Housing industry expert talks with ABC7

December 5, 2008 8:08:06 AM PST
When John Burns talks, the housing industry listens. Burns, Bay Area born and raised, is one of the nation's leading experts on the housing market. And ABC7 had a chance to talk one on one with Mr. Burns about what's next for the Bay Area's housing market.

When the Home Builder's Association of Northern California wants to get a glimpse of the future - they call on John Burns.

"A lot of banks use him to evaluate their assets and a lot of mutual funds use him to predict what the future's going to be," said Vince Fletcher, D.R. Horton Homebuilders.

Raised in Marin County, a St. Ignatius High School and Stanford University Graduate, Burns is known for telling it as he sees it.

"This is the third year I've heard him speak and pretty much what he says is true," said Dave Ridings, kitchen appliance wholesaler.

And he sees the economy in what he labels - a death spiral - where prices fall, so banks don't lend so business can't grow.

"Companies can't grow their business and have to lay people off, then people have to start saving more, and when people start saving more, they are not spending - which results in more business income losses, more layoffs, home prices falling - it's just a vicious spiral," said John Burns, homebuilding industry economist.

Burns, against his usual advice, says the government has to get more involved, by stimulating job growth with infrastructure projects, further encouraging loan modification, and stabilizing banking. And when stable home prices and a more stable job market first appear to signal the end of the recession, they will appear first in the Bay Area.

"The Bay Area has got better entrepreneurs who'll start something new. It doesn't have an oversupply of new construction. The major price corrections that occurred have started to correct affordability quite a bit," said Burns.

As for the $64 million question - which itself might need a bailout: When will this recession, with the painful foreclosures, massive losses of wealth and rising unemployment come to an end?

"I know a lot of companies who are planning on doing layoffs right now, so I think we are going to see a lot of layoffs in 2009, but I'm optimistic that entrepreneurs and government stimulus and banks will be back lending, so by the end of next year, we can come out of it," said Burns.

And in the meantime says Burns, find the opportunities that are there, improve your value in the marketplace and follow the jobs created by all that government money.

"Society has changed over the years. People used to get laid off and then moan and groan and think that they could only do one skill. Now people will go back to school, they will change their skill sets, they will work for the government, the will work for the FDIC, they will help with loan modifications," said Burns.


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