C.A.R. hosts Real Estate Voices—The Past, Present and Future of the Real Estate Industry
C.A.R. recently gathered some of the brightest minds in real estate for a one-day symposium that featured cutting-edge real estate and economic presentations from leading experts in the field.
Titled, “Real Estate Voices—The Past, Present and Future of the Real Estate Industry,” the event represented a variety of related disciplines, with 18 presenters providing their insights on the future of the housing market, banking, mortgage finance, the economy, demographics, and more. Held in Los Angeles last week, the fast-paced, “TED Talks-styled” event provided an opportunity for a thought-provoking exchange of ideas and information.
Here is a list of speakers and brief summary of their presentations.
• Kicking off the symposium, Mark Palim, vice president of Applied Economic and Housing Research at Fannie Mae, discussed difficulties young renters and future potential home buyers have in light of the sluggish labor market recovery, stalling income growth, and difficulty accumulating a down payment.
• Raphael Bostic, professor at Judith & John Bedrosian Chair in Governance, Sol Price School of Public Policy at the University of Southern California, emphasized the need to approach housing policy as an instrument in balancing one’s priorities, life, and communities in general. Bostic highlighted social benefits resulting from balanced and stable housing policy.
• C.A.R. Chief Executive Officer Joel Singer questioned the epidemic of cash-out refinances that took place during the housing boom. Referencing a simulation in the National Bureau of Economic Research’s Working Paper titled “Systemic Risk and The Refinancing Ratchet Effect,” Singer highlighted vast differences in aggregated loan-to-value ratios in an environment of no refinancing and cash-out refinancing. Singer concluded that the policy of pricing refinances at the same price as purchase money loans has generated incredible risk for the finance system and consequently, the economy.
• Dan Brumbaugh, an independent financial services consultant, examined the unifying causes of the savings and loan and banking crises in the U.S. in the early 1980s and early 1990s, and the most recent U.S. and European financial crises.
• Richard Green, professor and Lusk Chair in Real Estate at the University of Southern California, posed the question: “Will the Baby Boom Cause a Housing Bust?” and concluded that changes in preferences following the housing crash, along with favorable socio-demographic changes (such as age structure, race/ethnicity, marital status, and educational attainment) will increase housing demand and absorb the housing left by baby boomers.
• Celia Chen, research staff senior director at Moody’s Analytics, presented the audience with three reasons why housing is coming back, including fairly valued housing, forthcoming undersupply, and positive demographic forces.
• Lawrence Yun, chief economist at the NATIONAL ASSOCIATION OF REALTORS®, also highlighted the need for more housing starts. However, Yun reflected on the subdued economic recovery so far and the need for a more robust recovery going forward. Yun also questioned the impact of the rising share of renter households on current and future wealth distribution.
• David Crowe, chief economist at the National Association of Home Builders, followed up on the shortage in new home construction. By providing the audience with an overview of the local economic impact of building new homes, Crowe disputed naysayers’ arguments for rejecting new homes and suggested that new construction pays for itself.
• Freddie Mac Chief Economist Frank E. Nothaft emphasized the shift in the lending environment from one that is benefiting from low interest rates and is focused on refinancing to one that is dominated by higher interest rates and a shift toward home purchase financing.
• Dowell Myers, professor of Policy, Planning & Demography, Sol Price School of Public Policy at the University of Southern California, discussed the impact of aging and immigration on future housing demand. While recognizing the ups and downs of demographic waves, Myers believes we can plan for the flood of aging sellers by strengthening the younger generation, increasing their capacities, and removing barriers to their success.
• Florida Association of REALTORS®’ Chief Economist John Tucccillo talked about the difficulties in collecting and analyzing housing data and suggested that the future lies in microdata, augmented by local expertise.
• Mark Vitner, managing director and senior economist at Wells Fargo, focused on the forces driving California’s recovery and concluded that California’s lead in information technology has widened in recent years. While the Bay area remains the innovation hub for mobile devices, social media, cloud computing, and alternative energy, other parts of the state are still struggling to keep pace with the nation.
• Pat Veling, founder of Real Data Strategies, highlighted productivity challenges for real estate agents and brokers arising from low barriers of entry into the industry. Veiling proposed higher education requirements for all.
• Stuart A. Gabriel, director of the Ziman Center for Real Estate at UCLA, presented the audience with a new index which measures fear and loathing in the housing market, Housing Distress Index or HDI. The HDI uses Google search data and can significantly predict home price direction.
• Sean O'Toole, founder & CEO of PropertyRadar.com, talked about lending policies which were the culprits of the housing crash and proposed a uniform lending act that clearly defines parties, rules, and recourse.
• Robert Kleinhenz, chief economist at Los Angeles Economic Development Corporation, emphasized the importance of financial literacy in achieving sustainable homeownership.
• Amy Crews Cutts, SVP & chief economist at Equifax, concluded the day with a vignette of personal stories highlighting the challenges one faces when trying to obtain or refinance a mortgage loan.