Local Portland Oregon housing inventory was down to 7.3 months for the month of July 2009!!!  This is the 6th consecutive month of lower inventory of homes for sale, down from 10 months in July 2008 and down from 19.2 months in January 2009!!!  This coupled with the national lower unemployment figures and other recent positive economic indicators leads me to conclude we could be near the “bottom” and nearing the end of our recession.  That does not mean that we don’t have some more “repair work” to do.  I do believe it’s going to take some slow, steady re-building to fully rejuvenate our real estate market.  But, every little positive piece of the puzzle is welcome! To see full market statistics, please visit:  http://bit.ly/JulyMarketStats

Yesterday was our annual Realtor Trade Fair, with a full day of presentations, classes and new ideas from vendors.  I attended the morning session with Economist John Mitchell (I always enjoy his perspective).  I also visited all the booths at the fair and received clarification on some great new technology ideas and will be merging my office real estate web site, my excellent buyer search site and my blog into one web presence and I’m excited about that!!  These are some of the main points taken from Mr. Mitchell’s evaluation, assessment and predictions for our local, national & global economy!!

1)       Our real GDP (gross domestic productions) peaked December 2007 and we’ve been in a recession ever since and this is a global recession.

2)      We have endured 32 recessions in our economic history and all have ended.

3)      The Great Depression lasted 43 months.  In 1980, we were in recession for 16 months, the last two recessions were shorter in 1990 and 2001 (8 months).  We are in the 15^th month of this current recession.

4)      Housing is at the core of this recession.  The housing market peaked in 2005 with 2.3 million units.  We are now building 500,000 units (down 51%).  Mr. Mitchell believes we are “at or near the bottom”.  He mused that we were “bouncing along the bottom”.

5)      The housing “bubble” follows a long tradition of other “favorites” such as tulip bulbs, South Sea shares, Railroads/canals and internet stocks.

6)      The housing decline was precipitated by loose loan underwriting, regulatory failures and a colossal failure of risk management with all parties sub-dividing the transaction and no one taking ultimate responsibility, tax laws such as equity lines of credit encouraging people to take the equity from their homes and, of course, some speculation and fraud.

7)      The local change in our local real estate market really began in the Spring of 2005.

      “Housing Affordability” will cause the end of the decline.  (Actually we are already seeing that finding the “sweet spot” in pricing is what currently will move a home).

9)      We learned that “leverage” works both ways.

10)  Movement in the credit markets will be paramount to real estate moving.

11)  Case-Shiller reports Portland housing down an average of -13.1%.

12)  The prospects for GDP growth in 2009 -1.5 to -2.5% with 0 to -1% inflation and no price pressure.  The Fed has provided liquidity with Fed Funds Target at 0-.25%.

13)  What must happen to end the downturn?  Inventories have to be reduced, capital markets function again, people start saving again to strengthen balance sheets and, ultimately, confidence is restored.

14)  Mr. Mitchell believes the Stimulus Package is thinking back to Econ 101, right out of “The General Theory of Employment, Interest and Money” (1936) with government spending to offset personal “re-trenching”.  But, remember:  stimulus=borrowing and borrowing will eventually put upward pressure on interest rates.

15)  “Let’s resist the temptation to confuse what we hope or fear with what we know”.