INCLINE VILLAGE, Nev. — The worst is over.
This simple phrase represented the theme this week at the Hyatt Regency Lake Tahoe, as Realtors and real estate and economic professionals relegated the economic crisis to the past while painting the present as a time for bridled optimism.
“Home values have stabilized in many markets throughout the nation,” said National Association of Realtors’ Head Economist Lawrence Yun, during a Monday presentation. “In general, the industry is much healthier than before.”
Another central theme of Yun’s talk was the global nature of the economy and how growth in Brazil, Russia, India and China has led to the emergence of a middle class in each of those countries — and thus, the potential for U.S. Realtors to woo more international residents.
“Those countries will witness the addition of 30 million middle class families next year,” Yun said. “Members of the top end of that class have become interested in owning a home in Miami or Vail. Foreign investors are becoming increasingly interested buying high-end property in the United States.”
However, the global economy has also hampered the real-estate industry, as concerns over Greece’s public bankruptcy has banks in the United States reluctant to fork over loans to interested parties.
“Profits in the banking industry — after weathering the crisis of a few years ago — are equal to peak levels, but it is still difficult to obtain money from the banks,” Yun said.
Yun said worries over impending financial regulation by U.S. federal government could account for some of the stringent loan policies currently in play. Compounding the problem is that economic recovery — despite encouraging signs — has yet to find a solid track, Yun said. The unemployment rate hovers near double digits nationwide, and states like Nevada and Michigan are still severely impacted by the recession.
Nevertheless, it is the inability of the Greek government to get its books in order that has led to growing uncertainty in the global economy, Yun said.
“If Greece defaults on its loans, then the German banks will take a significant hit,” Yun said. “This, in turn, will trickle down to countries like Portugal, Italy and Spain, and banks worldwide will not have enough capital to lend.”
Other risks looming in the global market include high budget deficits, which may lead to high inflation.
Also, the nationwide slowdown in the construction of new homes may incur a housing shortage, Yun said, which would lead to an a spike in housing prices, creating a wealth of unaffordable homes and a reduction in mortgage lending.
Yet, Yun believes the slow, albeit erratic recovery of the worldwide economy bodes well for both the short- and long-term future of the real-estate industry.
“Even in Michigan, where the economic stats are the worst, they are starting to create jobs,” he said. “The growth is not robust, but the economy is recovering.”
Where is real-estate up?
According to a presentation by Lawrence Yun, head economist for the National Association of Realtors, these are the top flourishing real-estate sectors in the
United States:
San Diego, Calif.
Orange County, Calif.
Houston, Texas
Buffalo, N.Y.
Washington, D.C.
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