At the Five Star MPact Mortgage Banking Conference and Expo on Tuesday Fannie Mae’s chief economist, Doug Duncan, declared that we are half way through a 10 year adjustment period in real estate. It seems to be a rather bleak assessment of the future for real estate. After all, I assumed that once the economy turned around and employment started to grow once again we could look forward to gradually increasing home prices. But Doug Duncan appears to be clearly less optimistic. Other than lamenting the fact that there are a bunch of vacant homes sitting around Doug seemed to focus on two primary issues.
First he points out that there is a lot of public policy uncertainty that is keeping private capital on the sidelines. In particular he notes that only about half of the 300 regulations required under Dodd-Frank have been implemented and it will take another few years to implement the rest. Who would have thought that we needed 300 regulations? No wonder those guys are retiring.
Doug’s second main point has to do with employment and the fact that, even with the economy growing slightly, it’s going to take a long time to replace 7 MM lost jobs and even then wages will likely be very anemic.
But Doug also gives us all a ray of hope that five years from now “real estate is a good place to be.” So let me know when Godot gets here.