John Tuccillo, Former Economist for NAR

Becky Locknane, Managing Broker at Milestone, and I attended the KAR Broker Summit in Louisville this week and had the opportunity to attend the opening session which featured keynote speaker John Tuccillo, former economist for NAR.  John focused on the future of the real estate industry. He spoke not just in terms of the state that many Louisville houses are in but what is going on nationally, and made the following observations/comments:

1.  The recent recession was not the worst in our history.  The recession of 1981-82 was worse however this recession created the largest reduction of wealth.
2.  He compared the recovery to a Marathon with the fastest runners (meaning wealthiest with most liquidity) out in front while the average runner hasn’t even reached the starting point.  He mentioned the banking and automotive industries as the front runners.
3.  Contrary to popular belief, Bank of America will not “dump” a large number of properties on the market at one time thereby oversaturating the market with distressed properties.  As astute business people they will add homes to inventory stock as deemed appropriate by their business plan.
4.  There is no sign that the labor market will improve anytime soon.  In fact, we have become more proficient at producing equipment (robots,etc.) that produce goods thereby eliminating job opportunities for mere mortals.
5.  The current recession has caused many Baby Boomers to become “lifers” as their savings and home equity disappeared.

These were just a few of the observations made by Mr. Tuccillo.  Things to watch in the near future will be the effect of the private investor sector’s purchase of mortgage backed securities which will surely effect interest rates.  Also, the regulation of the banking industry as they are currently more focused on their own health and profitability rather than on their role in the economy.  Banks are currently playing the market and making more money that if they would make loans to the consumer.  Lastly, we must be an avid follower of employment, mainly the number of jobs created or lost rather than unemployemnt percentages.

We are definitely in recovery mode, slowly but surely our market will rebound to a sustainable level.  We are more than ready for change!!