AMERICA TODAY

AMERICA TODAY - Excepts from a speach from Lawrence Yun NAR's Chief Economist
The depth of the recession in America is directly linked to recovery in the housing market
Obama is already talking about a plan to stimulate housing.
What is recession? Where there is negative growth reported for 3 sucessive quarters.
America is no stranger to recession - every ten years there has been a recession in America -
* Mid 70's - resulted in little change in the housing market
* Early 80's - interest rates increased, there was a 50% reduction in home sales
* Early 90's - there was a modest decline in home sales
* Early 00's - there was lower mortgage interest rates, this resulted in an increase in home sales
90% of All Americans have employment - even if unemployment rates rise, this 90% figure will still be true (Unemployment is around 6% at present). Americans respond well to opportunity and incentive, this was evident in the last recession, interest rates were low, so even in recession there was an increase in home sales.
It is the same right now, in California and Florida home sales are double or triple what they were 12 months ago. Homes are more affordable, volume has increased. Forclosures and short sales (owners who have to sell quickly) represent 30 - 40% of this sales volume.
Low prices are not a concern, it is falling prices that cause buyers to wait.
Real Estate Inventory Levels are higher, but not too high. During the boom there was 4 months stock, normal is 6 months stock, now there is 10 months stock. So inventory levels are not too bad really.
The main casue of the problem has been the subprime market, this market has seen a 30% default rate. What is subprime? (It is a little different that what one may first think)
PRIME - Are loans of less than $417,000
SUBPRIME - fall into two categories Loans $418,000 to $728,000 (Jumbo Loans) and loans over $729,000 (Super Jumbo Loans)
I was speaking to Wells Fargo Bank - lending in the Prime Sector is still relatively easy, even for those non resident borrowers. Lending in the Subprime Sector is a "no go" zone, even for Americans. The Banks just cannot fund them.
From the peak of the Real Estate Market 2 Trillion Dollars has been wiped from values
Obama will be facing a balance of payments defecit of 1 Trillion Dollars this year (estimates)
HERE IS A VERY INTERESTING FACT - Whilst distressed sales represent 35 - 40% of the current volume of transactions, it is not speculative vultures that make up the bulk of the buyers, NO, 80% of all recent buyers have been those purchasing for primary ownership.
AMERICA IS ON SALE! DO YOU WANT A SLICE?