COLLEGE STATION, Tex. – Jan. 9, 2008 – Calendars may show 2008, but researchers with the Real Estate Center at Texas A&M University say many of the issues facing the real estate industry this year will have a familiar ring to them.
“Stories that made headlines in 2007 will continue playing out over the next year,” said Dr. Mark Dotzour, the Center’s chief economist.
Not the least of these is the declining housing market.
“Many questions remain,” Dotzour said. “When will the market bottom out? What will the signs be?”
Among other stories that Center researchers will be following in 2008 are the mortgage market’s response to the threat of aggressive regulation of the mortgage industry and how the global banking system will handle the repricing of mortgage debt.
Dotzour said the commercial real estate sector will also take the spotlight.
“Will required returns on commercial real estate increase and cause property values to fall in the commercial real estate sector? Will hyperaggressive mortgage underwriting in commercial real estate in 2007 lead to an increase in commercial real estate foreclosures in 2008? These are all questions we’ll be looking at,” he said.
Dotzour said the value of the U.S. dollar, which has been in a continued decline, could make American real estate even more attractive to foreign buyers this year.
Dr. Charles Gilliland, research economist with the Center, said he will be looking at how Texas land investment is impacted by concerns over future inflation and how land prices are affected by the turmoil in credit markets.
Judon Fambrough, an attorney with the Center, will research wind power, an industry that has been met with some controversy but is burgeoning in Texas.
Of course, the direction these and other issues take could be determined by the upcoming presidential election. For example, presidential candidates will likely discuss how they would deal with the alternative minimum tax (AMT).
“Congress completed AMT legislation in December, temporarily lessening the impact of the AMT for the 2007 tax year,” said Dr. Jerrold Stern, a research fellow with the Center and an accounting professor in the Kelley School of Business at Indiana University.
Stern said this legislation is a clear signal that many in Congress are ready to take action to stem the ever-widening annual impact of the AMT, which affects more homeowners every year.
The Real Estate Center has been providing solutions through research for 35 years. Funded primarily by Texas real estate licensee fees, the Center was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers and the general public.
By Bryan Pope, Real Estate Center at Texas A&M University