President's Perspective

Getting the Good News out

Brad Bennett
President

My real estate career began in 1972. At that time, the six counties that made up Greater Columbus had a population of 1,170,000, there were 3,800 REALTORS®, fixed mortgage rates were 7.5% and we sold 8,000 homes that year.

By 1982, our population was 1,270,000 (up 100,000 in 10 years), we had 4,400 REALTORS®, fixed rates were 16+%, and we sold 5,700 houses.

By 1992, the population was 1,400,000 (up 130,000), we had 5,000 REALTORS®, fixed rates were 8.25%, and we sold 14,000 homes.

Today, our population is 1,700,000, we have 7,400 members, fixed rates are in the 6.25% range, and last year we sold 28,000 houses.

That is 28,000 houses. A slump????

But what is different about today's market from the past 35 years? During my entire career, the American Dream has been to own a home. I do not think that has changed.

We sold homes in the early to mid 70's when there was a `gas freeze'. We could not get gas taps, so we just sold all electric houses.

We sold homes when the rates were 16-18% in the early 80's and people wanted to buy. We just had to show them how to do it. The real estate market has been on the rise ever since.

Last year was the third highest number of sales ever in Central Ohio. Yes, it was down 4% from 2005, but it was still a good year.

We have seen some of the activity lessen since then. Why? What is going on? Every real estate slowdown we've experienced has been tied to some adverse factor that created an economic burden making it harder for buyers to buy (i.e. 17% interest rates, or gas shortages).

But, we've not had adverse economic factors during the most recent slowdown.

The housing industry is quite resilient, and certainly leads our economy in upward growth. We can usually withstand one or two negative pressures and still maintain growth. The difference today is that the media is in front of the public at every waking moment.

Everyone I meet is talking to me about high foreclosures, sub-prime lending problems, the real estate market slump (remember our 28,000 sales last year), increasing taxes, high utility costs, unemployment rates, and the high inventory of houses for sale.

Well, who wouldn't be afraid to buy? We don't have a real estate market problem, we have a real estate image problem.

I suspect that we will all look back at the mid 2000's and say, "Wow, I wish I had bought more real estate then." This could be the best decade to buy real estate and we need to get the word out.

In the past 40 years, the median price of homes increased every year except 2006. But values have risen 88% in the past decade.

The median net worth of a rental household is $4,800, and net worth of a home owner household is $171,000.

Since 2000, the dow has gained 10% (all in the last year). In the same time the average home appreciated 88%. And by the way, my favorite saying is "You can't live in a stock certificate, but you can in your home".

In the next 15 years the baby boomers are going to inherit 90 trillion dollars. Ninetysix percent of baby boomers think real estate is a good investment, 8 out of 10 own their own homes, and 34% own multiple properties. That demand for the future real estate will certainly push investments higher.

Problem sub-prime loans make up less than 1.5% of all loans.

While we often hear that Ohio leads the nation in foreclosures, we were actually 8th in 2006. Certainly that is not great, but I must also share that we are also #8 from the top in the percentage of households that own their own homes! Now lets talk about Columbus, we are 19th of the top 100 MSA's in foreclosures. We are lower than Vegas, Dallas, Denver, Indianapolis, Houston, Memphis, Lauderdale, and lots of others.

We live in a society today that folks often blame others for problems. During tough times in households of past generations, they did what was necessary to meet their obligations. If someone lost a job, that person swallowed their pride and took any work they could to get through the crisis. Today, folks want to point a finger instead of pick up a broom and earn some money. Sooner or later, people need to learn that they are responsible for their own actions. We hope it's sooner rather than later after over-regulation of lending makes it too difficult to become a homeowner.

We all need to make a concerted effort to combat the negative press that is pushing homebuyers to the sidelines. For the first time in my 35 real estate years, prices are a bit flat, the inventory is great, you can get more house for the money, and interest rates are awesome. Only 3 years in my 35 years have rates been lower. And there are still many great loan programs for deserving buyers. Now is a great time to buy!