RE/MAX co-founder sees signs housing market is improving

RE/MAX co-founder sees signs housing market is improving
Dave Liniger shares his predictions for the sector and the overall economy
Wednesday, March 19, 2008 http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/120589710916650.xml&coll=7

AMY HSUAN
The Oregonian Staff

These days, Dave Liniger, co-founder and board chairman of RE/MAX International Inc., is more prognosticator than salesman. Still, even with nothing but doom hanging over the housing industry, Liniger comes ready with the infallible pitch: Buy! Buy! Buy!
And if anyone were to know what to do at a time like this, it might be Liniger, who in 1973 opened a single Denver real state office and turned it into what is today an international franchise with offices in 65 countries. In Oregon, RE/MAX is the top-selling real estate firm with 1,480 brokers statewide.
Liniger, on a national speaking tour for the year, stopped in Portland on Monday to give local real estate agents a pep talk. He had a few tidbits to offer homeowners, too, as well as thoughts on the Fed's unprecedented move to salvage Bear Stearns.

How is the Portland housing market doing in comparison with the national picture and what's impacting it?

The Portland market is right along the lines of the national average. Right now the national average for months of supply is about 9.5 months. Portland is about 10 months. So, Portland is like Main Street America. The places that have really been hammered are like Miami, southern Florida, Las Vegas and Southern California and Orange County. Compared to those places, Portland is doing OK. Portland has a bigger business base and a more broad-based economy. Also you have the advantage of being like the Sun Belt, though I probably shouldn't say that. It's more like the Silicon Valley. It's a desirable place to live, like Seattle, and people are continuing to want to move and buy here.

How do you think the Fed's bailout of Bear Stearns will impact homeowners or the housing market in general?
The whole subprime mess has created a real concern over the stability of financial institutions. All the restructuring over the past four to five months has been aimed at stabilizing the markets, and the move with Bear Stearns is about restoring consumer confidence. No one can tell if we're at the bottom of this. But it seems like things are turning around. We are beginning to see Realtors buying investment property, and that's a sign that the experts, the real industry insiders, have some confidence in the market and are beginning to invest themselves. Now is the best time to buy for the long term. Before, it was investment bankers buying the property, and those guys are industry outsiders, speculators. So, I think there is a sign that things are beginning to turn around with there being more confidence.

How does this current slowdown compare to previous recessions?
This is the fourth major housing recession since 1973. Most of the previous recessions have been fairly local and regional rather than national. This one's different because the housing business usually takes us out of a recession and this time, the housing business took us into the recession. Subprimes, overbuilding by builders, investment buyers and very low interest rates just meant the supply and demand went out of whack. The market overheated. The housing market is not going to take us out of this. It's created a long-term, fundamental shift in the economy of the United States.

What are your feelings about this unprecedented involvement by the Fed? And what is your reaction at its decision to bail out an investment bank that is partly to blame for the problem now rather than the homeowners who got caught up in the tide?
I think this move is an emergency measure. It's almost impossible for the government to handle millions of transactions on a case by case basis. But I think they're thinking if they can stabilize the credit market, things will even out. It will be a painful correction either way. The correction had to happen sooner or later.

What is your advice to homeowners given the economic crisis, which seems to keep getting worse?
The typical homeowner will feel no impact. Only 2 percent of owners have foreclosed, so that means 98 percent of those are not in foreclosure. Of those 98 percent, very few are trying to sell their homes now. The average homeowner is not going to be trying to sell their home during this time, and they'll just ride it out. The market will correct itself, though no one knows if we've hit bottom yet. It'll likely stay like this for the next two to three years, and it could get worse, but if you're not trying to sell your home right now, it won't have an impact.
It's a perfect time to buy. There's the biggest selection, there's the most incentives being offered, if you're buying long term, this is the time to buy. But if you are looking to flip a house, then it's a terrible time to buy.