Gloom tempers pep talks
As Gov. Crist leads the cheers at a Realtors' event, an economist offers somber words.
By James Thorner, Times Staff Writer
Published August 24, 2007
ORLANDO - The annual convention of the Florida Association of Realtors began with a call for steely confidence in the face of depressed housing sales that threaten the livelihood of much of the association's 153,000 membership.
That mood of self-affirmation was exemplified by this year's motto, "Get Pumped" and lunchtime motivational speaker Les Brown, who proclaimed before a packed house of more than 1,000 Realtors that "tough times never last, but tough people do."
But a few dozen Realtors who stuck around until the end of the afternoon at the Buena Vista Palace Hotel got a bracer that few seemed to welcome.
Economist Ted Jones, a prognosticator often cited by Realtors' groups, told agents that rashly approved mortgages, the worst of which he dubbed "time-bomb loans," would help keep the Florida housing market hobbled until 2009.
"If you think it's bad now, you haven't heard the end of this," Jones said to audible groans from Realtors who'd enjoyed earlier pep talks from the likes of Gov. Charlie Crist.
Jones, chief economist of Stewart Title Guaranty Co., blamed a get-rich-quick ethos that drew gamblers into the housing market and encouraged bankers to make risky loans on the assumption the good times would roll forever.
How bad did it get? Jones unloaded statistics showing that 43 percent of home loans required no money down in 2005. Borrowers of about $1-trillion in subprime loans, 13.5 percent of the total, will face higher interest rates in the next year. Many won't make their payments, adding to the already voluminous number of homes on the market.
"What is the difference between flipping real estate in Florida and playing craps in Vegas?" Jones said. "You get free drinks in Vegas."
Jones described prospective home buyers as buzzards circling fresh highway roadkill, waiting for prices to fall further. He urged Realtors to speed up the process by confronting sellers with the reality of a glut that's left 41,000 homes on the market in the Tampa Bay area alone.
"We've got to sober up sellers," Jones said. "I don't care what you paid for it."
He described the real estate downturn in conflict with an overall strong economy. Florida managed to net more than 100,000 new jobs in the past year despite the layoffs in construction and a drop in Realtors' ranks statewide by about 10,000.
Some of the older hands in the business, like Nancy Riley, president of the association and a St. Petersburg Realtor, took a long view toward a down market they'd experienced before.
"I've been doing this 35 years. To me, this is normal," Riley said. "The past five years was abnormal. I enjoyed it. But it was abnormal."
Also taking a positive view was Crist, who roused the crowd with an early morning speech before about 1,000. Crist laid into two of Realtors' favorite targets: high property taxes and deal-killing insurance rates.
The governor urged Realtors to vote against local governmental officials who oppose the Jan. 29 referendum that would establish a super homestead exemption that would cut taxes by about $15-billion.
"Florida's going to have a sonic boom when this happens and you're going to be busier than you've ever been," Crist said.
He lambasted the tactic used by some mayors who threaten to lay off police officers and firefighters if tax cuts pass.
"Unelect them," Crist said of local officials he viewed as obstructionists.
Attesting to the power of the housing industry, House Speaker Marco Rubio and Senate President Ken Pruitt are both scheduled to speak at the third day of the convention this morning.
James Thorner can be reached at email@example.com or (813) 226-3313.
[Last modified August 23, 2007, 22:47:11]
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