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2011-10-27 17:19:54

Crisis of Confidence

Why is it that we have historically low interest rates for home mortgages and historic home affordability in this country, and our Real Estate industry is stinking up the joint?

I keep sharing with those that don’t live and breathe Real Estate like I do, that our industry should be blazing hot right now. We should be doing 6 million sales a year, and we should be seeing double digit appreciation on homes. So again, I ask “Why isn’t it happening.”

The answer is a CRISIS OF CONFIDENCE.

The nation as a whole has a serious Crisis of Confidence in our government and our national leaders to lead. I call myself a Liberal Conservative. I’m right down the middle leaning right, so the things I have to say in this article do not come from any ideology.

Our government sucks at the moment!!!!! That’s the plain awful truth of the matter. They have lost touch with the people. We the people can no longer talk to each other about our differences. The leaders have divided us as a nation. The loons of both parties represent 10% of both parties, so that means that 80% of us should be able to speak with one another without fighting or hatred.

So once we get a leader in this country that once again can unite the country, we will see our industry absolutely rise like a Phoenix.

I heard a talking head on television last night say that we have an oversupply of inventory and the new proposal by the Obama administration of allowing those homeowners under water to refinance will do no good as a result.

Well, the talking head was wrong about the inventory. Once we get back to a healthy economy and we the citizens of this great country have faith again in our leaders and the government, we will see the little inventory we have disappear overnight. We in fact have a negative inventory at the moment of several million homes. As I’ve stated in previous articles; we need 1.2 million new homes built each year just to keep up with the homes lost to natural disasters, fires and population growth. For the last 5 years we have averaged less than 500,000 a year. So once our industry takes off again, watch out!!!

So do I think the proposal to allow all underwater homeowners to refinance will help our industry? The answer is yes. I actually sent this proposal to the Romney, Obama, Bachman, and Perry campaign over two months ago. I’m sure I’m not the only one that came up with this idea, but I can state that I did send it to all these candidates.

I assume in my proposal that the average homeowner would save $500 a month if he has a mortgage at 7% and can refinance at 4.5%. That is a lot of potential money that may be used in our economy to maybe buy some new furniture, or replace a roof, or add a patio. All these items are job creators.

So here are my projections for our industry over the next 3 years. I don’t think President Obama will win a second term. I do believe a moderate Republican will. I also believe that person will have to be someone that sincerely tries to reunite our nation as one.

Assuming that is the case, because of the historically low affordability factor, and low mortgage rates, our industry will rise from the ashes like a Phoenix.

 


James A. Crumbaugh III is CEO of Allison James Estates and Homes, a National Virtual Real Estate Brokerage. You may reach Mr. Crumbaugh at jcrumbaugh@allisonjames.net

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