Harris Real Estate Coaching students…and future students…please don’t misinterpret our intentions. When we share information with you that may seem overly ‘pessimistic’ understand that we are doing so for a reason.

That reason is simple, so you will be prepared. Its our belief that Realtors are the only true hope for homeowners. Don’t believe me…read on….

There were over 2 million of us (Realtors) a few years ago….now, many believe that by the end of this year there will be around 850,000. Sure, we could talk about market factors and the fact that you have to be strong to survive…blah..blah..blah. Our perspective is two fold:

1) In this worsening housing market…scary economy…. that will be called a depression before too long, our country needs MORE Realtors not fewer. All hands have to be on deck to help solve this historic housing created crisis. But, its seems that our industry simply doesn’t get it.

I have to admit…I am normally a strong supporter of the NAR. I know that several of the higher ups at the NAR read this blog everyday. But, when last months Realtor Magazine arrived…my heart sunk. Here we are in the midst of the worst financial crisis of our lifetimes…a crisis that will ONLY BE SOLVED by Realtors. (* Why Realtors? Because this problem started with housing and will end with housing. Housing is our business. We are the ones who are on the front lines. We are the ones who must gain the skills that are required to truly help homeowners) What did the NAR’s monthly magazine feature as their lead story. Information on decorating and staging. Good God, talk about missing the mark.

2) When a Realtor fails its the failure of a small business. All of us became Realtors because we wanted to help people and be business owners. Sure, many agents don’t realize that they have to consider themselves ‘business owners’ to survive and thrive long term(…and…that is probably part of the problem). We should collectively do whatever we can to support our fellow agents. When a Realtor fails everyone in the industry suffers.When a Realtor fails, thats one fewer person who can help the housing market. When a Realtor succeeds…the whole country succeeds. One less foreclosure, one more homeowner.

OK, rant over.

Here is the article from Huffington Post. Julie and I read literally  dozens of online and offline media outlets and pull out the stories that are important to you.

Read this article and let me know what YOU think. What you think DOES MATTER….

Last August, we wrote about the double bubble in the housing market: a more traditional bubble, then over-inflated by a massive asset bubble that drove prices up and up and up. The bigger the bubble, the bigger the pop.

In that post we wrote,

In every modern recession, the fall in housing prices follows the economy slowing down. What we have yet to see is the falling economy’s effect on housing prices. So if you think prices have already dropped, and might even be reaching a bottom, we think it’s the other way around: prices are about to start dropping.

And so here we are. Yesterday’s news of a mind-boggling 50,000+ jobs lost in a single day brings us now to the start of this second bubble popping. Because for all of economic talk about housing markets and prices and fancy new mortgages that were created, at its economic base, housing prices are just about the simplest thing in the world.When people make more money, or more people move into a market, housing prices slowly go up. When people make less money, or people move out of a market, housing prices slowly go down.

The housing bubble popped, leading to recession, and the recession is now going to lead to a further decline in housing prices. Where will that lead?

The problem at the root of the housing asset bubble is that over the last few decades — since Reagan and the Republican free-market supply-side, trickle-down policies took over — Americans have not been earning more, they’ve just been able to buy more thanks to a litany of mortgage and other debt-raising products that compensate for the lack of earnings.

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People used to be required to put 20% down before they could buy a house. How many people do you know, honestly, that have 20% to put down on a house now? How many do you know that actually have 20% equity accrued in the house they already own? We’re betting not many.

That 20% down payment requirement kept housing prices in check. But that became a 15% requirement, then 10%, then 5% then a negative 10% requirement, where you could actually get a mortgage for 110% of the value of your house. Well, they helped inflate the bubble.

On top of that, loan standards used to require that people spend no more than 25-28% of their income on housing expenses. This also kept prices in check. This was also set aside, and “liar loans” further inflated the bubble. Now that all has to be undone.

Last August, real estate experts were claiming that 2009 was to be the bottom of the market, and housing prices were going to head back up. Just like they claimed that 2008 was going to be the bottom and that 2007 was when the market would turn.

Sadly, the chances of real estate prices turning back up, in real dollar terms, has vanished for the next decade at least. There are two coherent facts behind this.

First, the size of the bubble means that someone who bought a house for $500,000 in 2005 is already 20-25% down in the price of the house. Factor in inflation, and it’s closer to 35 – 40% down right now, four years later. Of the millions of Americans who will lose their jobs this year, many will be unable to cover their mortgages. And foreclosures, short sales, sales right before the short sales, these will continue to increase, driving prices down even further. This all means there is little demand for high-priced houses.

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Second, the bubble caused a building boom, and along with all the foreclosures there is now a huge supply of houses and condos waiting to be sold. And only then will the “shadow” market of people waiting on the sidelines for a better market in which to sell their houses kick in.

Only after all of these factors are cleared will market conditions even start to return to normal.

By 2010, perhaps 2011, perhaps we will see signs of a bottom of the real estate market, with prices having returned to their historical norms at a level that many suggest is 30-35% below where they are today.

For many, this will be personal financially troubling, even disastrous. From an economic point of view, it is the fundamental principal of supply, demand, and income proving to be true again, and a return to economic reality.

What can be done about it? The root cause of this and many other problems in our economy is the stagnation of incomes that began when Reagan was elected. Republican policies brought a massive concentration of wealth at the top with a select few reaping all of the benefits of our economic system. But this double-bubble collapsing-economy problem is costing their wealth as well. Trickle-down doesn’t, and when the rest of us are tapped out by misguided policies like these it spells disaster for everyone.