I attended a talk on "Real Estate and the Economy" Thursday afternoon at my office. The presenter was Pat Stone with WFG National Title Insurance Company. Mr. Stone is the President and CEO of WFG and gave what I consider to be a very informed snapshot of today's market and how we got here. This is my very brief, condensed interpretation of some of his talk with some of the charts from his presentation.
We as Americans have become addicted to credit over the last 60 years. Our recent financial troubles have tempered our credit appetite and we appear to be starting to wean ourselves off the vicious credit trap, please see the chart below:
Stimulus programs designed to get us back on a healthy economic track provide a measured return to the economy on a per dollar basis as shown in the chart below:
President Obama's 2011 budget continues to add to the deficit. The only way to balance the budget is to raise taxes and cut spending. Everything else is smoke and mirrors. All politicians lie, they tell you what they think you want to hear. See chart below:
Real estate owner's equity has eroded drastically over the last 60+ years. Combination of homes being used as ATMs and the recent market crash has taken us to an all time low. See the chart below:
And now the good news! Housing affodability is way up, better than it's been in 20+ years! See the chart below:
But we still need to get back on our feet employment wise and work through the excess housing inventory. See chart below:
The bottom line is consumer confidence must return. There is a ton of capitol sitting on the sidelines waiting to jump back into the market, but it is waiting for a sign. It is waiting for an indicator that prices have stabilized and appreciation is once again a factor in the market.
But, there is still a lot of oppurtunity out there for the savy investor. Foreclosure deals, great housing affordibility and interest rates at historic lows. In some areas you can buy a home for cheaper than a builder can build it for. This is seen as an over correction of the market and can't last.
The storm isn't over, but the end is in sight.
For all of your Portland, Oregon metro area real estate needs, feel free to contact me.