Housing Market 2011 Forecast : The Data Maven
In this edition, we chat with Michael Feder, President and CEO of real estate data company Radar Logic.
Michael Feder is the President and CEO of Radar Logic, a real estate analytics firm with a unique edge in the housing market data space. Using a range of patent-pending financial instruments, Radar Logic identifies the price per-square-foot in 25 major metropolitan areas. The company has emerged as a go-to source for residential real estate analysis for several publications, including Forbes and the Wall Street Journal.
AOL Real Estate: 2010 was a tumultuous year in real estate. How would you advise consumers to think about the financial status of their homes in the current economy?
Feder: Housing is a market, like any other, and is going to be influenced by the forces known as supply and demand. Today, housing supply, defined as the number of homes for sale or likely to be for sale, far outweighs demand. This is true partly because buyers seem to believe prices will fall further, as evidenced by lenders' demand for more homeowner equity, which is intended to protect lenders from just such a fall. Until the supply/demand balance is restored--a function of many factors, not just jobs--housing will likely be a flat market with a bias towards lower prices, not higher. A home has to be viewed again as a combination of shelter and long term savings. If viewed as a trading asset, let the homebuyer beware.
AOL Real Estate: What is the one change you'd like 2011 to bring to residential real estate?
Feder: What we need now is a collective effort by those who hold the debt--and keep in mind that if it's Fannie or Freddie-backed, the American people hold the debt, through the guidance of our elected officials--to restructure the pool to attract new equity. And this doesn't mean that they should sell the loans for pennies on the dollar. It means they need to be creative and develop a way for everyone to win.
Several ideas have circulated in Washington. The one I like best (in fact, we proposed it to the U.S. Treasury) is a shared appreciation program, where borrowers get some help from third parties, and then they share the future increase in home values. Lots of folks benefit, and most importantly, defaults do not automatically become new inventory for sale. Frankly, if we don't address the inventory issue, everything else is going to come up very short.
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