Recovery, although slow, is under way
Last Tuesday's forum was an eye-opener for the 500-plus folks who attended. Excellent presenters from all areas of the real estate trade presented facts and figures that brought our local market into focus.
We often remind you here that all real estate is local, but when it comes to trends it appears that we are following the same course as most of the country. All areas are seeing foreclosures siphoned off by savvy investors and although those foreclosures are keeping housing prices down, unit sales are going up.
We were delighted to welcome Lawrence Yun, Chief Economist of the National Association of Realtors to The Coeur d'Alene Resort for this event. As he spoke, it became apparent that, here in the Northwest, we are experiencing the same types of market activity as in many other parts of the country.
Several lenders spoke too, at the 25th annual Real Estate Market Forum and they all told the same story, "We have money to lend." Mr. Yun reported that financial institutions in America are flush with cash and have rebounded from their near collapse to a state where they are more profitable than at any time in recent history. Yet, said Yun, financial stock prices are not increasing. We wondered, why? According to Yun, investors fear the yet to be decided role the Dodd-Frank Act will play in banking's future.
The "Dodd-Frank Wall Street Reform and Consumer Protection Act" implements changes that affect the oversight and supervision of financial institutions and created a new agency, the "Financial Stability Oversight Council," responsible for "implementing and enforcing compliance with consumer financial laws." This new council then caused several sub-councils and bureaus to form as well. The problem, according to Yun, is that no one really knows yet what the laws will be. That is because the laws are not yet completely written. The Dodd-Frank Act calls for a number of studies to be conducted which will determine new regulations to prevent another collapse and subsequent bailout.
Suffice it to say that banks have had to change their way of doing business and the changes are not yet complete. They can't be complete because no one knows what changes the studies will recommend. This causes the lenders to be exceptionally careful when lending money and has caused investors to be particularly shy about bank stocks as those financial institutions redefine their way of doing business.
But, other than the fact it is a bit more challenging to borrow - you have to have a pretty clean debt record - banks do have money to lend and lots of it.
Much of the real estate activity then is attributed to investors, once again turning to real estate as a safe haven for their cash. Yun explained that in Miami, Fla., repossessed real estate is going to investors who bid on the properties as soon as they hit the market. This in a market that had a six-year inventory just a couple of years ago. Many of these buyers are not U.S. citizens, but investors from overseas concerned with the European debt crisis. This decline in inventory has caused prices there to begin creeping up.
Commercial real estate presenters at the Forum had a similar message - there is plenty of inventory, but we are beginning to see the light at the end of the tunnel as interest builds for lower priced real estate. The same is true for leased properties. As prices come down and with landlords willing to make concessions in improvements or terms, tenants are moving in.
It seems in all sectors, at today's low interest rates and low prices, activity is beginning to heat up. Once our inventory drops - some categories are already slim - like Miami, we may see prices rise.
Trust an expert... call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.
Kim Cooper is a real estate broker and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling (208) 667-0664.