statement (the “Disclosure Statement”) with the U.S. Bankruptcy Court for the Southern District of Florida, Fort Lauderdale Division. (MORE)
O.C. builder pays CEO $3 million for 9-months work
Need an outlook on O.C. housing for 2009?
Real estate news you may have missed?
Originally posted here.
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December 27, 2008
Welcome to Eyeball 2009! This is our holiday gift to you: Two weeks of outlooks on local real estate conditions! A new vision every day of the week at noon through Jan. 6! Our eighth guest is …
Christopher Thornberg, the outspoken economist formerly of UCLA, who now works for Beacon Economics that he co-founded.
Eyeball: What’s the O.C. housing outlook for 2009?
Chris: Something between grim and nasty. Even as the subprime debacle continues to play out, the traditional source of housing weakness — rising unemployment — is now starting to kick in as well. To date the various policies the government has pursued to try to stabilize the markets have largely failed, because they do not acknowledge the fundamental issue — prices were forced to levels far out of whack with reality. Prices need to fall to fall even farther to get back to their historic norms relative to incomes in the region.
[ More Eyeball ‘09 HERE | Eyeball ‘08 | ‘07 ]
Eyeball: What’s the chance we bottom in 2009? What might it look like?
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Chris: Given the pace that prices are falling, it seems that housing will find bottom near the end of the year. But bear in mind that hitting bottom does not lead necessarily to coming off the bottom. Expect housing to sit there for years.
Eyeball: What do you fear the most about the real estate market?
Chris: My biggest fear is the crazy knee-jerk policy proposals coming out of certain corners of Washington DC and Sacramento. So far we managed to shoot down the worst of these, yet in the vacuum that will occur as the new administration comes into power we face the potential for these proposals to yet again come to the forefront and be passed. These include:
- Forcing cram downs — mortgage principal balance reductions — on banks.
- Stopping foreclosures and not allowing the market to clear.
- Rolling homes back under general bankruptcy protection.
- Providing mortgage insurance to banks for loans at best modestly
- altered and highly likely to go into foreclosure anyways.
All of these proposals either reward rechless buyers who borrowed and bought far beyond their means, will reduce the speed of housing recovery, create long run costs that all future buyers will incur and/or cost the taxpayers dearly,
Eyeball: What gives you hope?
Chris: While policy seems to be aimed at stopping the fall in prices, in many ways this is exactly the cure the market needs. Southern California has an enormous pent up demand for homes by families at the lower end
of the income scale. Eventually if prices fall far enough this will allow the potential buyers to soak up the excess supply of foreclosed homes and allow a quick recovery in the market.
Eyeball: What surprise or surprises will we be talking about at a year from now?
Chris: Well it wouldn’t be a surprise if I told you, now would it.
And you’ll want to come back …
- NEXT UP: PruCal’s Rich Cosner
- THEN: Most Agency’s John Most
- All of Eyeball 2009 to published date is HERE
Originally posted here.
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December 26, 2008
Luxury-home Realtor John McMonigle has sold “Val Verde,” his 10,700-square-foot house in Irvine’s Shady Canyon.
McMonigle, who declined to disclose the sale price, said he sold the home so his family could upsize.
The McMonigles currently are renting another Shady Canyon home while they hunt for a new lot on which to build another residence. His family of six has grown, he said, and his wife now wants a bigger closet, while he wants a subterranean garage.
“We’re excited about buying another lot and building a new home,” McMonigle said. He explained that he decided to act now because there are only a few undeveloped home sites left in the luxury golf course community.
McMonigle, who also owns his own custom homebuilding company, said he has built 15 homes for his family in the past 13 years.
The McMonigles bought the one-acre corner lot overlooking Shady Canyon golf course for under $2 million in 2001. He originally inteded to develop it for sale, but ended up moving into the finished home instead.
According to the multiple listing service, McMonigle listed this home for $10.9 million. County records show that the deal closed on Oct. 17. He said a confidentiality agreement prohibits him from disclosing the price, but he added: “There was no commission, so effectively it was a reasonable value for (the buyers) and a nice deal for me.”
Designed by architect David E. Martin, the old Tuscan-style estate features rustic, wood-framed windows, fireplaces made from hand-carved Italian limestone and 100-year-old pine salvaged from a former schoolhouse and wooden beams salvaged from old barns.
It has his-and-hers walk-in closets, a home theater, a cigar lounge, a wine cellar and a gift-wrapping room.
Rumors had circulated in real estate circles that McMonigle sold the house in a fire sale, but he denied that.
“The decision (to sell) was made solely for family reasons,” McMonigle said. “This had more to do with us.”
See our 2009 outlook interviews …
Other real estate news …
Originally posted here.
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December 26, 2008
Hahn
The current recession will be the nation’s longest and deepest since the Great Depression, resulting in perhaps 2 million more people losing their jobs and 8 million to 10 million additional homeowners losing their properties, Irvine real estate economist Walter Hahn forecast recently.
Hahn said he bases his conclusions on the jobs outlook “since employed people are the foundation of our economy.”
Among the consequences Hahn foresees:
- The loss of 2 million-plus more jobs, many in the first quarter of 2009 after a disastrous holiday season for retailers and manufacturers.
- A downward spiral caused by reduced consumer spending, resulting in more job losses, thus in further reductions in consumer spending.
- A continuing flood of home-loan payment adjustments that will result in additional defaults and foreclosures through 2011. “I have seen estimates of 8 million – 10 million foreclosures before all the home loan excesses are purged from the market.”
- Further drops in home prices due to continuing tide of foreclosures.
- Commercial real estate entering the rearly stages of a recession that won’t hit bottom until 2010. “The resulting drop in new construction will result in more job losses.”
Hahn, a consultant who advises homebuilders, wrote:
“We are suffering the consequences of 25 years of spending more than we earn and produce – by consumers, companies and government – and borrowing trillions of dollars to finance the difference. We have been on a 25 year debt binge but now the party is over and we have to endure the hangover, which is this recession.”
Hahn advises that the federal government needs “to spend billions more” on investments to creat jobs quickly, such as infrastructure construction and building new homes.
For more views on the outlook for housing, see our Eyeball 2009 Q&A’s …
In other real estate news…
Originally posted here.
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December 26, 2008
Welcome to Eyeball 2009! This is our holiday gift to you: Two weeks of outlooks on local real estate conditions! A new vision every day of the week at noon through Jan. 6! Our first complete week concludes with …
Robert Brunswick is the founder, president and CEO of Buchanan Street Partners, a commercial real estate investment management firm. The company did $3.7 billion worth of business in 2007, including investments in properties from Washington, D.C., to Irvine. That occurred before global investment firm TCW Group Inc. acquired a majority interest in the Newport Beach company.
Eyeball: When will the real estate market hit bottom?
Robert: My comments are centered on the commercial real estate sector and not residential, but of course there is some correlation pursuant to the economy.
In regards to commercial real estate, it’s important to remember that real estate is always a laggard in recessionary times. The primary issues for commercial real estate are they’re getting hit by the double whammy. First, the capital market implosion, with real estate being a capital intensive business, will force deleveraging of the asset class with a correlated devaluing of the asset.
Much has been said about this devaluing with projected 15-30% declines in values targeted, with certain product types and certain geographical areas being hit much harder due to the nature of their secondary market standing, lack of job growth and higher unemployment rates.
The second issue is, of course, the prolonged recessionary impact on real estate and its impact on rental decline and occupancy levels throughout the retail, office, industrial and multi-family sectors. So if you’re asking when will the values be at their lowest point, I would look towards the end of 2009 to the middle of 2010 — although no one can predict the bottom and there will be buying done prior to these dates in anticipation of the excellent opportunity to buy commercial real estate well below future replacement cost.
Eyeball: What numbers are you watching and what things are you watching anecdotally to see which direction the market is going in?
Robert: We certainly pay attention to a number of metrics as we assess real estate investment opportunity. Primarily we have focused on unemployment trends, consumer debt levels against annual GDP (which are currently at their highest levels ever), venture capital flows (as this speaks to new business opportunities), loan defaults (which will absolutely climb from currently half of 1% to probably at least 5% in this commercial sector) and finally tenant default trends based on region and based on business sector.
Eyeball: What do you fear the most?
Robert: Of course, the lackluster economy and the expectation for a protracted recession are high on my fear factor list as it’s all about the tenants and their sustainability and growth that is the capital driver for cash-flow maintenance and value creation within commercial real estate.
[ More Eyeball ‘09 HERE | Eyeball ‘08 | ‘07 ]
• Click to vote on '09 pricing!
Having said that, I’m probably more optimistic about its recovery than I am about the capital markets’ return to some level of normalcy. We need to get the banks working to put back money into our system, albeit in a much more thoughtful diligent manner.
Eyeball: What gives you hope?
Robert: Finally… a chance to talk about some good news.
The first thing that gives me hope is that our business sector due to the capital market and recessionary issues will wean away many of the part-time or less sophisticated participants such that the true professionals can continue to run and grow this asset class to enable it to garner more and more capital flows.
Further, I am convinced that America’s entrepreneurial spirit will, as it has in the past, get us back on track from an economy standpoint, which will certainly bode well for the commercial real estate sector. I’ve been in the real estate business since 1981 and have never seen such an attractive investment thesis in the offing.
Eyeball: What surprise or surprises will we be looking at a year from now?
Robert: I believe that 2009 will undoubtedly set a mark in time as the year that established the new paradigm for commercial real estate investing and real estate services.
[ More Eyeball ‘09 HERE | Eyeball ‘08 | ‘07 ]
Specifically, I believe that real estate participants will become more consolidated as higher quality reporting, services and performance will be required by investors seeking to invest larger amounts of capital into our sector.
I believe the deleveraging of the asset class will be a more permanent ingredient of future real estate investing and prompt real estate to become more of a proxy to a fixed income asset while also providing an excellent inflationary hedge with the benefits of investment in a tangible hard asset.
And you’ll want to come back …
- NEXT UP: Economist Chris Thornberg
- THEN: Investor/lender Bruce Norris
- All of Eyeball 2009 to published date is HERE
Originally posted here.
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December 25, 2008
Orange County has the sixth-worst forecast of the nation’s 100 top housing markets, Fortune magazine reports.
The Fortune article says that the county’s 2008 median home price of $532,810 will fall 22% in 2009 and an additional 3.5% in 2010. More from the story:
“Of the 100 biggest markets, this Orange County area, which includes Anaheim and Irvine, was the fifth most expensive place to live this year. But in 2009, prices are forecast to decline by $121,000.”
The magazine rates Los Angeles as the nation’s worst market, with prices forecast to fall 24.9% next year. The other four worst markets and estimated 2009 decline:
- Stockton (-24.7%)
- Riverside (-23.3%)
- Miami (-22.8%)
- Sacramento (-22.2%).
To read the full story, CLICK HERE!
For more views on the housing market outlook, see our Eyeball 2009 housing forecast Q&As …
In other real estate news …
Originally posted here.
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December 25, 2008
Talega
The Concord Group, a Newport Beach development consulting firm, reported that home prices and sales have fallen at five new home projects with price tags of $1 million and above.
The firm examined sales this year at five O.C. housing projects — Lucia and Alta at Talega in San Clemente, Breakers at Brightwater Homes in Huntington Beach, and The Tides and Seapoint in Newport Coast. The results:
The Tides
- Prices fell between 7% and 15% from January to December at the three projects with homes selling for $1 million to $4 million.
- Prices fell 3% to 4% at the two projects in the $4 million-plus range.
- Sales rates were cut in half for all five communities, dropping from an average of one home sold a month to one home sold every two months. Sales declines were sharper in the $4 million-plus communities.
Brightwater
“A lot of people think the luxury end of the market is immune to downturn; this data suggest that O.C., with its high percentage of affluent citizens, is being impacted on the higher end. It’s not as bad as less affluent sections of O.C., but it is still notable.”
Our Eyeball 2009 housing forecast Q&As …
In other real estate news …
Originally posted here.
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December 25, 2008
Welcome to 
Eyeball 2009! This is our holiday gift to you: Two weeks of outlooks on local real estate conditions! A new vision every day of the week at noon through Jan. 6! Our sixth guest is …
David Levy is a housing-rights advocate at the Fair Housing Council of Orange County with expertise in real estate and renters’ issues. The Fair Housing Council also has been counseling homeowners facing foreclosure. We asked him about the outlook for 2009 and how it will affect tenants.
Eyeball: What’s the OC housing outlook for 2009?
Dave: I think the outlook would have to be characterized as bleak. It will certainly be no better than 2008, and is likely to be worse. The foreclosure crisis will continue, and many of the new foreclosures will not be resolvable with the homeowner staying in place. There is no strong indication, at this point anyway, that there will be new government responses that are any better than the mostly ineffective ones attempted thus far.
Eyeball: What’s the outlook for tenants?
Dave: Most directly, there will be an easing of the rise in rents, possibly even getting to a flat or slightly declining rate. This will be mostly tied to the economic downturn. There will be some increase in vacancies driven by households consolidating, moving in with family or friends, etc., and previously for-sale units being offered as rentals. That will be counterbalanced, but not overcome, by demand from foreclosed upon former owners entering the rental market. There might be more single-family units available for feasible rents.
An unknown for some multi-family tenants, more likely those of smaller landlords, is whether those owners might lose properties in foreclosure. Commercial foreclosures have been mentioned as another area of turmoil that may be coming. Tenants of foreclosed rental complexes may face disruptions or declines in the quality of their housing.
[ More Eyeball ‘09 HERE | Eyeball ‘08 | ‘07 ]
Perhaps the good news for certain tenants, who are truly financially ready, is that the move to homeownership may be more achievable than it has been for several years. While still above historical norms, home prices are now much more in line with incomes. Once the credit markets start working again, tenants with money to put down and good credit will no longer be faced with prices that continue to move out of reach.
Eyeball: What are the chances the housing market will bottom in 2009? What might it look like?
• Click to vote on '09 pricing!
Dave: We won’t see the bottom in 2009. We are seeing an increasing number of foreclosures resulting from job loss, which will put more downward pressure on prices. These foreclosures will mostly not be subject to any rescue attempts, because no loan modification can work if the borrower has little or no income. That leaves primarily ‘short-sale’ or trustee’s sale.
Added to that will be a ‘second wave’ of foreclosures from so-called ‘Alt-A’ mortgage defaults. While these may be open to some form of loan modifications, they are approximately equal in number to the sub-prime ‘first wave.’ Given the overall poor workout success rate thus far, they too are most likely to go to a ‘short-sale’ or to trustee’s sale.
Eyeball: What do you fear the most about the housing market? Why?
Dave: From the perspective of an agency trying to broaden everyone’s access to quality housing, I fear that, as a society, we will not learn the appropriate lessons from this current market crash. We forgot that housing is first, and foremost, a place to live, not some kind of financial instrument. The distortions of the recent market, that falsely treated housing as a means of wealth creation, rather than its traditional wealth accumulation, helped drive a ‘have’ and ‘have not’ scenario. That helped lead many of the ‘have nots’ to act irrationally, by buying housing they really could not afford, in an attempt to join the other camp.
[ More Eyeball ‘09 HERE | Eyeball ‘08 | ‘07 ]
Eyeball: What gives you hope? Why?
Dave: Ironically, while I fear that the lessons of this burst ‘bubble’ will be soon forgotten, like so many times before, I take hope that perhaps this time, given the magnitude and national scope of the problem, some important changes will occur. One lesson learned should be the need for balance in housing policy and development, which considers the housing needs of all economic segments of the community. While homeownership will remain the goal, I hope such balance will prevent overemphasis on that goal at the expense of a more rational overall housing policy. From these ashes may rise a Phoenix of a mix of housing opportunities, supported by public policy, that seeks to provide all of us a chance at a decent, safe and affordable place to live.
Eyeball: What surprise or surprises will we be talking about at a year from now?
Dave: I’m somewhat hesitant to predict the unforeseen regarding the future of housing. After all, it was the prediction that home values would just go up forever that has left so many ‘surprised’ by where we find ourselves today. However, I’ll venture that one surprise will be that the Obama government will get solidly behind implementing the National Housing Trust Fund.
While the Housing and Economic Recovery Act of 2008 created the fund, its funding mechanism, using funds derived from Fannie Mae and Freddie Mac, is likely dead for the time being. Under the leadership of HUD Secretary-designate (Shaun) Donovan, a means will be found to start funding the trust.
And you’ll want to come back …
- NEXT UP: Commercial investor Robert Brunsiwick
- THEN: Economist Chris Thornberg
- All of Eyeball 2009 to published date is HERE
Originally posted here.
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Buyer's Market.
