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VOL. 36 | NO. 32 | Friday, August 10, 2012

Armchair QBs offer views on recovery

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Inman News held its annual real estate Connect conference in San Francisco last week, attracting a number of informed speakers to discuss the real estate market and predict what trends might emerge.

Jed Katz, a venture capitalist who started Rent Net and later Move.com, which he sold for $900 million, had the most extraordinary revelation. There is a company called SmartZip that monitors a “bunch of PhDs hanging around” who have created algorithms identifying people who are going to buy or sell homes before the people themselves know.

One of the better panels discussed whether or not the economic upturn is real. The question posed was “Is the system too broken to fix?” The panel was moderated by Brad Inman, founder of Inman News, and was composed of a venture capitalist, the CEO of the California Association of Realtors, the president of a financial advisory group and an economist from the Federal Reserve Bank of St. Louis.

Overall, the emphasis was on the restructuring of financial systems.

Most of the panelists foresee more privatization of securitization of mortgages. In short, Fannie Mae and Freddie Mac might be on the way out. Tennesseans know that Sen. Bob Corker has introduced legislation that would phase out those agencies over 10 years. Corker’s qualified mortgages are less draconian than those introduced in the Dodd-Frank Bill, which required a hefty 10 percent down payment at one point.

With private securitization, there are concerns the rules will be exclusionary and that lenders would be sued by borrowers who are turned down. Until that is resolved, there will be no privatization, experts say.

The election spawned differing views. Pat Stone, the president and CEO of Williston Financial group, is “stunned that neither candidate has made a meaningful pronouncement on housing.” In fairness, this could be due to the fact that housing has always led the country out of recessions, though not this time.

Bill Emmons of the Federal Reserve Bank of St. Louis says “elections are always frightening,” and “we are likely to have a divided market.” He says he agrees with Winston’s Churchill’s oft-quoted assessment: “Americans will do the right thing, but only after they have exhausted all other possibilities.”

Amy Brand, CEO of Vantium Capital, says “so much growth comes from sentiment and that there will be uncertainly,” both of which concern her, as does access to capital.

Joel Singer, CEO of the California Association or Realtors, says the election “will have a clearing effect” in hopes that some of the do-nothingers in the Congress will be defeated. But he anticipates incremental changes with no radical change.

On the positive side, exports are increasing with grain leading the way and natural gas on the rise. Personal balance sheets are improving with the economy, allowing consumers to appear more attractive to banks. The entire group said interest rates will remain low until, at worst, the second quarter of 2013.

They noted inventory is being sold off.

In a Monday morning armchair quarterback statement, one suggested the United States should have adopted the philosophy of Japan and suffered for 18 months and gotten it over with. That seems fine today, but as bad as the 18 months of recession were, I don’t think the country could have endured much more.

Richard Courtney is a real estate broker with French, Christianson, Patterson, and Associates and the co-author of Come Together: The Business Wisdom of the Beatles. He can be reached at richard@richardcourtney.com.

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 0 0 0
MORTGAGES 0 0 0
FORECLOSURE NOTICES 0 0 0
BUILDING PERMITS 0 0 0
BANKRUPTCIES 0 0 0
BUSINESS LICENSES 0 0 0
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0