Fed seeks solutions to Ga. real estate slump

Friday, Dec. 2, 2011 7:50 AM
Last updated 8:44 PM
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ATLANTA — A weak real estate market is acting as a major drag on the economy of the Southeast the president of the Atlanta Federal Reserve Bank, Dennis Lockhart said Friday during a conference to discuss solutions.

At the end of the daylong symposium of brokers, developers, lenders and academics, Fed officials wound up with plenty of ideas but no silver bullets.

“We’ve witnessed over the last few years, especially in the ... Southeast ... some pretty severe stress in the both the residential and commercial real estate markets. That stress spilled over inside financial institutions and in the overall health of the economy of the Southeast,” Lockhart said as the session began. “... The recovery has been slower in the region, and a lot of that has been connected to the recovery in the real estate markets.”

At the wrap-up, Brian Bowling, the Fed’s senior vice president summed up not only the conference but also private meetings on the topic the bank held in recent days.

“The key thing we’re hearing all week is confidence,” he said. “People want leadership. They want clarity to change the psychology in the near term to maybe sustain some kind of recovery.”

Panels of experts on residential and commercial real estate and homeowner’s insurance gave their own arguments for letting the economy work out its own balance between supply and demand.

“I think the cure is time,” said Walter Mercer, executive vice president with SunTrust, a regional bank based in Atlanta.

Mercer predicted that the values of what he called trophy commercial properties would begin increasing but said he and other lenders would be very picky about where they invested. They can afford to with the collapse of the mortgage-backed securities funding source that commanded the majority of commercial development between 2005-07, developments that are mostly under water and maturing in the next three years.

On the residential side, negative equity is also the chief problem, according to the experts.

“You can drop rates as low as you want, but people aren’t going to be able to pass the underwriting,” said Mark Fleming, chief economist with CoreLogic, a firm that compiles property data for lenders.

Reducing the principal owed for homeowners at risk of default may help the overall economy by preventing foreclosures but it is not the remedy for mobility, the ability to take a new job out of town or retire in a new state like Georgia or Florida, Fleming said.

States in the South enjoyed an economic boom since the 1950s fueled by people moving to them from other parts of the country for work or retirement. That flow stopped because homeowners lost their mobility when they couldn’t sell their homes.

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CorporalGripweed
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CorporalGripweed 12/02/11 - 11:26 am
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I've got a solution, elect a

I've got a solution, elect a president who isn't an avowed anti-capitalist. Then watch ALL sectors of the economy go through the roof..

Chillen
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Chillen 12/02/11 - 11:30 am
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So, the federal government

So, the federal government enacts policies that totally destroy our housing market (forcing banks to make loans to people who could not afford to pay the loans back) and now the crooked Fed wants to step in and fix it?!

Is this the twilight zone?

CorporalGripweed
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CorporalGripweed 12/02/11 - 11:30 am
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Great point chill...At least

Great point chill...At least "Slobberin' Barney" won't be around next year to finish the job.

Insider Information
4009
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Insider Information 12/02/11 - 11:51 am
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Barney Frank quitting is a

Barney Frank quitting is a good start.

Now if we could only get the rest of the feds out of the way...

omnomnom
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omnomnom 12/02/11 - 12:33 pm
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how about stop building new

how about stop building new tract-style houses when we have perfectly good houses in existence? take care of what we already have. stop printing bajillions of dollars to cover for mega banks bad positions?

Little Lamb
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Little Lamb 12/02/11 - 01:55 pm
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The reason the residential

The reason the residential and commercial construction is low is because residential and construction inventory is high. All you've got to do is bulldoze and/or burn down all vacant buildings and voilá, construction will pick up.

Chillen
17
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Chillen 12/02/11 - 02:42 pm
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omnomnom. How do you propose

omnomnom. How do you propose we tell the private contractors to stop building new homes? Should we put them in jail if they build one? Fine them? Should they and all their subcontractors be put out of work.

I agree that its stupid for new houses to be build right now, but there is no way to stop it. Other than consumer boycott.

Insider Information
4009
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Insider Information 12/02/11 - 05:41 pm
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We could end the slump in the

We could end the slump in the housing market the same way we "fixed" the problem of people without health insurance - turn it into a crime.

Under the healthcare law, if you have a heartbeat you are commanded to get health insurance. Those who don't will be fined and those who don't pay the time will do the time.

To "fix" the housing market, make it a crime not to buy a house. Those who don't buy, should be fined.

We should do the same with jobs. Make it a crime not to get a job.

rmwardsr
525
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rmwardsr 12/02/11 - 10:15 pm
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Four more years of Obama

Four more years of Obama should fix the problem. By then it will all be considered public housing, and we will pay rent to Obama Realty, while we drive our cars made by Obama Motors, and do our banking at Obama Bank and Trust. And we will not have to worry about shopping for food, as Obama will ration to each household all we can eat. I hear Obama is going to foray into the funeral home business. After all, he has to profit from something when we can no longer pay healthcare premiums. Four more years of Obama,,,,yeah!

seenitB4
87395
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seenitB4 12/03/11 - 06:56 am
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OOowwwweee.....Big brains

OOowwwweee.....Big brains can't figure this out---drive through ANY small town & look at the big empty factory buildings...huge empty store lots....NOJOBS=NO HOME SALES......why don't we just outsource congress ...we have outsourced everything else......
Why goodness me...why should we actually MAKE goods in the USA----it would only give work to people on welfare & unemployment & then they would just go out & buy stuff with that paycheck...like maybe a
HOUSE...WELL I'll BE....it will make the economy hum again....oooh shucks.....no nono....can't have that.....let's fight like cats & dogs ---keep congress in a flux----put dumb bunnies back in office & watch this great nation bend over to the knees....
I never dreamed we could get sooo stupid in the USA----but we are giving our country away---day after day..

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