“Everything is just fine! And it’s a great time to buy a house!” That’s the official company line from last week’s Realtors conference & expo in sunny Orlando. Listening to the Realtors’ economists, one would think that “happy days,” while maybe not exactly here again, are assuredly right around the corner.
Belying the superficial tenor of the convention planners is the broad underlying depression of the many attendees I listened to over several days here. Agents and brokers alike have seen many in their ranks suffer and die on the field of economic combat, not so much in competition with other agents as in battle with lenders, appraisers, underwriters, and bureaucrats at HUD, Fannie Mae and Freddie Mac.
Over and over again I was told that, even if you could get a buyer to sign a contract, and even if they appeared to be well-qualified, there was only a 50-50 chance the property would pass the nitpicking home inspection, the low-ball appraisal process, or the loan-approval gantlet. And the likelihood of besting all three was, well, less than it should be.
This factoid should stun all of us: Last year the average applicant for a conventional loan who was rejected or didn’t make it to closing had a FICO score of 732, and an average down payment of 19 percent of the purchase price. For those of you with a lending background, their average debt-to-income ratios were 24 percent housing expense and 41 percent of overall debt service.
Back at the convention, even a special guest appearance from television comedian Jim Belushi seemed out-of-place in this somber environment. The mood was especially poignant when contrasted with previous Realtor conventions.
I will never forget the 1995 Realtors Conference in Atlanta. We were all frantically trying to prepare for the Centennial Olympic Games the following summer, and excitement was in the air! The world was focused on Atlanta, and for all the right reasons.
Times were good then, houses were selling, and agents were making a good living.
In contrast, attendees last week seemed uninspired by the 2012 NAR theme “Discover Your Magic.” The sad truth is that this has been a tough couple of years for the real estate industry, and it may not get much better anytime soon.
The flood of foreclosures seems to be slowing down, but there are so many vacant houses in so many metro Atlanta neighborhoods that it’s hard to tell. Prices are dragging along the bottom and will probably continue to do so until we can absorb some of the bank-owned inventory. And there is no indication that lenders intend to loosen the purse strings anytime in the near future.
It seems that everyone here knows we are in big economic trouble but no one wants to do anything about it. The national debt hangs over this group like an ominous cloud, threatening to undermine the international strength of our currency, even as the administration continues it’s ham-handed and clumsy approach to helping American homeowners who want, need and deserve a loan modification.
I guess I should have started worrying when neither candidate even mentioned housing in the recent presidential debates. And when I ventured to one of the attendees that perhaps we should consider eliminating the mortgage interest deduction as part of an overall approach to tax reform, well, it wasn’t pretty. (I only did that once.)
The expo consisted of lots of agent-branding software packages and solutions, a seemingly endless stream of booths giving away one “iPad mini,” and the usual garden variety of automakers, national lenders and national brokers.
There was little talk of the impending economic catastrophe should our federal government fail to postpone our date with disaster the night of December 31.
So, is this really a great time to buy a house? Yes, I believe it is. And is everything really just fine? We won’t know until January.
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