Sunday, December 14, 2008

Prudential Georgia Realty President Dan Forsman Presents Georgia Housing Industry Proposal Before State Congress Joint Economic Development Committee

Prudential Georgia Realty President and CEO Dan Forsman addressed the Joint Economic Development Committee of the State of Georgia on Wednesday, December 10, 2008. Other speakers included Elliott Eisenberg, the economist for the National Association of Home Builders in Washington, D.C.; U.S Senator Johnny Isakson; Roger Tutterow, economics professor at Mercer University; and Kurt Cannon, the current president of the Home Builders Association of Georgia, to name a few.

Forsman was the sole representative of the Georgia real estate community. In his 20-minute allotted time, he outlined the root causes of the current housing industry crisis, the economic impact to Georgia, provided a market update on the latest numbers for Georgia and proposed specific recommendations to fix our problems and establish Georgia as a leader for our nation. He projected the impact to Georgia in 2009 could exceed $1.4 billion if immediate housing incentives are not put into place.

Forsman outlined what he called a “perfect storm” of real estate, credit problems, economic conditions and consumer sentiment. Forsman also explained that a set of new problems are brewing in the Georgia real estate market. Examples given included the growing number of construction and development foreclosures, oversupply of in-town condos; oversupply of Buckhead commercial real estate; decreased second home (mountain, lake and coastal) property sales; and seniors who feel trapped in their current homes but want to move to smaller, more maintenance-free lifestyles. He cited recent limitations of mortgage rules for real estate investors which charge them higher mortgage rates and limit investors to four properties with a single bank and total of 10-12 properties. Forsman stated, “By reversing these limitations, we could bring many qualified buyers back into the game.”

In his presentation, Dan Forsman emphatically stated, “We are not here today asking for a bailout. We can’t bail out everybody. As a business owner and entrepreneur, I understand that nothing is free in life. All my proposals today will pay for themselves with incremental new state revenues. Lack of action will cost the state far more than the short-term costs of these proposals. We need your support to enact these proposals quickly and then let the market work.”

Forsman’s proposals include a federal mortgage stimulus of a 4.5 % interest rate buy-down and raising the conforming loan limit to $1 million. “The minimum rate to be effective is 4.5 percent and this needs to be a top priority of all the housing incentives implemented.”

He supported this claim by mentioning the National Association of Realtors’ Chief Economist Lawrence Yun’s educated estimates—each 1% decline in mortgage rates could generate between 500,000 and 800,000 home sales nationally.

Forsman’s multi-part federal and state stimulus solutions also include a federal real estate tax credit of 5 % of a home’s purchase price to be applied toward federal taxes; a new $7500 Georgia home tax credit; a $7500 Senior Tax Credit for current seniors living in Georgia and new senior residents moving from other states; a 50 % Utility Incentive for the first year to new residents and first-time home buyers; and a new Georgia marketing campaign focused on new residents (same concept as the one implemented to win the 1996 Olympic Games) that promotes our state, our new housing incentives and attracts new residents from all over the world.

Forsman stressed the need for immediate action so that laws could be enacted before the Spring 2009 real estate market as Spring through Summer is typically the busiest time of year for real estate sales. He stated adamantly that, “If we do not act before Spring, there will be as many as 70 % of local builders and 50 % of local real estate brokerages out of business before 2010.” He further emphasized that any stimulus or any housing incentives ultimately passed by the Georgia Congress, should apply across the board to resales, new home construction and all forms of foreclosures.

A whitepaper detailing Forsman’s presentation is available for download at PrudentialGa.com. Simply click on the “Whitepaper” icon near the top of the website’s home page. For other information which provides specific updates on metro Atlanta’s housing market, click on the AtlantaRealEstate2008 video report, also available on Prudential’s home page. In January 2009, this State of the Atlanta Real Estate Market video will be updated again and can be viewed directly at www.AtlantaRealEstate2009.com. We encourage all Georgia citizens to contact their state Senator or Representative to support these initiatives. Together, we can make Georgia the shining star of the South!
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