Who gives a Hoot? Real Estate and the Economy.

By
Managing Real Estate Broker with Alta Realty Company, LLC RB 21961

Great Horned Owl

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:Credit Chart

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:

Stimulus

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:

2011 Federal Budget

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:

Equity

And now the good news! Housing affodability is way up, better than it's been in 20+ years! See the chart below:

Affordability

But we still need to get back on our feet employment wise and work through the excess housing inventory. See chart below:

Inventory

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.

Best Regards,

Donn Rasch
Broker, CDPE
RE/MAX Equity Group, Inc.
Cell: 503-658-5000
Fax: 503-495-3235
www.equitygroup.com/drasch
Donn's Blog

Comments (2)

Gabby Tyer GRI, CRS
Realty Solutions,LLC - Portland, OR
Real Estate Sales and Property Management

Thank-you for sharing this information.  I just want to to make a comment about too much credit etc...  I totally agree that we have too much credit and we should save more and quit buying stuff just to have it.   However as a mostly REO Broker I want to say that-No one thinks their life is going to be worse the next year.  No one thinks their going to loose their job.  No one thinks their health is going to fail.  No one thinks the banks,corporations, politicians etc... are going to take advantage of deregulation etc...  Most of the people I meet lost their jobs or had a health crisis and just simply cannot afford their mortgages anymore.  Bush was absolutely right that Wall Street got drunk with greed and threw the rules out the window.  They bet against the very people they were advising. 

Even if you did not loose your home.  You still lost 40/50% in your 401K or pension.  So everyone has felt this recession in one way or another.  So before saying people lived beyond their means-ask yourself- If I lost my job and got $260 bucks a week unemployement could I pay my expenses? Most of us could not. 

If you do meet anyone in need of a Social Service need (food,shelter,counseling,health etc) Please direct them to 211.  It is a non-profit in 47 states that direct people to services.  www.211info.org  is the website. 

 

Oct 24, 2010 05:27 AM
Donn Rasch
Alta Realty Company, LLC - Hawi, HI

Gabby thanks for your comment.

I hear you about no one thinking their life is going to be worse next year. And I agree there are folks who through no fault of their own, are walking the foreclosure path.

Having said that, there are plenty of people who have created their own mess by living way beyond their means. There are also people who have the means, but have made the decision to "take advantage" of the current economic situation by walking away from their financial obligations. Some of those people are taking it a step further, by not only failing to pay their mortgages that they can afford, but staying in the home for 12-24 months and longer working the system. It is outrageous and they are part of the problem. Unfortunately, our society is full of people who have got to have it now, and when it comes time to pay for it they act like they were taken advantage of. I could go on about what I think of those people but I would have to be censored!

It is important for everyone to educate themselves financially, be responsible for themselves financially and to live within their means.

Thank you for website link, it looks like they are great help for people who are "truly in crises".

Oct 24, 2010 01:58 PM