There term "Real Estate Recovery" is an oxymoron because it isn't occurring! It is interesting to look at what is taking place in our industry these days, and it is even more interesting to see what isn't. Historic low mortgage rates are not bringing buyers out in droves as they normally would. Massive builder incentives and bonuses are not whetting the appetite of cashed starved agents and brokers to sop up excess inventory some of which has been sitting for years. Buyers sense there is something else is about to occur. There is a pervading sense of dread that the other shoe is about to fall. Pending contracts, building starts are down...the message is loud and clear..."Slow times ahead!" In the Atlanta area, new contracts are the lowest level in over 10 years!
Rising unemployment and lack of any real job creation after massive amounts of Federal Funds have been spent... have set an uneasy mood across the nation. Consumers are finally watching their spending which in one way is good, but it also means less money is going back into the economy. Even a blind person can read the writing on the wall. It is not working. We are in a deflationary cycle that no one is acknowledging. For the consumer, it translates into a major loss of confidence. Buyers are afraid of job loss, and that they may be the next persons laid off, or their wages could be cut. They are also concerned about the future devaluation of real estate property values, inflation, higher taxes, and in turn they are afraid to take a calculated long term risk. Can we blame them for being prudent and wanting to buy right? No we cannot! This is real money they are risking. Our industry acknowledges that recently closed sales are still comprised with more distressed homes sold than anything else. That does not bode well for future property values, and according to most industry experts there is no end in sight to this vicious circle.
Washington is sending the wrong signals...are they really fixing the economy or wrecking it? The banks that were awash with taxpayer dollars are not making loans as they should. In fact the complaint many loan officers and those actively engaged in real estate have noticed that loan processors in many banks were short staffed. Instead...many banks were taking the Federal funds and creating their own hedge funds with taxpayer dollars and are making billions a month in profit mainly buy betting against the market. The interesting thing is that Congress did not foresee this before they freely gave away a trillion dollars of stimulus monies with basically without any oversight. Nothing in the last year has been done to correct this. Big bonuses in government bailed out firms that were not tied to any real performance and political cronyism has sent the message to the public at large that it is business as usual in Washington DC. It is all about them, Congress's political futures and not the welfare of the nation's.
Meanwhile if we learned any lesson from history it is not to repeat mistakes of the passes, In the 1930's immigration was suspended because what is the point of letting more persons into the country while our own neighbors were out of work? Yet Congress defiantly does nothing to correct immigration issues, or crack down on those that hire those worked that are undocumented. We are a nation that cries out equality, yet openly has a slave labor class that in our current economy only compounds the problems. Never before in the history of this nation have we had 30 million illegal aliens, and compound that with less work to go around. History also teaches us that the government interference into the economy in the 1930's actually prolonged the Depression from 1929 to 1940. There are no incentives or innovation when the private sector is removed from the equation. Higher taxes in dire times will not spur on a recovery. It will turn the United States into a feudal state and lower further the standard of living which we have learned to love in the one "Land of Opportunity!"
With federal Tarp funds and bailout monies for the economy now expiring, I see trouble ahead both short and long term for our economy. Higher taxes, less government services, high unemployment, and a contraction in home values not unlike what Japan went through for many years to come. The reason I say this is that Washington has not taken any of this seriously. They have just taken advantage of the situation for their own gain. The solutions coming out of Washington are political solutions, not real fixes. I can fully understand buyers that are afraid to risk their own capital and jump into the market. Reluctance, apprehension! Are you seeing I what I'm seeing? Where Does Real Estate Go From Here?
