Here are some notes that I jotted down from the Leading Real Estate Companies of the World Conference in Las Vegas.  I think that once we better understand these numbers, we can see why so many predict that there are still challenges ahead.  Some of us will look at those challenges as opportunities to grow our businesses stronger.   I will.

It all started off with a great quote from Winston Churchill

“Now is not the end, it is not even the beginning of the end, but perhaps, we are at the end of the beginning.”

Some Interesting Facts that  one might argue, indicate that the market is still in for very difficult times ahead.

Let’s Take a Look at the Volume of Home Sales in the US
2006-7.2 Million Homes Sold (Abnormal) -2006 Volume was up 40% and Values were up 150%
2008-4.9 Million Homes Sold
2009-5.1 Million
We’re back to the future (2000’s volume)

Reasons Why we’re not out of the woods yet.
1)Unemployment is around 10% now
There is also a tremendous amount of Underemployment (people settling for less)
20% of the Gross Domestic Product is real estate related.
So..if they want to buy…can they?  Do they have a job?

2) Consumer Confidence (or lack thereof)
2007 values started getting destroyed.  There was 7 Trillion Dollars of wealth destruction
130 Million in Homes and Apartments
There is still the prospect of further destruction.  We need more consumer confidence to move market.

3) Inventory is High
3.5 Million Homes listed for sale in the US
2.6 is the usual number. We have 30% more homes to sell
We are in a sluggish market.
When you compare all that inventory to our 5.1 Million Velocity, it shows an unlikely rebound soon.

4) Foreclosures and Shadow Inventory
2008 1.9 Million Foreclosures
2009 2.1 Million Foreclosures
2010 2.8 Million Projected
2011 SCAREY – 8 Million Mortgages are 90 days or more in arrears now..and that’s out of 55Million total mortgages in the country.
25% of all mortgages in the USA are under water – Mortgage is higher than property value
1/3 of all real estate in the US is distress related

5) Government Stimulus Could End
Last year the Government was the only main provider for mortgages.
What we’re feeling right now is a Euphoria..a false high.
We need to recalibrate our expectations.

PREDICTIONS:
5 million existing home sales this year is likely (This would be similar to 2000, 2001)
Rates will be in the 5’s and 6’s in the next 24 months

We need to burn off excess real estate and then get back to normal
Normal market is 2-3% growth per year.
5.8 Million Home Sales/year would be normal

My Thoughts (John Reinhardt)
Based on the above analysis, it would appear that we could be in for a weaker spring and summer market than many brokers might be expecting.  This false euphoria very well might wear off if the banks start tightening up financing requirements further, and/or  interest rates move north and/or shadow inventory hits the streets, and/or more people lose their jobs and ability to pay their mortgages.
We’ll see how it all plays out quickly….but let me say this…
We will definitely take advantage of this opportunity to trim our expenses even more and create a company that is stronger and ready to conquer in the times that will certainly be around the corner…I just hope the corner is in sight.

I’m going to be realistic, but I will also prepare for the worst and hope for the best.
We’re kicking butt right now with our extra programs to promote the Home Buyer Tax Credit program.
Our agents are pumped in getting price improvements and getting offers accepted NOW.

Hey, if for some unexpected and welcomed reason, all these negative things don’t happen, and we continue to kick butt…we’ll at least be proud of the extra efforts made along the way.
JR

Note: Ron Peltier, Home Services of America hosted the session that provided most of the information on this page.