May, 2009

One hot topic was the lending crisis, including the easy lending policies and no money down mortgages that helped get the nation in trouble. Former Fed Chairman Alan Greenspan spoke of the disaster that followed: a credit crunch, and a real estate crash.

The NAR’s president-elect, Vickie Cox-Golder explained the Summit was created to explore the root of the crisis, and manage its impact, as well as search for the next steps to put us on the road to recovery.

United States Secretary of Housing and Urban Development Shaun Donovan was also a speaker at the summit. In addition to his big announcement that the $8000 tax credit will soon be available up front, Donovan also said he sees solid reason for optimism in America.

There many ideas on how to get recovery going and how to make sure we don’t have a crisis like this again. Some demanded that banks should write mortgages to qualified buyers, and end the reported practice of denying those mortgages in order to hoard their capital. Others demanded higher conforming loan limits, so more buyers in high-cost areas, can get loans and go to the settlement table.

Most agreed that the $8000 tax credit will be a key part of the recovery, and all were hopeful that recovery was close.

We asked a banker who knows from the inside out that these sales come with long, drawn-out procedures. Phil Bracken from Wells Fargo said there are many things holding the sale up. He says, on average, it often takes eight weeks just to get an answer on an offer to buy a distressed property, because there are so many people and sometimes corporations involved.

As for solutions, Bracken suggested a streamlining the process and standardizing the short sale process across the banking industry.

The bottom line: faster short sales and foreclosure closings will help the buyers who want to move in, help the sellers who want to move on, and help the nation to move forward by clearing out the excess inventory.

Why are so many banks denying mortgages to qualified borrowers?

Buchanan seemed surprised, and appeared unaware of the problems some consumers were having obtaining loans, but began to defend the banks and their tightened lending standards, saying that loose lending was what had gotten the country into the trouble it was in now.

The REALTORS® were glad to tell him all about it.

Buchanan was clearly surprised by their reaction and surprised by their stories of qualified buyers were being denied mortgages. The exchange may have opened his eyes to the problem, and may have changed his mind about its solutions.

It may have been one of the more productive exchanges of the summit, because it epitomized one of the Summit’s biggest goals: to let the movers and shakers know what’s really happening in the real estate markets all across America.

Things might be looking bleak, but we want to hit bottom! Dr. Reich reminded us that once you’ve hit bottom, you’ve got nowhere to go but up. Consumer confidence is improving, although we aren’t spending very much. The stock market also seems to be stabilizing, but recent testing has shown that many banks are still undercapitalized. We may not have hit bottom yet, but we are close. While it might not be this year that we see a full turn around, it will likely be by next year.

There is reason for optimism! Dr. Reich is one of the keynote speakers at next week’s NAR Summit, and when we asked him what he would say, he said he was very optimistic. The economy is poised for a recovery. Jobs losses are beginning to stabilize, and while employers may not be hiring in large numbers yet, we have to remember that employment is one those “lagging indicators”– it’s one the indicators that comes back last. Also, there are many young people looking towards buying their first home, which will help add to the recovery of the real estate market. With prices low, and interest rates low, a slow recovery is on the way.

The $8,000 tax credit will help! The new tax credit for homebuyers has brought more people into the market, and Dr. Reich agrees that it has helped. Some people are pushing to extend it past its December 1st deadline, and Dr. Reich agreed with that also. Given that the economy probably won’t see a strong recovery until the beginning of 2010, he said it makes sense to encourage people to keep buying to build growth.

Ms. Halliday works in the Dallas market, and she says things are beginning to bounce back already — She’s seen a lot of eras come and go when it comes to homebuying, and she says this is one of the best buyer’s markets ever. Citing low interest rates and the new federal tax credit for first time homebuyers, it’s a fantastic time to buy, and increasing sales in the Dallas area are proving that, Ms. Halliday shares.

Amazingly enough, Ms. Halliday still works a ten hour day at the office, and is very involved with her community as well. Her company currently employs sixteen hundred REALTORS®. If you’re interested in her book, Ebby Halliday, the First Lady of Real Estate, you can check it out at www.ebbysbook.com.