Friday Facts November 25, 2011

FRIDAY FACTS

November 25, 2011

 

Here are some sound-bites from Lawrence Yun, Chief Economist of the National Association of Realtors, speaking at the Economic Issues & Residential Real Estate Business Trends Forum at the NAR Conference in Anaheim, California on November 11, 2011

 

  • The world feels upside down.  Too much strangeness going on.  It’s difficult to get the recovery we need.  Best affordability ever but no pick up in house sales.
  • According to Case-Schiller, prices have stabilized over the past two years
  • 40 year low in inventory of newly constructed homes
  • Huge cash reserves at banks.  Record high financial industry profits last year and very good profits this year, yet BOA stock in the tank.
  • Federal Reserve is trying to stimulate yet regulations discourage lending
  • Never before a better time to buy, yet home sales running flat
  • Prices are up in Boston, San Francisco, D.C., San Diego and Buffalo.  Prices are down in Atlanta, Chicago, Las Vegas, Miami, Phoenix and Portland, Oregon.
  • New home construction at a 46 year low.  Lowest rate since WWII for the past 3 years.  Builders can’t get construction loans.
  • Existing inventory elevated, but trending down. 
  • Only a third of Dodd-Frank bill has been implemented.  Great uncertainty over remaining two thirds and what the regulations will be.
  • Latest Home Buyer/Seller Survey for 2011 released.  Last year’s home buyers had increasingly higher income.  Creating a divided society.  Home ownership possible to less and less of the middle class
  • Work hard in America, you will be punished is the message coming from D.C.
  • Traditionally, home price versus rent was 1 to 1.  CPI rent is rising.  Next year rent growth could be 3 to 4%.  Home prices should rise concurrently.
  • Cost comparison over the past 20 years – rent up 200%, food up 150%, gas up 197% yet mortgage payment rates have risen minimally
  • Gold now rising.  5 years ago was okay as an inflation hedge.  Now, real estate could be that hedge.
  • Consumer confidence remains in the tank.  Country leaders can change attitude:  FDR, Truman, Ike, Regan all did.  Inspiration doesn’t cost money.  Dividing the country makes it worse.
  • When will we see an end to the strangeness?  Let prices recover without obstacles.  If prices go up 5%, 2 million fewer will be underwater.  Obstacles:  Rising mortgage rates, QRM-20%.  Attack on home ownership by academics and the media
  • Tea party – leave us alone – against big government
  • Occupy – someone screwed us – against corporations
  • VA loans – 4 million no down-payment mortgages for WWII vets.  Fueled unprecedented growth of the middle class. 
  • Simple fact:  stay within your budget and you’ll be fine
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