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Market Insights

2008 New England REALTOR Conference

by John W. Rice, President Seacoast Board of REALTORS 

CAMBRIDGE, MASS---More than 300 REALTORS attended this year's conference March 3-4 here. I was on-hand as well, representing the Seacoast Board of REALTORS. There were about seven of us from the Granite State.

 The hot question  was  when will the "correction" end? The short answer seems to be 2009-maybe. In the meantime, the NAR sent 2008 President-elect Charles McMillan to help key note the program. McMillan is the highest level NAR official to appear at a NERC function in years.

            "REALTORS are unaccustomed to this market," the affable McMillan said. "But we are family and family's work together. There's never been a time that this was so critical..."

            McMillan explained that tough times often bring out our differences, rather than what we have in common. We have to work through that.

            "Treat each other with respect and dignity," he said. "It's gonna be OK."

             Taking that thought a step further, Keynote Speaker Richard Mendenhall, 2001 NAR president, reminded us that there is no national market. Just as we note dramatic differences in our New Hampshire markets, Mendenhall repeats the NAR mantra that all real estate is local. Half the U.S. markets, in fact, are doing better than last year.

            "Don't get up tight about this market," Mendenhall said. "One-hundred years from now it won't matter what your bank account was."

            Instead, the former NAR leader urged all to ask yourself, "What's new in your thinking? Refuse to participate in this recession. As Winston Churchill once said,' Never give up. Never never give up. Never never never give up."

Continuing the World War II theme, NAR Chief Economist Lawrence Yun assured everyone that, "The only thing we have to fear is fear itself."

            Yun noted what most of us in the SBR have seen locally. There is pent-up demand, interest rates are at record lows and housing is becoming more affordable daily. While prices are moderating, if one owns a property three to six years, one usually make good money.

Yun sees prices and sales having already retreated to 2002 pre-boom levels. But, in New Hampshire and Maine our inventory decline-unique to the national market-helps to stabilize prices. New construction has sharply declined, though. Yun predicts further that subprime delinquencies will continue to rise sharply. Prices, he expects, will slide possibly another eight percent through the end of 2008.

            While prices moderate, Yun sees affordability rising. The overall economy is weak, but New England's highly educated work force is likely to help us out of it sooner than the rest of the country. Corporate profits are at record highs and wages are rising-all positive signs.  Only the financial and homebuilding sectors are weak. Oil prices, of course, are a wild card here.

            "2008 will continue to be uncertain, though we should see stabilization by year's end," Yun said. "We should experience a slow recovery in 2009. It is unfeasible that this could go on."

            Also speaking was Alicia Sasser, senior economist for the Federal Reserve Bank of Boston. Sasser also predicted falling prices for a second straight year, but that we could see recovery late this year.

            "Our over supply is not as dire as the rest of the country," she said. "It's still going to take some time to work through that inventory."

 When markets do stabilize, she predicts 2.1% annual appreciation through 2011. New Hampshire, Sasser thinks, should have the fastest growing economy of all the New England states.

 While on the subject of finance, NAR Senior Vice President of Legal Affairs Jerry Giovaniello trumpeted the NAR's role in pushing Congress to enact FHA reform. That action is currently in the Senate in conference. Already lending ceilings for Freddie and Fannie have been raised, but specific market increases are still a few weeks away. The new loan limit for the Boston area will likely rise from $417,000 to $538,000.

For a complete and more detailed accounting of the conference, go to http://www.nerc2008.com/.

 

                                                           


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