Those of us
in the title industry certainly know that things have
been slow. Well know we now just how bad things are.
According to an article on Bloomberg.com, U.S.
Economy: Existing Home Sales Fall, Prices Drop,
2007 provided us with "the biggest annual slump
in 25 years and the first decline in prices since the
Great Depression."
|
Purchases fell 2.2
percent to an annual rate of 4.89 million, the
National Association of Realtors said [on January
24] in Washington. For all of last year, sales of
single-family homes declined 13 percent and prices
dropped 1.8 percent, the first decrease
since records began in 1968 and probably the first
since the 1930s, the group said.
|
Investors are speculating
that the Fed will cut interest rates again next week in an
effort to prevent the down turn from exacerbating weakness
in the broader economy. But, lower interest rates may not
spur home buying as many would suspect.
| "Would-be
homeowners are not going to jump into the market to
buy new homes no matter how much prices have dropped
until they get a solid feeling that prices have
bottomed," said Ellen Zentner, an economist at Bank
of Tokyo-Mitsubishi UFJ Ltd. in New York.
|
Not to mention that with
the economy at serious risk of falling into a recession
many potential homebuyers may wait to see how secure their
financial future is before making a major purchase.
Several top economists believe that the chances of a
recession are better than 50 percent.
|
"There is likely to
be little or no increase" in gross domestic
product this quarter, Harvard University economist
Martin Feldstein told the Senate
Finance Committee in Washington today. "The
probability of a recession in 2008 now exceeds 50
percent. If it occurs, it could be deeper and
longer than the recessions of the recent past."
...
Former U.S. Federal
Reserve chairman Alan Greenspan
said Thursday the odds of a U.S. recession are
50 percent or "slightly more," as he defended
the risky subprime mortgages that accelerated a
drop in the American housing market and subsequent
economic downturn.
...
"The probability of
recession is probably 50 percent or maybe slightly
more, but we're not there yet," Greenspan told a
Vancouver audience.
...
“What is the
probability that the U.S. economy will fall into a
recession in 2008? We would answer, 65.5 percent
… What we do see for 2008 is an economy
teetering on the brink of recession.” Paul
Kasriel, director of economic research,
at Northern Trust Bank in Chicago.
...
"In sum, the recent
employment report strongly suggests that an
official recession has arrived.”
David Rosenberg, chief North American
economist for Merrill Lynch. |
Of course, in my opinion,
economists are like weathermen: no matter what
happens, you can't prove them wrong. If the
weatherman tells me that there is a 10 percent chance of
precipitation and we get the worst downpour since Noah
built his ark, well... he told me that there was a 10
percent chance.
What I can't understand is
so many economists would so boldly state the chances are
around 50 percent - why don't they just say "we don't
know." The housing market, and the broader economy, are in
chaos. What will happen tomorrow is any one's guess. But,
today, things are bad. Of course, you don't need me to
tell you that - that is the like the weatherman that says
"right now, it's raining."
About the Author
Robert A. Franco has been in the title industry for nearly 15 years in the
state of Ohio. The owner of
VersaTitle,
a full service abstracting and title company, and the founder and
president of Source of Title, a
Web site devoted to providing media and marketing services to the title
industry, Franco has dedicated much of his professional career to
furthering the role and significance of title examiners in the title
insurance industry. You can read more from Robert's blog or write
him at
rfranco@sourceoftitle.com .
Comment
or vote on this article