Today, I attended our company’s second annual “Launching the Year” event. Guest speaker, Matthew Gardner, industry pundit, economist and nationally recognized real estate analyst whose company, <a href=http://www.gardner-johnson.com/index.php/>Gardner Johnson</a> is Seattle-based, offered sobering, insightful and sometimes surprising opinions on the state of our national economic outlook as well as regional. Amongst his predictions and observations: He is ninety percent certain that Washington Mutual will end up on the block this year, the result of their heavy investment in poor sub-prime paper. Although the Fed has already aggressively attacked rates, Mr. Gardner suggests the likelihood of yet another .5percent basis point reduction at their next meeting, preceded perhaps by a .25pt. cut prior to that event.
On the housing market, he offered that the climate in the Pacific Northwest remains strong. Though we may experience short term pricing downturns, they are likely to be transient and tepid with a rebound expected no later than next year. Our population continues to increase and economy remains strong. At the opposite end of the spectrum are markets such as that in Florida where an unchecked new construction boom has lead to inventory saturation and market stagnation.
With perhaps some tongue-in-cheek, Mr. Gardner suggested that Jerome Kerviel, Frenchman infamous for the single largest trading loss of any financial institution when he “got carried away” and lost France’s banking giant, Societe Generale, 7.1 billion dollars last month, is directly responsible for staving off serious recession in the U.S. economy. He postulates that, as our stock markets were closed on the Monday following the breaking news due to Martin Luther King’s birthday, those in Europe and elsewhere were compelled to ride the negative results of the fallout spurring Fed. Chairman Bernacke to announce a rate cut as soon as our markets opened, thus averting calamity.
I remain upbeat about the long term forecast. Yesterday’s record voter turnout speaks of dissatisfaction with the status quo; a call for a new direction and administration. Regardless the outcome, this election cycle is likely to yield a stronger dollar, reinvigorated economy and this country’s return from the hinterlands of international standing, all of which bode well for real estate in the long term.