Things Are Looking Up: 2010 Economic Forecast

A large crowd of REALTORS®, many with coffee cups in hand, snapping photos with iPhones and Blackberries, packed a ball room this morning to hear NAR Chief Economist Lawrence Yun discuss housing market trends and the economic outlook.

Yun kicked off his presentation by telling the capacity crowd that things are looking up with the recent extension and expansion of the home buyer tax credit and home prices beginning to stabilize. While the U.S. economy still faces some significant challenges, including high unemployment, Yun says there are a number of reasons for REALTORS® to feel optimistic about 2010: “The momentum is building. . .”

According to Yun, the tax credit has already delivered a significant boost to the economy, bringing 350,000 to 400,000 buyers to the housing market so far. The extended and expanded home buyer tax credit will help to release pent-up demand, bringing more buyers–including move-up buyers–into the market and increasing market velocity. Yun estimates that in 2010, thanks to the credit and home price stabilization, home sales should increase by 15%–an estimate that he was careful to explain is extremely conservative. Home values, which Yun stressed are key to durable economic recovery, will begin to become positive in 2010.

To check out NAR’s Economic Forecast or the slide show presentation, visit NAR Research’s home page.

Jumbo Freeze Might be Thawing

By Robert Freedman, senior editor, REALTOR® Magazine
It’s still early but there are signs the availability of jumbo financing might be improving—although underwriting standards probably won’t ease any time soon. That means the days of creditworthy borrowers having a tough time getting financing for an amount over the conforming loan limit might be ending but they’ll still have to come up with a significant down payment and be prepared to show lots of documentation, like three years worth of tax returns instead of the customary two.

NAR Chief Economist Lawrence Yun says lenders are slowly getting back into the game because the climate of dread is lifting: Wall Street analysts and business executives have recalibrated their performance scenarios to reflect the greatly improved conditions among lower-priced homes (thanks to the home buyer tax credit and steeply discounted pricing). That in turn is creating a virtuous cycle as the improved scenarios help relax concerns over the economy, pushing up equities, which in turn creates the wealth that further increases confidence.
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The Residential Housing Outlook: Have We Finally Hit Bottom?

NAR Chief Economist Lawrence Yun gave a report to attendees at NAR’s Midyear Legislative meetings Thursday on the outlook of the residential housing market. Watch a video of highlights from his talk to find out what you can expect with home sales in the coming months.

Real Estate Summit Tomorrow: Expect Sparks

By Robert Freedman, Senior Editor, REALTOR® Magazine

It would be hard to assemble a more brilliant cast of characters than will be gathering tomorrow for the Real Estate Summit at the 2009 NAR Midyear Legislative Meetings & Trade Expo in Washington. What will be exciting is seeing what ideas come out of this summit, because when you gather together the kind of intellectual wattage that will be represented in the room, you know there will be sparks-and the chances are good that from these sparks will come some very real ideas for getting real estate moving again.

We can start with Alan Greenspan. To be sure, since retiring from the chairmanship of the Federal Reserve he’s taken his lumps. As he’s acknowledged, he was surprised by the depth of lax underwriting among lenders rushing to securitize risky home loans. But who better to give us an inside look not just at what has happened but what we need to do get things moving again? Probably the only person who might bring as much insight into today’s macro-economic picture is Martin Feldstein, and he’ll be part of the summit as well.

Feldstein made his name as a deficit hawk when he was head of President Ronald Reagan’s Council of Economic Advisors and he came to be one of the most influential voices on the importance of keeping taxes low to grow the economy through private rather than public investment. For that reason, he hasn’t been a fan of the Obama administration’s stimulus plan because of its focus on public spending. Yet he has been a fan of the effort to shore up the banks, because until they’re able to lend again, private investment can’t get channeled into the economy.

One participant who hasn’t been squeamish about using public investment to spur growth is Robert Reich, the labor secretary under President Clinton and possibly one of the most prolific writers on poverty. Like another analyst who will be at the summit, Barry Bluestone, Reich has been vocal about the need for Americans to refocus on succeeding at white collar work. It’s not that the world of blue-collar labor is over, but that much of our future economic growth will be information-based rather than industrial-based, so the sooner we revamp education and training to meet this new reality the better. Bluestone has been a leading voice on that same theme. For almost two decades he’s been looking at what the country should be doing to succeed at its post-industrial future.

The summit will have some of the sharpest minds on mortgage finance and housing issues, including Susan Wachter, an expert on mortgage securitization, and Eric Belsky, an expert on mortgage financing for low-income households.

Analysts who aren’t well known to the general public but are the go-to people on housing and mortgage finance issues will be there as well: Bruce Katz, who heads up metropolitan planning for the Brookings Institute, a policy think tank; Conrad Egan, the head of the National Housing Conference; and Michael Calhoun, the head of the Center for Responsible Lending.

Shaun Donovan, the new head of HUD who came from the country’s largest public housing authority, in New York City, will be there, as will Sheila Bair, the head of the FDIC, who has been a leading voice for fixing the mortgage mess by facilitating workouts.

For their range of ideas and depth of experience, there could hardly be a more exciting line-up of participants than what we’ll see tomorrow at the Real Estate Summit. We’ll be bringing you coverage updates regularly, so you’re encouraged to check REALTOR® Magazine Online and its blog, Speaking of Real Estate, often, to catch the latest.