This being election day, I think it's a really good time to talk about change. Not "Change We Can Believe in" which was President Obama's campaign slogan, but change as in doing things differently and for the better. We have gotten ourselves into a situation whereby true change of our governmental system is something people seem to be quite afraid of. At this point, why? Why do we fear change when our current system is broken and does not seem to be making anyone happy, except those who are benefitting from the system. Those people would be those in elected office, who can happily change the health care system since they have the best coverage of anyone and will not be footing the bill. Others who benefit are lobbyists, whom we have allowed to become a highly paid force representing special interests who hold way too much sway in policy.
Thinking about change in our financial system, the biggest change we can have is opening up the floodgates of lending. Employment and the housing market's strength are intertwined, especially in our current situation. Our economy is not going to improve until we stabilize the housing market. The housing market isn't going to stabilize or improve until buyers can get loans. We espeicially see the correlation between the housing market and jobs in Crested Butte, CO since we are a resort community. Besides the ski resort, most jobs here are in the housing market, from real estate agents like me to builders, lenders, decorators, etc. If the housing market here isn't healthy, taxes are greatly reduced which reduces services, restaurants are less busy effecting owners and employees and the shops are underutilized causing those owners and employers to suffer.
What then is the change that we need? We need lenders to modify loans to keep homeowners in their homes and decrease the number of vacant homes due to foreclosures. We need a new group of lenders to see that there is an opportunity to make money doing real estate loans at current rates. One might think that with historically low long term rates lending cannot be profitable. However, short term rates are even lower so there is room for a profit (banks take in deposits at 1% and lend at 4%). Locking in 3% (300 basis points) is a beautiful transaction for someone like me who is more accustomed to making 3 basis points on a transaction (in trading, not real estate).
Instead of government trying to change things like health care and the financial industry, they should be focused on changing things that matter and can stimulate the economy. Lenders need to lend so people like me can help people purchase the properties they want, then we can all spend money on taxes, restaurants and stores so our country becomes a superpower once again.
(Crested Butte real estate agent Diane Aronovic is a former Managing Director at Bank of America Securities, and a real estate agent at Red Lady Realty in Crested Butte, CO)
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