As America gets ready to take a day off, the real estate market has little to celebrate.
Most real estate agents have had a dismal year -- many have left the industry. And now that the summer selling season has passed, the kids are back in school, and those few potential buyers are torn between soccer games and band practice instead of bedrooms and baths.
Yet, the conditions are right for a real estate recovery. Interest rates, while slightly up from recent weeks, are still in the low 4 percent range. And prices of resale homes are as soft as they have been in years. One would think that this is a great time to buy a house. And it is.
But people who are worried about their jobs don't buy houses. And way too many people are either out of work now or worried that they may face problems in the months ahead.
I don't know which has to come first: confidence or a recovery. But it seems even our friends at the Federal Reserve are divided over what to do next.
Unfortunately, Atlanta home values continue to be undercut by wave after wave of foreclosures. And I don't believe for a minute that these are the people who bought more house than they could afford or got really suicidal mortgages. No, these are prudent homeowners who have lost their source of income or are simply upside down in their mortgage. Once they exhaust their savings, it becomes easier to walk away.
To make matters worse, even if an owner can afford a reasonable monthly payment, existing lenders are unwilling to modify or work with their borrowers. So the owner tries to sell, finds a buyer, but is unable to close when the appraisal comes back showing a dramatically lower value due to recent foreclosures in the area. That's Catch-22.
To put icing on the cake, business isn't hiring because of the uncertainty of future labor costs in terms of taxes and health care.
And the banks aren't allowed to lend because the regulators want to see a higher capital-to-asset ratio (translation: trim loans).
It's hard to wish a happy Labor Day to all the builders, carpenters, brick masons, agents, electricians, HVAC installers, lumber and brick manufacturers, roofers, landscapers, carpet manufacturers, and painters (and many others) who are out of work due to this recession.
When all these workers are fully employed, they pump huge amounts of money into the economy. They buy everything from cars to appliances, from milkshakes to clothing. They even buy houses and pay income taxes (and property taxes and sales taxes and capital gains taxes and gas taxes and transfer taxes and intangible taxes, et cetera, et cetera, et cetera).
But it's just not happening.
Memo to the president: It's time to do something now.
John Adams is an author, broadcaster and investor. He answers real estate questions at noon every Saturday on radio station WGKA (920 AM) .
For more real estate information or to make a comment, visit www.money99.com.
