I would argue that we’ve had enough federal intrusion into real estate. The market is now verging on being in the same position as retailers during the Christmas season. Consumers have been trained to wait as long as possible to buy becuase there will be yet another discount that will save them money. So they hold out in expectation that the best deals are yet to come. This is what the homebuyer tax credit is doing to the housing market. Buyers will wait, knowing that the industry will lobby for yet another tax credit and that will come on top of even lower prices. So why buy now when you can save more by waiting? Consumers are not dumb; they see what’s going on and they act accordingly.

As a final note, consider the degree to which the real estate market has been nationalized. Between the mortgage interest tax deduction and the recurring tax credits, the government is underwriting massive portions of the cost of becoming a homeowner. I’m amused when Realtors rail against creeping socialism when they are in a sector which is a the head of the chow line.

The dirty secret of monetary policy is that it cannot force anything. It persuades, cajoles and uses market channels to try to get banks and other financial institutions to do what it wants but it can’t mandate any action (unlike fiscal policy which operates through the enactment of laws that must be obeyed–or, in the case of taxes, circumvented). So while the Fed has done what if can do, the banks sit on their hands, refusing to lend and thus stimulate a naggingly moribund economy. Rather the banks have used the liquidity to play the short term securities markets and increase their profits. To the extent that these profits have been returned to the government in the form of repaid TARP money, we the people benefit. But most of these profits have been held in the banks, pushing up their stock prices and increasing the wealth of bank owners and executives.

The Fed has done what it can. But if monetary policy is going to help this economy grow, the banks need to step up and do their duty, instead of behaving like pure profiteer who don’t care whether the economy shrinks or grows.

The weak job numbers for May almost guarantee that this recovery will be very slow and very mild. Without jobs, housing cannot come back and while there’s some good news on the employment front, it just ain’t enough. It now appears that the housing sector has become a ward of the state, fully dependent on government concessions for survival. The demographics are good and if the job market and the economy were to come back strongly, there is great potential for a real estate surge.

But the Great Recession and the financial meltdown seem to have caused a sea change in the outlook of many Americans. Most folks were only accustomed only to good times; the downturn has now convinced them that there will never be good times again. So, like their forebearers in the Depression generation, they accept the fact that renting is their only future. Until this psychology can be turned again, there will be no return of housing, onlywhat the government dole will allow.

Yet we see “social media” filled with these or similar statements. They do nothing to advance your business. Relationship building is a gradual process in which you build trust with a potential customer and convince them that you can create value for them. Your “social media” strategy neesd to be based on this, and your image needs to be that of someone knowledgeable, serious, attractive and ultimately valuable to that legion of consumers who are out there watching you.

To explain all this, I need to indulge in a bit of a diversion. Big city marathons (New York, the Marine Corps, Chicago) attract thousands of runners. The fastest get to line up close to the starting line and the recreational runners bring up the rear. Those in the rear may not actually start the race for 30 minutes or so after the ones in front. Considering that the winner will cover the twenty-six plus miles in a little over two hours, that means he or she will have finished a quarter of the race (about seven and a half miles) before the last runner crosses the starting line.

Think about this recession and recovery—yes, we are in recovery—as a marathon. The front runners are the financial institutions. They are considered to be so vital to the economy that they are placed at the front of the pack. The average consumer brings up the rear. As with the marathon, media coverage is focused o the front runners, not the stragglers. Hence, we learn about the profitability that allows Bank of America to pay the government back, and we learn (as we will soon) that the GDP expanded again in the third quarter. That doesn’t reflect the fact that the average household hasn’t even started the marathon yet.

But unlike the major races, we are able in this recession to move some of the slow footed up to the front as special VIP runners. So, that auto companies get special loans and a beneficial trade in program (cash for clunkers), and first time (and now repeat) home buyers get tax credits. This jump start allows them to race ahead of the pack and participate in the joy of the front runners. Meanwhile, the consumer stays behind. That consumer is focused on getting into the race, i.e. getting or keeping a job, paying bills, putting food on the table. The extras, like Christmas gifts and vacations, might be attractive mid race, but not now.

OK, I’ve tortured that metaphor enough. The bottom line here is that all the economic data we are seeing points to the fact that both TARP (a Bush program) and the stimulus (an Obama production) are both working. The net is that we are returning to growth in both the economy (now) and employment (soon). It is likely that there will be pressure to move faster and we may see other runners moved up in the pack (weatherization tax credits, anyone?) and a second stage stimulus. But the point has been made: In 2010 we all be running the same race.

The answer is yes. It is ho-hum because the pending sales index predicted the jump. So there is nothing new happening in the housing market. It was encouraging because it was more good news about a housing market that is in real recovery. The coming months will display a consistent positive movement in real estate. It was misleading because the additional sales were “borrowed” from 2010 because of the expiration deadline of the first time buyer tax credit. We will see sales drop as soon as the credit disappears. The state of the market is such now that even an extraordinary piece of data like a sharp monthly rise in sales can support any argument about the future of the market.

Where is the truth?

My intelligence from around the country tells me that we are somewhere between the last two explanations. Where there are jobs, supressed demand is emerging and sales–unaided by extraordinary government subsidy–are happening.

Yet, where there are no new jobs, the market is almost fully reliant on the tax credit. It strikes me that the best policy for real estate is to encourage in all possible ways the job creation that will guarantee a strong housing market and avoid getting addicted to a government handout that introduces yet another artificial element into the market.

So that’s the good news; now for the bad. The key to any economic recovery is the creation of jobs. In the early Nineties, recovery was jump started by technological change and job creation boomed. In the early years of this century, there was no such boost and recovery was weak. We are looking at the same scenario right now. There really is no job engine pushing employment and the economy. More importantly, that technological change (as well as the emergence of a global economy) made many jobs redundant. Prosperity allowed us to ignore this; austerity requires that we face it. Each month the job loss figures become less bad; they have “improved” from losses of nearly 700,000 in January to about 250,000 in September. Eventually—probably sometime in early summer 2010—we will start adding jobs, but not at a significant rate.