The New Kid Sounds Okay To Me, So Far

For a couple of years now, I've been disagreeing with the opinions of David Lereah, the chief economist for the National Association of Realtors (NAR). It just seemed to me that Lereah was misreading and misinterpreting the facts and constantly painting an all-too-rosy picture of the real estate world in the United States, and he seemed especially uninformed about the Tampa Bay area housing market. Lereah even wrote a book about real estate -- Are You Missing The Real Estate Boom? -- Why Home Values and Other Real Estate Investments Will Climb Through The End Of The Decade. I wonder what decade he's writing about. Perhaps the ten years which ended in 2005.


Apparently NAR finally got fed-up with Lereah and dumped him in favor of Lawrence Yun. Yun spoke before the Greater Tampa Association of Realtors recently. I think Yun's comments are a lot more realistic than those of Lereah -- Yun feels that in the short term, real estate is going to be a bit painful, but in the long run it's still going to be a great investment and a great career. I don't think there is much doubt of that.

Yun puts much of the blame for falling real estate prices on the media's constant editorializing about the so-called "real estate bubble". If it were not for the fears such comments generate, Yun thinks declining home prices should have stimulated more sales this year. I agree. The media seems to over-sensationalize everything these days. Here are some of Yun's other thoughts ...

• The real measure of housing affordability is mortgage obligation compared to income, not property price compared to income. That kinda makes sense, doesn't it? It does to me. Yun said that much of the Tampa Bay area is about at the national average for mortgage obligation to income ratio. That's a good thing.
• Speculators are leaving the marketplace. I think that's a good thing and will help bring some equilibrium back to the local housing market and will tend to keep price increases more under control.
• Tampa Bay has strong job creation. Clearly, this is good for the local housing markets and business in general.
• Baby boomers are buying second homes. Reports I read indicate that there are millions of baby boomers who do not intend to spend their retirement years fighting the winters in upstate New York or anywhere else in the northeast and noth-central areas. Florida will attract its share of these people.
• Florida will reform its property tax problems and property insurance premiums. This process is currently underway and eventually the matters will be solved. Once the insurance issues are resolved, Yun has predicted a "sonic boom" in property sales -- and I agree totally, as long as mortgage rates and other demand factors remain positive.

Yun has suggested that the current large inventory of unsold homes in the Tampa Bay area -- in the neighborhood of 40,000 properties -- will resolve itself over time. Many homes will become rental units while other owners simply take their homes off the market awaiting better times. We have seen this drop in inventory during April -- just check the listing inventory from March to May, and you'll see a drop of several thousand single family homes. Those homes were not sold you know. They were taken off the market by owners fed-up with the current market conditions, just what Yun said would happen in his recent speech.

Frankly, I hope Yun keeps a realistic view of things and deals with the facts. We don't need another chief economist who is really a PR guy for the real estate industry. Grown-up people need to know the facts so that they can make realistic plans for the future. That's something I don't think Lereah ever appreciated with is rah-rah comments when everybody else knew the situation was anything but positive. Eventually it discredited Lereah and he began to look foolish. Lereah was all about spin. Let's hope Yun is all about facts.

For more information about real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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