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Monday, October 02, 2006

Is real estate dead?

By Mary Umberger, Chicago Tribune

I'm waiting for the ominous Time magazine cover to get it over with, to ask the question Americans dread: Is real estate dead?

Say it ain't so, Mr. Trump. Tell us the wild ride will roll on, that every American still has the chance to realize his one, true dream: to flip a condo.

Alas, numbers released last week suggest that America's legendary real estate boom, if it's not moribund, certainly has a weakened pulse. The National Association of Realtors reported that, for the first time in 11 years, the median price of an existing single-family home around the country actually declined in August.

For a broad slice of America, the new data may signal the end of a peculiarly golden era, one that created a culture of real estate envy excess. If you couldn't buy or sell, remodel or refinance, you could dream about it or watch others do it on HGTV.

"Mortgage lenders have replaced doctors at cocktail parties," said Doug Duncan, chief economist for the Mortgage Bankers Association in Washington. People "want to talk about interest rates rather than their thyroids."

And lately, they want to talk, quietly, about all the for-sale signs in their neighborhood that are starting to rust.

What happened? Where did the party go?

Duncan, for one, jests that America is suffering from "real estate fatigue"--that we have virtually toured, open-housed and blogged about the bubble until we just have to move on.

He has a point: Real estate has permeated our lives. An official staple of our popular culture, it is the stuff of office chitchat. We surf for property listings or we check home valuation site Zillow.com to see what our neighbor's split-level is really worth. Sometimes, surreally, real estate is our constant TV companion.

Admittedly, as a real estate writer, I'm not a civilian on the property front, but HGTV ("'Designed to Sell' now five nights a week!") has become white noise at my house, droning on at all hours. Friends giggle and admit to similar habits.

Celebrities and branding have crossed over into home building. Martha Stewart is flogging houses now, as are model Kathy Ireland and mass-market artist Thomas Kinkade.

You can get an Eddie Bauer house to match your sport-utility vehicle.

A mere decade ago, would we have anointed a real estate developer as a celebrity? Would Donald Trump have hogged the TV if we weren't quietly nursing fantasies of real estate riches? Last fall, when I covered a frenetically over-hyped Trump appearance in Chicago during which he (and dozens of other carnival barkers) promised to share their secrets to endless wealth through real-estate investing, I was practically trampled by the masses who turned out.

And, oh, those investors. When tech stocks crashed, investors turned to property as a safe haven. Hordes of real estate wannabes--even those who couldn't tell a HUD foreclosure from a developer's closeout--snapped up homes and buildings at a blistering pace. Housing analysts said they were among the strongest forces in the boom.

Even for those who aren't flipping bungalows, real estate moves have become everyday decisions. A house is more than a home; it's an ATM. Quicker than you can say, "cash-out re-fi," we snatch our equity to send the kids to college or to bankroll--yes--another house, this one at the beach.

I know, I know: The market's not really dead. It's just slower, and, of course, it will pick up again, though amateur analysts in chat rooms argue angrily about how long that will take.

I suspect that with the cresting of prices in August, our Real Estate Moment has passed, that in a generation, cultural historians will write dissertations about our societal obsession at the dawn of the 21st Century the way they have chronicled Holland's tulip mania in the 17th.

Fortunately, scholars will have access to plenty of documentation, starting with interviews of those folks who will still be paying off the 50-year mortgages that debuted this year. And HGTV will be rerunning "House Hunters" into perpetuity. Won't it all seem quaint?

Copyright © 2006, Chicago Tribune
Distributed by McClatchy-Tribune Business
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