Housing: 'A bear market, not a crash'

An interest rate analyst said Wednesday that falling housing prices are a catalyst for a bear market nationally, and he predicts future market decreases of 2-4 percent annually over five to seven years.

Sales have slowed in Carson City, despite falling prices, but one local real estate agent speculates that the capital city will continue to be a buyer's market, with prices equalizing after a four-year boom.

Nationwide, real estate is sinking in its claws.

Jay Goldinger, a Southern California consultant for a residential and commercial mortgage broker, said at a Business Bank of Nevada luncheon in Carson City that investors should watch their portfolios, where they bank and what they buy.

"Residential real estate has entered a period that nobody in this room has ever witnessed," he said to an audience of Business Bank customers and executives at the Station Grille. "Since nobody has witnessed it, they don't know what to do. This is going to be a bear market. Not a crash."

Prospective home buyers should wait a little while longer until prices lower because of aggressive sellers, Goldinger said. He warned against paying too much attention to industry predictions, while giving some of his own.

He said those who must sell should put their property on the market now before it gets worse. Those who are comfortable in their homes shouldn't move. If you don't need the sale, take it off the market, he said.

Executives at Vintage Class Motorcars, of Carson City, are listening to this advice, said Frank Horn, president.

"We're going to pay off our interest-only loans, continue to stay away from the residential housing market, and continue with what we have as commercial property," he said.

All the problems associated with the real estate market are not going to get fixed any time soon, Goldinger said. Problems include the continuing sales of Option Adjustable Rate Mortgages to home buyers.

Home owners invested in properties they couldn't afford at a time when the gap between income and home prices widened considerably.

"Now, if housing prices went sideways for about 12 years they still wouldn't catch up," he said.

Goldinger said he is often at odds with Wall Street experts, and his Cassandra predictions embroil those in real estate. One real estate agent whispered "Shoot!" after hearing Goldinger's advice that "you can't prepare enough for what's going to happen."

It's a bear market nationwide, said Bob Fredlund, an agent with Coldwell Banker Best Sellers in Carson City, in a phone interview. But he said Carson City will have "minor adjustments" because it did not have a glut of new homes like other markets.

"I believe it is a good time to buy," Fredlund said. "People are buying houses in Carson City, and there are really good deals out there. There are reductions coming and reductions in the works because the market is slower."

Goldinger said condos will crash and burn. The trend toward condos has only recently been embraced in Carson City. The first new town home project, Governor's Square in southeast Carson City, is under construction. The city recently passed a condo conversion ordinance and only one apartment complex has started the process.

His statements that "it's not a time to be a buyer at all" left some glowering, others asking questions.

"I think there are going to be pockets up and down," said Cathie Jackson, a branch manager with Mortgage Options Inc. "I don't think it's going to go all down."

She believes the market will force out a lot of inexperienced mortgage agents, leaving the elite professionals.

Goldinger's forecast for commercial real estate is rosier.

Owner/user properties will endure, while investor properties, will suffer. He predicts a stable future for companies sitting on cash, who understand their market and own their own building. Those who do their homework and pay attention will come out ahead.

"This is the start - not end - of a bear market no one will forget," Goldinger said.

• Contact reporter Becky Bosshart at bbosshart@nevadaappeal.com or 881-1212.