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In one of my recent posts, I referred to this Moody’s article. However, it has a lot more great information. One of those items is an interactive map showing where and when the recession started and a tracking of where the jobs will be.
It has a link to each of the areas in Oregon and provides a broad economic picture. 
You can click on the link to get a better view. It also says in part:
“If you want to be in the right place when the recovery starts, that place may be in Colorado, Idaho, Oregon, Texas or Washington.”
The recession didn’t start at the same time in every state, and it won’t end at the same time either. The new forecast from Moody’s Economy.com predicts that job growth will return first in those five states listed above, starting in the last quarter of this year. Four of those states benefit from strong high-tech industries, and the fifth, Texas, has a strong base of energy industries.
According to Moody’s, there are 8 states not in a recession:
“(The) eight metro areas still not in recession are judged to be at risk of recession, meaning they are decelerating toward the downturn. The eight are Anchorage, Alaska; Bismarck, N.D.; Killeen-Temple-Fort Hood, Texas; Laredo, Texas; Las Cruces, N.M.; Midland, Texas; Odessa, Texas, and Texarkana, Texas-Arkansas. Most of those benefit from energy production. Laredo also benefits from trade with Mexico.”
Moody’s predicts that Oregon’s recession will end at the end of the 4th quarter of 2009 – here’s the interactive map.
So when do you think the recession will end here in Oregon? Let’s hear from you and answer this poll. All votes are anonymous.
Source: Moody’s Economy.com
© Copyright 2008-2009 Betty Jung. All Rights Reserved. Use of this article, photos and images without permission is a violation of federal copyright laws.
(For more local and national real estate information, go to my website www.bettyjung.com).
President Obama has stated that foreclosures and this downturn in our economy have affected everyone especially with our high unemployment. Inasmuch as I have agreed with that from the beginning, it was even more obvious to me recently again. This doesn’t rank up there with people losing their homes, having financial problems, etc. but even while completing some minor tasks on my “to do” list the other evening it was more than obvious.
Bloomberg.com yesterday said that the bottom is close at hand. Click here for the whole article. Our inventory here in Portland albeit still high, is creeping on a downward trend. Although all the reports in the media have said the worse is over and we are nearing or at bottom, going to the mall the other evening I had a front row parking space yet again. Inside it was empty. Heading over to Toys R Us store, there were lots of cars in the parking lot, but I saw two couples walking in front of me, loaded with toys in the arms of each husband and wife, piled high over their heads returning them. Must have been around 20-25 different toys they were returning. Did their children already have duplicates? Did they not want those toys? Or, was it a matter of spending too much and returning the toys for cash?
Heading over to the local Starbucks…each time I’ve been there lately, they have been out of coffee. This time I asked ‘what’s up with that’? They said they are no longer making coffee after 4 p.m. and are only brewing regular and not decaff. She said it had been extremely slow although none of the 8-9 Starbucks within walking distance of my home have closed yet I keep reading there have been over 900 Starbucks closures?! That’s really how many are close to where I live as I counted them once and was amazed. At Winco later in the evening, there were lots of empty parking spaces. When I walked in there were no crowds even around the fruit and veggie aisles; and, at the check-out, no one was there either.
If you don’t think it’s affecting everyone, just get out in your neighborhood – it’s visible everywhere without even looking. The politicians in Washington should do the same – get out in the neighborhoods they represent. Maybe they’d understand it all better then.
© Copyright Betty Jung 2008-2009 All Rights Reserved. Use of this article, photos and images without permission is a violation of federal copyright laws.
(For more national and local real estate information, go to my website at www.bettyjung.com)
As a self-employed Realtor®, I am always working for today, tomorrow and 5 years from now. I need to make sure I have a steady stream of clientele in the hopper that will want/need to purchase or sell a home today, tomorrow and in the future. I think the economy can only be fixed with this same principle.
TODAY
I’ve been talking a lot in my posts about fixing the housing problem. You hear a lot of it in the news. However, now I feel the most important goal should be to jump start our economy with a focus on jobs, jobs and more jobs. No one will be buying houses, cars, or anything else until there are more jobs that give people the earning power to pump money and credit back into our economy. Our government is doing many things to hopefully make that happen.
TOMORROW
Senator Chuck Schumer, Jack Welch, David Leonhardt and Martin Feldstein were on The Charlie Rose Show. Professor Feldstein said that any plans to fix the economy need to be short-term and long-term. In order to deal with this financial crisis it was important to place emphasis on jobs, housing, then banking and ultimately the credit crisis. Professor Feldstein said given tax breaks people will either pay off bills or put the money into savings, which won’t stimulate the economy. We have had no “great” innovation in many, many years and to return to a super power and a great economy we need new innovations.
I’ve seen Paul Krugman many times on TV and lately have been also reading a lot by Nobel Prize Winner and economist Paul Krugman. He said what I have heard others, including Warren Buffet say. Recently, he was here in Portland. Paul Krugman says we need new innovation much like the railroad and what it did for America. He suggested green technology could be the answer. (Note: Mr. Krugman says first green technology is the answer then says it isn’t. He also contradicts himself when he says initially a recovery will ocur in 2011 and then in another interview says early next year. Yet another economist who just doesn’t know!). Mr. Krugman is an esteemed economist, yet hasn’t been consistent with his forecasts. I realize he is a Nobel Peace Price winner; however on other interviews I’ve seen him, his predictions have been pretty bleak. The links above will take you to three separate interviews or remarks made by Krugman. There was also a lengthy article in The Oregonian again contradictory.
There have been no new technologies developed since the birth of the Internet. Where will that innovation come from? Will education be the answer? A new entrepreneur? I do agree with Professors Krugman and Feldstein that the stimulus just isn’t large enough.
5-10-20+++YEARS FROM NOW
The other evening on the Bill Moyers Journal, Vartan Gregorian said education should be a part of any stimulus because that will impact our future economy. He said:
“As an immigrant I have a different view of America. I see America in perspective. As a historian, I see the depth of it as well. And, there are great moments in American history. Since President Obama is fond of Abraham Lincoln, I’ll start with Abraham Lincoln. In the middle of the Civil War, (the) worst tragedy that happened to America, Abraham Lincoln signed (the) Morrill Act, (that) established land grant universities. Imagine now (today) any president doing that in the middle of all the calamities we have, Afghanistan, Iraq, economy, and Iran and the Middle East, somebody spending that much effort on (that) because he wanted to see the future of America.”
“In the middle of (the) Civil War, Lincoln established a National Academy of Sciences, (in) 1863, because he wanted to see the future of America. In the middle of (the) Civil War, he established a commission to study the merits of (the) metric system for America. Because he wanted to see not one year, one to four year (s); he wanted to see 20, 30, 40 years. Second thing that happened(was) in the middle of the war. World War II, ‘44, Japan is still fighting, Germany’s still fighting, Roosevelt established (the) Servicemen’s Act, which later became (the) GI Bill, to see what will happen if ten to eleven million soldiers return without jobs. Would it unleash a new major depression? What? (He) Came up with this brilliant idea to give them (an) opportunity to be educated”
“Yet we’re the greatest country in the world. Well, on what basis? Just (the) economy does not make that right. We need also (to have) values. We need also to participate as citizens in the fate and future of our country. So we cannot have a democracy without its foundation being knowledge, in order to provide progress. And knowledge does not mean only technical knowledge. But also you need to have knowledge of our society, knowledge of the world. If we’re a superpower, world’s greatest power, we should know about the rest of the world”.
“We cannot afford duplication. We have to bring collaboration and (a) twenty-year vision, twenty-year plan, how to bring higher education of United States, both public and private, to help re-engineer, re-ignite, and keep the momentum of the United States and its progress by educating its workforce, by educating its leadership.”
On a website recently I saw this paragraph:
“The two most traumatic experiences in the nation’s history were the Civil War (1961-65) and the Great Depression of the 1930s. Buoyed by victories in World Wars I and II and the end of the Cold War in 1991, the US remains the world’s most powerful nation state. The economy is marked by steady growth, low unemployment and inflation, and rapid advances in technology.”
I found it interesting that at the G-20 European Summit, President Obama also spoke on the need for new innovations in the U.S. Unfortunately, we no longer have an economy with steady growth, low unemployment nor are we advancing in technology. Hopefully things are starting to get better and we will return as a strong nation once again with major innovations – one can only hope.
Use of this article, photos and images without permission is a violation of federal copyright laws. (Copyright applies fully and automatically to any work — a photograph, a song, a web page, an article, pretty much any form of expression — the moment it is created. This means that if you want to copy and re-use a creative work in another way (i.e. flyer, newsletter, print media), that you find online, you have to ask the author’s permission to re-use their information.)
(For more national and local real estate information, go to my website at www.bettyjung.com)
Now, that’s a word I can’t recall I’ve heard before, yet as we continue on our journey with this economic downturn, we may be hearing that word soon. A word that our grandchildren, and their children, unfortunately may hear in their life-times.
Quadrillions, in case you don’t know has 15 zeros — $1,000,000,000,000,000. Billions equal 9 0’s – $1,000,000,000, and trillions, a word we have all now become too familiar with has 12 0’s — $1,000,000,000,000.
What does all this have to do with this post or this blog? If you’ve noticed, and perhaps you haven’t, I’ve limited my reporting on how many millions of people are being foreclosed upon, how many people are losing their houses or their jobs, how many trillions the government and all of us are now in debt, and how the real estate market keeps declining in value. Why?
We are bombarded daily with reports, opinions and statistical interpretations regarding the real estate market that, in my opinion, amount to a whole lot of worthless information. We hear all the numbers in the news, we know the numbers are bad and have gotten worse. National statistics regarding pending home sales and price declines may have little or no value when placed next to our Portland real estate market stats and may not present a true picture of our area.
Everywhere you turn, you get those numbers. We all know it’s become “serious”, as my granddaughter would say. She always tells me “I’m serious, Grandma”. When it starts getting better, I’ll post the numbers. Do you really want to know how much worse things are getting? Do you really want to know how many of your neighbors have lost their houses? Frankly, I’m done with the bad news and the high numbers. When things start looking on the “up side”, I will report the numbers.
Here’s a recent post that says the role of sub-prime mortgages in the housing boom have been over-exaggerated….And even Warren Buffett recently said: “Fear and confusion have been driving consumer and investor behavior in recent months.”
My blog, I feel is to report, convey useful information, educate and help. However, I see no redeeming feature in constantly reporting negative news, etc. Therefore, I have made a decision, that I will report the stats for my local real estate market as far as properties for sale, properties that are sale pending, and properties sold. Once the foreclosure numbers shrink, the unemployment numbers shrink, and our economy gets better – you will get those numbers! My decision is based on my desire not to further induce fear or confusion with stats that may or may not be accurate, and that may not relate to our local market at all. If this isn’t what you want to hear, let me know, because I don’t want to “feed” the negativity. I’m all for better days. Besides, we’re already considered one of the “unhappiest” cities, and I want our image to improve and will do anything I can to help.
Use of this article, photos and images without permission is a violation of federal copyright laws. (Copyright applies fully and automatically to any work — a photograph, a song, a web page, an article, pretty much any form of expression — the moment it is created. This means that if you want to copy and re-use a creative work in another way (i.e. flyer, newsletter, print media), that you find online, you have to ask the author’s permission to re-use their information.)
(For more national and local real estate information, go to my website at www.bettyjung.com)
We’re not anywhere close to a depression according to economists. But, what did Portland, Oregon look like during the depression era?
Recently, I read an article in the Oregon Historical Quarterly that spoke about just that:
Franklin Roosevelt’s New Deal was a visible symbol for social innovation and an experiment that had very disorderly planning strategies to seek a way out of the nation’s economic and social crisis of the day. Triggered by the demoralized economic conditions and wrenching poverty of the Great Depression, the 1930s witnessed the emergence of an activist federal government, an effort at centralized planning to advance the public good.
The top 14 states in per capita expenditures were all in the west. The general public welcomed the new agencies the New Deal brought such as the Civilian Conservation Corps (which among other things built parks and maintained forests in Oregon), the National Youth Administration and later, the Works Progress Administration. The state of Oregon was very similar to other states with its bank failures, bankruptcies, business foreclosures and high unemployment. Throughout the U.S., 4,004 small local banks failed. Herbert Hoover, the first President from the west, insisted that charities and local communities take care of the destitute. Portland’s political leaders were in agreement with the President and opposed direct government relief.
However, with that economic collapse, the local relief agencies were completely overwhelmed. County and local taxes went delinquent, making it difficult to pay public employees including teachers. “Desperation protests” became common-place events. There were people “hunkered down” along the Willamette River, 100 people were living under the Ross Island Bridge, more than 300 were at Sullivan’s Gulch, while another large group lived at the old Guild’s Lake site. When Franklin Roosevelt was inaugurated in March 1933, 40,000 Portlanders were on welfare, 24,000 had registered with the local employment bureau. In Portland, labor progressives organized an Unemployed Citizens’ League, residents at the coast formed Workers’ Alliances to speak for the unemployed, and the Portland League and others like it organized the unemployed into urban cooperatives while making major appeals for public works projects. Franklin Roosevelt told Oregon’s local business leaders that the government wouldn’t be giving them any charity. The most popular program of the New Deal, the Civilian Conservation Corps, only employed “boys” and no women were allowed. The most significant and largest program was the WPA (Works Progress Administration) and wound up hiring 8.5 million people nationwide and 25,000 in Portland alone. The WPA also built Oregon’s bridges, along with other projects throughout Oregon, such as Timberline Lodge at Mt. Hood, Rocky Butte’s Scenic Drive, Portland’s Municipal Airport, the Bonneville Power project, the rock wall along Johnson Creek, and the Wolf Creek and Wilson River Highways to mention a few.
|
Depression Era Unemployment Statistics–United States of America
|
||||
|
Year
|
Population
|
Labor
Force |
Unemployed
|
Percentage of
Labor Force |
|
1929
|
88,010,000
|
49,440,000
|
1,550,000
|
3.14
|
|
1930
|
89,550,000
|
50,080,000
|
4,340,000
|
8.67
|
|
1931
|
90,710,000
|
50,680,000
|
8,020,000
|
15.82
|
|
1932
|
91,810,000
|
51,250,000
|
12,060,000
|
23.53
|
|
1933
|
92,950,000
|
51,840,000
|
12,830,000
|
24.75
|
|
1934
|
94,190,000
|
52,490,000
|
11,340,000
|
21.60
|
|
1935
|
95,460,000
|
53,140,000
|
10,610,000
|
19.97
|
|
1936
|
96,700,000
|
53,740,000
|
9,030,000
|
16.80
|
|
1937
|
97,870,000
|
54,320,000
|
7,700,000
|
14.18
|
|
1938
|
99,120,000
|
54,950,000
|
10,390,000
|
18.91
|
|
1939
|
100,360,000
|
55,600,000
|
9,480,000
|
17.05
|
|
1940
|
101,560,000
|
56,180,000
|
8,120,000
|
14.45
|
|
1941
|
102,700,000
|
57,530,000
|
5,560,000
|
9.66
|
Oregonians survived this time period with fewer children being born, living in multiple-family households, surviving on sporadic and part-time employment. They bartered, exchanged labor for food and farm-grown products. Along Oregon there was a plentiful supply of wood for cooking and heating and they picked the wild fruits and berries, made do with canning, poaching of fish, and preserving food.
The other evening on The Charlie Rose Show I listened to the interview with Felix Rohatyn author of “Bold Endeavors: How the Government Built America & Why It Must Rebuild Now” . Mr. Rohatyn spoke about how the New Deal rebuilt the U.S. and mentioned all the good programs and projects that came from the depression-era and how many still exist today. One of them is the Oregon State G.I. program that has funded and educated millions of American soldiers here in Oregon and afforded them the opportunity to buy a house. We still use that program today.
Some economists argue that although the New Deal did not end the depression, it helped to prevent the economy from decaying further by increasing the regulatory functions of the federal government in ways that helped stabilize previous troubled areas of the economy: the stock market, the banking system, and others
The great depression remained a fact of life in Oregon for a full decade and only eased when war orders slowly began to energize the American economy. One historian described Portland as “a city that had ceased to grow”.
Use of this article, photos and images without permission is a violation of federal copyright laws. (Copyright applies fully and automatically to any work — a photograph, a song, a web page, an article, pretty much any form of expression — the moment it is created. This means that if you want to copy and re-use a creative work in another way (i.e. flyer, newsletter, print media), that you find online, you have to ask the author’s permission to re-use their information.)
(For more national and local real estate information, go to my website at www.bettyjung.com)
Photo from Microsoft Clip Art.
If you’ve been reading my blog, you know I haven’t had much confidence in economists going back to the 1980s. Particularly now with our “economic downturn”, I didn’t feel any of the economists have been “spot on” during this crisis nor during the last couple of years. These economists have never carried much weight with me in any of their forecasts or predictions. It isn’t that I know more or better, it’s just that I thought they did, should or could. It was also because what I was seeing on the streets, in the real estate trenches, was so different than what they were reporting or predicting.
I haven’t been able to understand why no one saw this crisis coming. Recessions have been happening since the 1700s so why didn’t they see it coming? They have all the data, they all had the numbers to crunch.
One of the things I think economists, all or most of them, ignored was the “human condition”. They crunch numbers but forget the psychological aspects of the individual consumer. Perhaps that’s why I see things differently. I deal with people’s emotions day-in-and-day-out selling them their new home. Finally, the other day I read an interesting article about all of this. It explains why the economists “didn’t see it coming”. It basically says the same thing, the economists were only crunching numbers and never thought about the “behavioral economics” and how that would affect the economy. They never thought how lack of consumer confidence in the financial markets, the government and Wall Street would affect the numbers they were crunching. Here’s a link to that story.
We are all going through turbulent times right now for sure. In aYahoo!® Finance post CLICK HERE by Laura Rowley, global recessions and economic downturns were discussed. History, unfortunately, does repeat itself.
You need only look to the 1970s, 1980s, 1990s, early 2000s and of course, today. Every 7-10 years there is a “bubble” of sorts and not just in the United States.
“….. history suggests the current downturn is characterized by many of the same factors that caused financial blowouts in the past, according to a paper in the American Economics Review by economists Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard.”
“Reinhart and Rogoff examine financial calamities dating from the 1800s to the current subprime crisis in the United States. Over the last two years, they’ve unearthed and analyzed data covering 66 countries, which account for about 90 percent of global GDP.”
“What they found is that across countries and over the centuries, economic crises of all types follow a similar pattern. They begin with an innovation — a new tool of science, industry, or financial engineering such as the steam engine, the radio, junk bonds, and collateralized debt obligations.
“Go back to famous South Sea bubble in the late 1700s,” says Reinhart. “They said this time was different because they had discovered new waterways and expansion for British trade. That gave way to massive run-up in stock prices in Britain — and it ended with a spectacular crash also.”
Sheilia Bair from FDIC recently said:
“We will dig out of this. And when we do, I hope for a back-to-basics society – where banks and other lending institutions promote real growth and long-term value for the economy, and where American families have rediscovered the peace of mind of financial security achieved through saving and investing wisely. We need to return to the culture of thrift that my mother and her generation learned the hard way through years of hardship and deprivation. Those are lessons learned that the current crisis is teaching us again”.
History will show us how great this recession actually was and how it in fact compared to other times. I don’t think the dust has settled as yet and until it does we won’t be able to measure it all. We are a rich nation, a rich and resilient people and we will all survive. My hope is that the economists can all take away something from this time period for the next time, my wish there won’t ever be a “next” time.
There will be a new order to things. There are already new mortgage programs. There will be new rules and regulations. They’re talking about banking going back to the 1970s. We used lots of creative financing in the ’80s as well and we may need to use those instruments again. All the old ways are becoming new. I remember one transaction I was involved in we used a motor home and some chickens as a down payment. I hope we won’t go there! Will there be assumable loans again? The larger down payments are definitely coming back. Lots of changes and we will all need to adjust but I trust we will get there.
Use of this article, photos and images without permission is a violation of federal copyright laws. (Copyright applies fully and automatically to any work — a photograph, a song, a web page, an article, pretty much any form of expression — the moment it is created. This means that if you want to copy and re-use a creative work in another way (flyer, newsletter, print media), that you find online, you have to ask the author’s permission to re-use their information.)
(For more national and local real estate information, go to my website at www.bettyjung.com)
I had planned on writing a post today about what the stimulus bill means for our Oregon housing market when I came across this blog post by Karen Cooper. Rather than reinvent the wheel, I am linking to her post here and below. Besides, I felt she did a nice job summarizing the stimulus bill and I wanted to share it with you.
Guest Author:
Karen Cooper – OR/CA Mortgage Consultant 
(541) 608-6003 office,
(541) 601-4304 mobile
FROM KAREN COOPER
There are several provisions in the overall stimulus package that should be on President Obama’s desk to sign Monday. One of the most beneficial provision for home buyers is an $8,000 home buyer tax credit for new home buyers – buyers who have not owned a home in the past three years. For qualified home purchases in 2009, the legislation:
· Stipulates that the $8,000 tax credit does not have to be repaid, unlike the tax credit passed last summer;
· Keeps the tax credit refundable, or claimable regardless of tax liability;
· Extends the “sunset” date from July 1, 2009 until Dec. 1, 2009 so that consumers can utilize it during the critical summer and fall buying months;
· Allows tax credit home buyers to participate in the mortgage revenue bond programs, such as Oregon Bond’s RateAdvantage program; and
· Permits state housing finance agencies to help buyers at closing by advancing the credit amount as a loan using tax-exempt bond proceeds – this is even better than the Oregon Bond CashAdvantage program, as you may still take the really great rate on the RateAdvantage program.
While much of the focus has been on the home buyer tax credit, there are several other important components in the legislation that will help small businesses and bolster the housing market. Additional provisions that relate to housing in H.R. 1, the American Recovery and Reinvestment Act of 2009, will:
· Help home borrowers wanting to purchase or refinance homes in the high-cost markets by extending the 2008 FHA, Fannie Mae and Freddie Mac loan limits of $729,750 through the end of 2009;
· Temporarily allow exchange of Low-Income Housing Tax Credit allocating authority for tax-exempt grants and appropriates $2 billion in HOME funding for affordable housing projects (this should make housing developers trying to keep their construction crews busy happy!)
****
Here’s more (to view a nice chart from the National Association of Realtors® in pdf. form click here):
- Tax credit of 10% of the purchase price up to $8,000
- Credit only valid for first-time home buyers purchasing a principal residence
- Credit can be applied to purchases made from December 31, 2008-December 1, 2009
- Home purchased must be principal residence for 3 years or credit will be recaptured
- Only applies when taxable income for the year is $75,000 (file single return) or $150,000 (file joint return)
Use of this article, photos and images without permission is a violation of federal copyright laws.
(For more national and local real estate information, go to my website at www.bettyjung.com)
This weekend I held an open house and there was a steady stream of people through. Several groups were from other states and were being transferred. Almost everyone mentioned the stimulus package and the $15,000 possible tax credit to purchase a home that is now being proposed. In addition, almost every one of the buyers said they wish Congress would move quickly to approve the stimulus because they would get off the fence and buy. Clearly they were all frustrated that it’s taking so long. So what’s the key to getting the housing market moving again? What will get you off the fence to buy in 2009?
HousingPredictor.com had an interesting article about a poll asking what would stimulate the economy and housing market. 36% said consumer confidence needs to be improved and 35% said it would take lower housing prices. The combination of the two represent nearly 3 out of 4 surveyed in the online poll. Improved consumer confidence is still the “biggie”. I personally feel if the unemployment situation is taken care of consumer confidence will follow. To get this economy on the right track it should be jobs first, then housing, then fixing the financial crisis. Americans need to feel secure financially and only with a job will they feel that way. Another 14% said lower mortgage rates were needed to re-stimulate the marketplace. Some nine percent said grant money for home buyers would help the ailing real estate market, while the remaining six percent said more tax incentives are needed.
What do you think will stimulate the housing market the most?
|
– | 14% |
|
– | 36% |
|
– | 6% |
|
– | 9% |
|
– | 35% |
How Low Will They Go?
In an attempt to stimulate the stagnant housing market the Fed cut the prime lending rate very close to an historic low. Just how low do you expect the 30– year mortgage rate to drop was the question put to poll participants.
- With 41% of the votes, the largest number of those surveyed said the 30–year mortgage rate should drop to 4.5% to give the housing market a much needed boost
- Twenty–three percent think the magic number will be 4%
- Nineteen percent of poll takers were very optimistic with a 3 to 3.5% rate
- 17% expect the rate to be at 5% or higher.
Use of this article, photos and images without permission is a violation of federal copyright laws.
(For more local and national real estate information, go to my website at www.bettyjung.com).
Source: HousingPredictor.com
Reading the news, I saw where an economist said he has no idea where we’re headed and can’t make any predictions. It was, I felt, the first honest assessment as to what’s going on. The headlines are up, then they’re down and every one is guessing.
Here’s what he had to say:
“Many other economists, meanwhile, are reluctant to make predictions of any sort. Brian Bethune, U.S. economist for IHS Global Insight in Lexington, Mass., said housing forecasts are pointless these days because so much is unknown, especially about the federal government’s housing measures. “We’re in uncharted territory,” he said. “We can start polling people, and they’ll start throwing out numbers. At this point, it’s just confusing the public. Quite frankly, a lot of this is unknown.…Once the pieces of jigsaw puzzle come together, then we can make a reasonable prediction.”
However, now with the new $15,000 tax credit as part of the stimulus package, perhaps we will be on our way to a recovery. Banks haven’t been forthcoming. It doesn’t matter whether the home buyers obtained sub-prime mortgages, or the fault of the lenders at this point, because it is affecting all of America. Pointing fingers doesn’t help anyone; however, getting out of this crisis will help everyone. Here’s a link to a story comparing the 1974 real estate market with today’s when a similar tax credit was given to home buyers. The article says that within 1 year, 2/3 of the backlog of inventory was sold and a stable real estate market took hold.
Source: HousingPredictor.com
Here’s also an interesting article on how to determine if we’ve reached bottom:
Bottoms to real estate markets are a lot like trying to determine when stocks in financial markets are at their lowest price. Veteran investors say it’s a fool’s game to try to find the bottom to make a buying decision because as you wait, study and calculate the tendency is to over analyze as the market makes its own moves and often leaves you in the lurch. In these increasingly complicated financial times, troubled by the credit crunch finding a market’s elusive bottom is no easy task.
But here are 10 signs to ponder on whether the bottom of your market is near:
- The inventory of listings is reducing as properties come off the market, especially those over priced places that have been sitting on the market.
- Noticing fewer for sale signs in that neighborhood you’re interested in buying a home or condo in these days?
- The Mass Media spurs interest with talk of a bottom. Newspapers and television reporters speculate and ask the expert if a bottom is occurring.
- Sales volume begins to pick up, slowly at first as pent up buyer demand results in more showings.
- People are less fearful of the market.
- People begin to talk about how much money there is to be made in investing in real estate again.
- Increasing telephone calls to Real Estate offices on listings and for sale by owners.
- The Fed finishes tinkering with interest rates at least for a while, trying to get a handle on how the markets are moving.
- People commonly talk about the bottom occurring like it’s a thing of the past with increasing consumer confidence.
- Prices finally seem to be dropping.
- Financing becomes easier to obtain.
Source: HousingPredictor.com
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(For more local or national real estate information, go to my website at www.bettyjug.com).
Part of the lack of confidence on the part of the consumer is because the media and everyone else plays up the negative to a large degree. I report some of it, but you hear plenty of it in the news.
Having been snow-bound and house-bound like most of you, I couldn’t wait to get out. Finally at the grocery store loading up on what was missing at home, I had one of those “aha” moments. The Fortune 500 magazine was on stands with their real estate predictions for 2009 and I wanted to purchase it. As I was pulling it off the shelf, I saw the headlines on all the covers in front of me on the magazine stand screaming “Buy Stocks at their Lowest Values Ever”, “Best Bets for Stocks”, “Now’s The Time To Get Into The Stock Market”, etc. and it got me thinking. The managers who’ve lost all or most of your 401k money, your childrens’ college educations, your long-term investments, most of your dreams not to mention your confidence, are now wanting you to invest in the “drama queen” of all investments. Yet, in the same breath and on the same pages they’re advising everyone not to buy real estate. They’re saying how bad the real estate market is and that the real estate market could only go lower. It occurred to me:
- Those same people couldn’t warn you about their own industry i.e. the stock market. They didn’t know their market would crash but they can and know all about real estate. They continue to warn you there will be price drops in real estate. Where were they when their stocks plunged and companies failed? Remember, they didn’t see it coming? Oh, but they got bailed out and you didn’t.
- We’ve all heard about the greed, sheer greed, of the Wall Streeters who lost all your money but they are encouraging you to continue to invest with them. They still want more of your money now? Didn’t they lose enough of your money?
- The one industry that hasn’t been hit as hard over the-long term and hasn’t had as wild of a ride, has been real estate and that’s the one investment they’re telling you not to make.
- One of the market’s guru’s Jim Cramer right before Bear-Stearns failed kept encouraging his followers to invest in Bear-Stearns yet he’s saying “don’t buy real estate”.
- Rumor has it, and it is only rumor as I can’t verify everything I read in blogosphere, that the same Jim Cramer and Suze Orman bought real estate at the end of last year for themselves, but of course, they won’t tell you to invest in real estate. Why? Because they want prices to continue to drop so they can get the good values for themselves. They might start a rush towards a good thing.
John Kenneth Galbraith wrote of the 1930’s stock market crash: “Never before or since have so many become so wondrously, so effortlessly and so quickly rich… Perhaps it was worth being poor for a long time, to be so rich for just a little while.”
Nearly $7 trillion in stock market value was wiped out last year. Here is how those broad market indexes finished up in 2008:
- The Dow Jones industrial average dropped 33.84 percent, its third-largest decline ever and the biggest decrease since 1931.
- The S & P 500 lost 38.49 percent, just slightly better than the severe decline of 1937.
- And the Nasdaq composite index, created in 1971, posted its worst year with a 40.54 percent plunge. That was actually worse than the bursting of the tech bubble in 2000 when the technology- heavy index only lost 39.3 percent.
Real Estate experts see prices in Portland, Oregon dropping 12% below their peak before rising again. Wall Street is saying don’t invest in real estate yet stock market loses have been 40% or better and mostly they’re at their 1930 levels? In fact, daily losses were almost greater on Wall Street than our entire yearly real estate losses here in Portland.
The Greatest Dow Jones Industrial Average daily point losses of all time
- Sept. 29, 2008= -777.68 points=-6.98 percent loss
- Oct. 15, 2008=-733.08 points=-7.87 percent loss
- Sept. 17, 2008=-684.81 points=-7.13 percent loss
- Dec. 1, 2008=-679.95 points=-7.70 percent loss
- Oct. 9, 2008=-678.91 points=-7.33 percent loss
RMLS™ Statistics – Housing Appreciation in Lake Oswego/West Linn (147), SW Portland (148), Tigard, Tualatin, Wilsonville & Sherwood (151)
As reported in my “Oregon’s Housing Appreciation” post, I showed how Oregon as a state has appreciated over the last 21 years. What follows are 3 graphs showing appreciation broken down by specific areas from our RMLS™ for 147-Lake Oswego/West Linn, 148-SW Portland, 151-Tigard/Tualatin, Wilsonville and Sherwood. I know we are in negative territory here in Portland recently, but we’ve had good appreciation over the long term and we will again. Jerry Johnson of Johnson Gardner forecasters expects “the region will return to the 6% annual growth rate that simmered between 1987 and 2003″.
Also since 1980, the OFHEO (Office of Federal Housing Enterprise Oversight) reports that Oregon saw a record 354.04% appreciation and a 5-year appreciation rate of 55.62% (granted that included the “boom” years).
John Galbraith further stated “In economics, the majority is always wrong”. What am I missing?
*** Update: I guess Cramer just recently changed his “tune”. Thanks to Ron Ares @repdx.com: Cramer is now screaming “BUY real estate!”. http://www.youtube.com/watch?v=SJRWVS7AZN ***
Housing Appreciation for RMLS Area 147 - Lake Oswego/West Linn 1993-2007
Housing Appreciation for RMLS Area 148 - SW Portland 1993-2007
Housing Appreciation for RMLS Area 151 - Tigard, Tualatin, Wilsonville, Sherwood 1993-2007
(For more local and national real estate news, click on my monthly newsletter – JUNG’S JOURNAL – on my website www.bettyjung.com).
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