A couple of weeks ago, I referenced a cautiously optimistic outlook on the economy (”Real Estate Slump End in Sight?”) by NAR’s former Chief Economist John Tuccillo. At the end of last week, John Tuccillosounded even more positive: “Real estate professionals who are in this for the long haul are back in business in a big way. All in all, the late summer beginning of the recovery appears to be right on track.”
I bring you this quote simply to inform you that the National Association of Realtors are a little more than cautiously optimistic about the housing market. I would actually characterize their stance as a tad too bullish a tad too early. Here’s my opinion: It’s hard to believe that we’re through the real estate slump when the commercial real estate market is on the precipice of a massive write down. Literally, commercial bankers in Nashville are telling me to hold on to my socks because what’s coming is liable to blow them right off my body! I am no Chicken Little, but when a commercial lender tells me that it’s about to get a lot worse, I believe them.
There are three fundamental things that I need to see happen before I am ready to say that the Nashville real estate market has made a turn around. I need to see more jobs created during a month than lost. Granted, that time is fast approaching, but we’re not quite there. I need to see liquidity returned to the home building market. If banks are unwilling to lend to a home builder, they must fundamentally believe that buyers (willing and able) don’t exist at this point. I need to see banks and lenders re-introduce a “fast and easy”, no doc or low doc loan – that would be a definitive sign that they believe in housing appreciation. Of course there are a million other indicators out there that are great measures, but for me, these are the three that are unquestionable.