NEW YORK — The first half of 2010 should be a healthy one for Realtors in terms of transaction volume, regardless of whether the economy is in an L-shaped recession or a V-, W- or "triple U"-shaped recovery, a panel of industry veterans agreed during the Real Estate Connect conference on Wednesday.
Agents and brokers might want to save some of the money they will earn in the next six months, some said, as continuing unemployment and withdrawal of government support while millions of homeowners are still underwater or facing foreclosure could put a damper on the rebound in many housing markets.
Soon-to-be-released statistics on sales of existing homes will show a dramatic increase during the fourth quarter of 2009, predicted Greg Rand, CEO and managing partner of Better Homes and Gardens Real Estate Rand Realty.
Rand said he thinks the growth in sales in 2009 was driven by lower prices, rather than government incentives like the homebuyer tax credit, and believes the trend will continue into 2010.
"I believe the next six months will be fantastic for home sales," Rand said. "Attack your job now."
Patrick Stone, chairman of The Stone Group, said lower vacancy rates and better housing affordability have him feeling optimistic for the first time in more than two years.
"There is investor money coming on market right now like we haven’t seen in some time," he said.
"My gut feeling is that 2010 will probably be one of the best years of our lives," said former broker-owner Steve Harney, speaking at an earlier session. "I’m not looking through rose-colored glasses … there is confusion in the market, and a much, much greater need for experts — with much less competition" because of agent attrition.
One reason for short-term optimism is that while delinquencies continue to rise, foreclosure rates have slowed — the result of "very purposeful" efforts by lenders to constrain the supply of distressed properties coming onto the market, O’Toole said.
Panelist Carter Murdoch, senior vice president for strategic business alliances for Bank of America, said the nation’s largest residential mortgage lender has no defined strategy to keep homes back from the market. …CONTINUED
But O’Toole said that while prices are coming back down to earth and foreclosures are putting less pressure on inventory at the moment, it will take much longer to address the problem of underwater borrowers.
It’s not just those who purchased a home at the height of the boom with little or no downpayment who now owe more than their home is worth, analysts say. During the boom, many homeowners who took out loans to extract equity from their homes as they rose in value are also underwater.
Some will be tempted to engage in "strategic walkaways," leaving their homes to their lender, while those who stay may be unable to sell their homes for years until they can get back in the black.
Based on the additional residential debt that was created during the housing boom, and the value of foreclosed loans to date, O’Toole said, "we are only one-eighth of the way in dealing with people who are underwater."
Nishu Sood, a research analyst with Deutsche Bank Securities, warned of a rollercoaster-like recovery — a "triple U" with another dip tacked onto the end of the more common prediction for a "double dip" recession and W-shaped recovery.
Sood cites the expiration of the homebuyer tax this year — buyers must be under contract by April 30 and close the sale by June 30 to qualify — and the Federal Reserve’s plans to wind down purchases of mortgage-backed securities that have helped keep mortgage rates low as potential bumps in the road. Murdoch sees double-digit unemployment as another.
Healthy housing markets are driven by homeownership, not investors, Murdoch said, which calls into question a sustained recovery without job growth.
Sood said that an analysis of historical data shows 1.5 jobs are usually created for each new home that’s built. The recession has destroyed so many jobs, he said, that "we are essentially flat — we grew no jobs" during the housing boom.
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