During an interactive session at the National Multi Housing Council's annual conference here, 56% of the participants said the likelihood of an economic recession is high, with only 7% believing that likelihood is low. Ric Campo, chairman and CEO of Camden Property Trust, explained that if consumers' debt levels get too high they will start cutting back. And it may already be happening, added David Schwartz, managing member of Waterton Associates LLC. "The effect of consumer debt is already being seen in retail, but this time we will not have housing to bail us out [of a recession]," he said.
But Clyde Holland, chairman and CEO of Holland Partner Group, said "the overblown worry from the recession's standpoint is just that, overblown." He added that the US is starting to move back to real competitive place in the world, especially with the loss of jobs to other countries slowing down.
The majority of participants, 60%, also believe the housing recession will last into 2009, with an additional 35% believing it will last beyond 2009. "I think it will last beyond 2009 primarily because there are a million housing units that are in excess," Campo, NMHC's new chairman, said.
He added there are psychological issues at play as well. "People can afford to buy houses, but why would they when they read in the papers everyday that prices are coming down?"
Despite the very real worries of a recession, 59% of the participants feel there will be better buying opportunities in 2008. "That's pretty optimistic for the same group that voted for a recession," NMHC president Doug Bibby noted.
Schwartz agrees with the optimistic outlook, at least for the second half of the year, adding "I didn't think '07 had great buying opportunities so it will be pretty easy to beat [it]."
Along with buying, just less than half of the participants will be selling properties this year, with 22% believing sale prices will decline and 20% believing prices will remain firm. "We are always selling," Schwartz explained. "Some properties are at the end of our hold period. But we will probably sell less than we will buy."
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