Recession? Wadda Ya Talkin About?

Well Countrywide CEO, Chief Executive Angelo Mozilo, was on CNBC today and uttered the dreaded R word. Mr. Mozilo seems to think that the current housing market will throw the US economy into a recession. I guess anything is possible, though highly unlikely. Funny thing is you never know you are in a recession until you are out of one. “Recession” by definition, is two consecutive quarters of negative GDP growth. Yes, the housing is bad, yes many jobs will be lost within construction, real estate and mortgage divisions. Seems I heard around 40,000 jobs have been lost so far but really, a recession? When I hear this “R Word” I always want to ask them what a recession really means. Its so funny to hear these people that catch on to these “buzzwords” and talk like they know what they are talking about. I would have loved to say “well Mr. Countrywide CEO, tell me sir, how exactly would you define a recession?”

The only real losers in the game where and will be those that came to the party a little too late. Seriously, you know when the plumber comes to your house to fix your sink and he has a “We Buy Houses for Cash” magnetic sign on his truck, its time to get the hell out of the real estate market! My point is, all the real estate sales people, builders, mortgage sales, pseudo “investors” that are losing jobs, in foreclosure, they all had careers before, right? They can just go back to their full time jobs. I know I sound crass. But really, when a guy drives a forklift for $32,000 a year and calls up to wanting a new construction loan on a $450,000 house for a “flip”, no money down AND stated income (you could do those back then) because he thinks he can sell it for $550,000 before its even sod in the yard, you get what you get. That by the way, is a real life story and no we did not oblige. Even better was another guy who offered$50,000 over the asking price because there were 4 other offers. Bear in mind this was nearly 20% of the value of the home. So lets put things in perspective.

The housing market is not THAT bad. Think about it realistically. Most anyone who bought a home any year prior to 2003 made what, 80%, 90% 100%. So what if your value is off 10, 20, 30%. Lets be realistic and look at the whole picture. All the jobs that were created,,,,,,, not to pick on Real Estate Agents but The National Association of Realtors in 1997 had 716,000 members. By 2006 nearly 1.4 million members. It came out today they expect a whopping 4% drop this year!! Whooweee, what a drop. I wish I had some loan officer numbers. If you have any please let me know. We need to see these numbers drop a whole lot more than 4% before we get out of the woods yet. We need to see top 5 lender go down a top 5 builder, This would be called capitulation, not a recession.

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