I was fortunate enough to attend a recent forecast lunch the past month. Actually it is my favorite forecast of the year. These UIC boys are so smart and so deep and so detailed you can fall asleep…or get blown away by the information. One of the cool things is these guys are; in my opinion; unbiased and (this may be biased now that I think about it) they believe in the free enterprise system! Wow imagine that!!! Wish Barak would give and learn a lesson.
here’s why I think these guys are the best; the first words that preclude any/every prediction are “the numbers allow me to tell you” then present the prediction followed by guess what? EVIDENCE like some stats and then some graphs and charts that backs it all up. Detail? You want detail?
There were a couple of things that blew me away: The biggie was the size of the real estate industry as a whole related to us as a percentage of GDP (I believe in 2001) was .02% for the country. Told you they were deep!
So while you are trying to relate to what the hell that means let me help you understand or begin to define the real estate industry. They mean all of us poor real estate brokers,mortgage lenders (even the predatory bastard ones praying on the consumers), carpenters and all of the other tradesmen but also the carpet and appliance guys and dealers and their delivery drivers and sales clerks. I mean everyone who could touch any real estate transaction; (think of any/every thing in your house or office) suppliers of every kind, the insurance guys the lawyers, landscapers; got it?
That .02% GDP number grew to .06% in 2008 so whats that percentage increase in 6 years? Crazy right? now lets bring this thing in closer to the people you and I know. Remember hearing about “the fastest growing city, county, state, region, blah blah blah in the country”? Which city, county, state, region in the country have the highest unemployment rate…Hmmm: Nevada, Arizona, Florida and California (and why would anyone want to live in that state by the way. Yeah the weather is good but the leadership is nuts…wait a minute I’m calling the kettle calling the pot black. I live in Illinois!)
The numbers allowed these guys to give us numbers(the highest unemployment) showing the correlation to these states that experienced the “fastest this or that syndrome” and it is the RE industry that makes up 35% of that state’s unemployment number. Makes sense to me being a man with logic at my base. They went on to say these RE folks (victims probably in the nanny state) have been unable to recreate a new skill to alow them back in to the work force. Huh?
Apparently the numbers say that’s true and whats worse those that have recreated themselves have a house in a state with highest foreclosure rates, lowest resale values and velocity so they cannot relocate quickly enough to grab a job out of state. Sounds like there is no hope.
Ahhh but the government under BO (no pun intended on stinky body) is (de) incentivizing these folksy victims with unemployment and extension after extension and typical poor government accountability so these folksy victims don’t really have to go back to work. I have a couple of life long conservative friends who have worked their whole lives and participated and were raised in the belief you work hard and make your own living. These guys have been out of work for 1 + years and had opportunities to work but why do that when they can make close to the same without working…I’m afraid they have gone over to the dark side.
So our prognosticators suggested that SOMETHING has to be done about unemployment. They suggested a one time lump sum payment and that’s it; Spend it and it’s gone. Kinda like that concept. Motivates them to get a job before the doe runs out. What a novel idea incentivizing people to seek work! Don’t you love people that have a solution and not just the problem?
The lesson(s) learned from this lunch for me is there are particular segments that are doing fine and others that have tanked. The government does not segment the problem by industry and should.
The RE industry has shrunk they think back to the .02% number. How does this get cleaned up? They say incentivize people to work! Huh?
So besides fixing the welfare state attitude with unemployment stupidity the banks have to stop penalizing everyone but themselves and clean up the crap. Allow owners (mortgage holders) to have access to capital so they can compete in the market for buyers of their home or tenant prospects for their office or warehouse space.
Stop the de-leveraging of the economy! Stop covering your ass and help us by providing proactive financial assistance. SEGMENT THE MARKETS. Understand there is good real estate and bad real estate. Hire real estate experts to consult to determine value in the REO portfolios and dump the crap and market the good. The values will steady for the good stuff and demand will rise quickly. The crap is the crap and will always be the crap.
Real Estate is not a commodity damn it!!!