Real Estate in 2010.

The New Hampshire Business Journal recently wrote " The housing slump led us into the Great Recession. Will a housing rebound, fueled by stimulus housing credit, lead us out?

Perhaps -but not right now, the economy is following the real estate rebound sluggishly, reluctantly and sometimes not at all. Most businesses are grateful just to thread water--but they are hardly out of the water."

It wasn't "real estate" that led us into this national and global financial and overall economic turmoil, it was the over-abundance of cheap, unregulated money or financing, orchestrated by Wall Street, banks and financial institutions, with the help of lobbyist groups and governmental policy makers and officials.

The real estate market was always one which reacted to the gyrations, swings and fluctuations of the overall economy. Real estate never before was an economic catalyst. The real estate industry ( the buying, selling, leasing building of homes and commercial properties) cannot sustain a national economy.

The real estate business is dependent on the overall business, agricultural and industrial stability, growth, development and national prosperity.

Real estate is not, and never was .a prime national or even regional economic engine.

For regional or national economic prosperity to return we need to re-create manufacturing and industrial firms together with ancillary assembly, warehousing and distribution entities.

For real estate activity in all sectors, to return to the level it was, would require trillions of dollars of new capital: capital which is no longer available.

Rather than looking for a miraculous real estate rebound, anticipate months, if not years ,of stagnation which eventually will morph into some level of financial property stability simultaneously with a rise in national savings.

We'll always have some real estate activity, sales and rentals will continue, but not at the high prices or the high velocity and volume level of the past.

This means that the real estate industry is headed for some major business structural changes. I believe the year 2010 will be the beginning of a long period of stagnation.


Bill McInerney