Real Estate Articles
REALTOR®: Economists Share 2009 Forecast with REALTORS®
Pictured left to right are SILVAR Membership Committee Co-Chair Josie Gambera, SILVAR President Leannah Hunt, Dr. John Shoven, Dr. Tom Means, SILVAR Membership Co-chair Toby Vanderbeek
Four hundred members of the Silicon Valley Association of REALTORS® gathered at the Palo Alto Hills Country Club recently and listened to local economists analyze the nation's economic problems and their impact on the housing market.
The guest speakers were Dr. John Shoven, Wallace Howley Director of the Stanford Institute for Economic Policy Research, and the Charles R. Schwab Professor of Economics at Stanford University, and Dr. Tom Means, Director of the Center for Economic Education and Professor of Economics at San Jose State University. Although both Shoven and Means acknowledged the country is in a recession and laid out a dim forecast of the economy for the next few months, they expect a turnaround by late next year.
Shoven said traced today's economic problems to the assumption that home values never decline and an overconfidence that home prices will continue to appreciate rapidly, which led people to depend too much on credit. The Federal Bank in turn continued to lower interest rates and encouraged home buying, and banks loosened their lending standards to accommodate more borrowers.
"We have been living beyond our means. We just have to stop doing that as a country," Shoven said.
The economists see the unemployment rate reaching eight percent and home prices falling yet another 10 percent, and Shoven believes the Silicon Valley region, whose housing market has not been as hard hit as other places in the state, will also feel the hurt.
"Silicon Valley has been very lucky, but I have doubts it will go on," Dr. Shoven said.
The good news is these economic experts don't see the recession lasting too long. They believe prices will bottom out next summer and the economy will take a turn for the better by the second half of 2009.
Shoven believes the government has used the $140 billion bailout money wisely by buying preferred stocks and helping the banks get equity. He endorsed the National Association of REALTORS®' proposal of making the 2008 temporary conforming loan limit of $729,750 permanent and encouraged REALTORS® to continue urging Congress to pass such a measure.
Means advised REALTORS® to continue working on policies that will strengthen the housing market. He said based on his experience as mayor of Mountain View, policies on affordable housing are difficult to pass and take political will and strength to push them forward. Means promotes updating and strengthening old products as keys to the success of many businesses.
Despite the problems in the economy, the housing market in the region will survive, according to Means. "It may not grow fast, but we'll be okay," Means said.
Shoven added President-elect Barack Obama's team has a formidable task ahead because it has to virtually "rewrite the playbook," and much of the economy's future will depend on his administration's ability to boost consumer confidence.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.