Thursday, May 14, 2009
Talking real estate in the Capital
Mark Thomton, the editor of Illinois Real Estate Journal, recently traveled to Washington D.C. and the mid-year conference of the National Association of Realtors. Here's a taste of what he found there.
I recently spent a few days in our nation’s capital, rubbing elbows with members of the National Association of Realtors at the group’s Mid-year conference.
The conference is a weeklong affair, but I was only able to attend the first few days. The fireworks really kicked off Tuesday morning when NAR hosted its first Real Estate Summit. The association of 1.2 million members was able to pull in some heavy-hitters for the occasion: Patrick Buchanan; former U.S. Secretary of Labor Robert Reich; Secretary for Housing and Urban Development Shaun Donovan; Harold Ford Jr….and that was just the morning session.
I was unable to catch the afternoon session (had to catch a plane), but in attendance were Alan Greenspan and Sheila Baer, chairman of the Federal Deposit Insurance Corp.
Needless to say, the place was packed.
I wish I could say it was a light affair and that the mood was upbeat, but the frustration that permeated throughout the room full of Realtors (overwhelmingly residential) was almost palpable. Who can really blame them? This is the worst housing market since the 1930s (which we were all reminded about several times throughout the morning).
It seemed that the repeating theme expressed by Realtors as they approached microphones to question the speakers was the extreme lack of liquidity in the market. Realtors (and taxpayers) want to know why banks aren’t lending the bailout money the government signed off on in February.
Multiple times, an exasperated and visibly upset real estate agent would approach the microphone and say something along the lines of, “I can find creditworthy borrowers, but the lenders who used to work with me are no longer issuing loans.”
They all wanted to know when the money would start to trickle into the market again.
Unfortunately, no one in the morning session was able to give a solid answer.
One member of the morning panel discussion (a 14-member panel discussion, mind you) asked the room to “put on their lender hats.” He noted that if prices were still declining and would probably decline for the short-term, would any of them be eager to loan money out?
He had a point.
There were other highlights as well…
Secretary Donovan got the biggest reaction out of the crowd when he announced that the $8,000 homebuyer tax credit will soon be eligible to use at the point-of-purchase for down payment purposes. That got the place rocking.
One of the biggest problems with the lack of liquidity is lenders are unwilling to lend to parties with little cash equity. This could solve that problem, and banks may be more willing to hand out loans.
Robert Reich was very funny and upbeat, despite labeling himself an economic soothsayer and saying that the economy had another 18 months of stagnant or recessionary activity before things began to turn around.
“The economy is not falling off a cliff anymore,” said Reich. “It is now slowly rolling down a grassy hill. That’s not as bad, right?”
He said that he is very positive about the country’s future and that four to five years from now, the United States would be in a very good place.
Here is to that sentiment.