Amanda's Blog

First of all I need to thank Marc Rasmussen for bringing this segment to my attention on his blog because I was not aware of it.

I am also glad that 60 minutes had the foresight and courage to run a piece like this, even though it does instill concern about the direction of the housing market and ultimately the economy; there is simply too much at stake for this country, our government, and the REALTOR community to pretend that this type of threat to our housing market does not exist.  Or to simply hope that the problem will go away or take care of itself.  It's not going away, and it's not going to take care of itself without an awful lot of pain for an extended period of time - and quite frankly I'm not sure if most Americans are prepared to weather this type of correction.  As we are seeing, a housing correction will indeed spillover into every corner of our economy, the financial markets, and the credit markets.

The point that the 60 minute segment brings up, the fact that there are still millions of loans acting as ticking time bombs, is the fundamental issue as to the reason I wrote the, "It's The Housing Market, Stupid!" book.

This housing and home-ownership bubble that is the result of easy and cheap money and aggressive leverage, has not yet run it's course.  In fact, I would argue that we are only one third of the way through a correction.  And there are two reasons for this.  First, we are going to continue to see millions of foreclosures over the next four years.  Credit Suisse recently increased their estimates to 8.1 million foreclosures.  Asa result of the first wave of foreclosures, the supply of homes has surged 48% over the past three years (source: NAR).  The second concern is that there is not a buyer for these homes that will ultimately end up in foreclosure.  With the mortgage market as tight as it is, the demand for real estate has plummeted nearly 30% over the past three years (source: NAR).  It is a perfect storm, demand has plunged, and supply has surged.  And there is no indication or data that either of these trends is changing course, especially considering the broader economic concerns.    

Ordinarily, if this was just simply an isolated case of home prices declining further, it may not be so worrisome.  But the truth is that declines in home values, the leading cause of foreclosures, are anything but isolated. They have a significant spillover effect to the financial markets (including the stock market), the credit markets, and the broader economy (jobs).

While an unpopular position, I will admit that it is my belief that the economy will not be able recover from this current recession until the housing market, the foundation and engine for our economy, can get some price stability.  And what this means is that the excess supply of homes (approximately 1.5 million) needs to be absorbed, preferably sooner rather than later as the longer it takes for this to be accomplished, the more homeowners will be at risk and the more damage will be done to the economy.

The government needs to get ahead of this crisis rather than reacting to it.  Loan modifications and lower mortgage rates are not the answer, this is going to require aggressive fiscal policy to get Americans to invest in the real estate market in order to prevent a cascading effect on the overall economic health of this country.

www.ItsTheHousingMarketStupid.com

 

  

 

 Every year my office, RE/MAX Realty Group in Gaithersburg, Maryland supports our community in some way.  In past years we have helped the Salvation Army Angel Tree Kids to help make the holidays better for others.  I was always amazed at the support and generosity that the agents in my office showed for those in need.

This year we did a Food Drive for the Maryland Food Bank.  Each agent was asked to send out postcards to folks in our SOI and other networks we were involved with in order to meet our goal of 500 lbs of food for the Maryland Food Bank.  I, of course, wrote a post about the food drive with all of the pertinent information if anyone wanted to drop food off to the office.

Food came it bit by bit.  People in the office, the office building and clients did indeed bring food to the office to help the cause.  However, I was amazed when I got a call on the phone and a young lady called me to say that their company also wanted to help the Maryland Food Bank and could they put their food with ours.  We were thrilled to have them put their collection with ours. 

Just today I had a phone call from a woman who had food to drop off to the office and wanted to make sure we were still collecting food.  I told her yes and that we would be thrilled for her to drop the food off at the office.  I was so excited that the blog helped our cause in a round about way.  My broker thought it was great.  It lets the public know us on many different levels, not just as agents, but as a part of the community.

I asked both of these women how did they know about our food drive and they both told me they read it on my blog here on Active Rain!!

How close did we get to our 500lbs goal?   Well, the last time we weighed we counted 1772 lbs and more food has come into the office.  Our office is happy that even in times like these, people know that there are people who need our help and we were able to be there for them.  Thank to everyone who helped the Maryland Food Bank this holiday Season.