Future of the Housing Market
by: Dane Hartzell
Senator Norm Coleman speaking at the 2008 Minnesota Housing Summit
Here are my notes from the 2008 Minnespota Housing Summit. Keynote speakers, NAHB Sr Economist, Dr Elliot Eisenberg, MN Senator, Norm Coleman and 9th Dist Fed Reserve Economist Toby Madden.
Sen Norm Coleman:
Coleman says the holiday season has him counting and recounting his blessings!
Coleman blames regulators, banks for current woes. Says change in leadership will help no matter who it is. Leadership is about credibility and Obama has it.
Bottom line: 1. Do no harm. 2. Need short term fixes. 3. Need vision. If you don’t know where you’re going, any road will get you there. However, MN is north star state and we will lead nation out of this situation.
Pawlenty administration says we need to build consumer confidence.
Toby Madden, 9th Dist Fed Reserve:
Derivatives and credit default swaps were the incentives created that built 40,000 homes in MN and each state. Problem is these were not regulated.
2009 9th Dist Fed Reserve forecast:
7% unemployment
-17% housing starts
“Remember all recessions end and expansion happens.” Not worried about the long term because we have good system.
NAHB Sr Economist, Dr Elliot Eisenherg:
2009 will be the bottom of the housing market in MN but not in states like FL. In MN, overbuilding of multifamily construction was the issue. Population will save the day. US growing at 3 million people a year. US needs 1.6 to 1.8 million new homes a year. Housing prices largely driven by land prices. Land prices driven by govt regulation. That is why CA, Boston and Seattle are expensive. Regulators need to understand that each action causes an equal and opposite reaction.
Builders concerned that credit available but appraisals prohibit equity needed.
Recessions last on average 18 months.