Five Questions With: Paul A. Leys

"I'M OPTIMISTIC that the market will start to turn around. The federal government has taken some important steps to free up lending and encourage people to buy," said RIAR President Paul A. Leys. /

When Paul A. Leys took office as the 2009 president of the Rhode Island Association of Realtors in October, the residential real estate market had slowed significantly. The median price of a single-family home in Rhode Island had fallen and continued to fall, reaching $234,900 by the end of 2008.
Leys spoke with Providence Business News this week about what direction the real estate market will head in for the rest of 2009.

PBN: Looking back, can you summarize what happened in the 2008 residential market?
LEYS:
The growing number of foreclosures affected Rhode Island’s residential market in 2008, but like any other year the impact was felt more strongly in some areas than others. All markets are local, varying from town to town and even from neighborhood to neighborhood. We saw the greatest declines in urban areas with the largest percentage of foreclosures. It’s interesting to note that though home prices were down 14.6 percent statewide, those that didn’t have to sell under duress – either through short sale or foreclosure – saw a much smaller drop in prices of 3.6 percent.

PBN: And, looking forward, what do you think will happen this year?
LEYS:
I’m optimistic that the market will start to turn around. The federal government has taken some important steps to free up lending and encourage people to buy. The stimulus money coming into Rhode Island should create jobs that will help our local economy. The buying incentives in the Economic Stabilization Act are temporary so I think that will help get people off the fence sooner rather than later.

PBN: I have heard Realtors say that the first step toward a stabile market is clearing the foreclosed and distressed homes off the market. Is that something that you would agree with?
LEYS:
I think it’s one of two important first steps. We definitely need to reverse the foreclosure trend but just clearing up the bad loans alone won’t do it. We need to make sure that those who are credit-worthy and ready to buy have the consumer confidence to do so and the ability to readily access the loans they need.

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PBN: How powerful will President Obama’s stimulus be in actually stimulating the real estate market?
LEYS:
Time will tell, but I think some of the elements of the stimulus, like the $8,000 tax credit to buyers who haven’t owned a home in three or more years, will be powerful motivators. That’s taking $8,000 right off the price of the home before you even begin to negotiate.

PBN: And what do RIAR members think of actions by banks that curb foreclosures by offering renegotiated deals with mortgage holders? Is this a fix that can last?
LEYS:
I think the lasting fix will be the new responsible lending standards that banks will adhere to. The era of easy loans with little income documentation is gone, as it should be. Renegotiating mortgages can help us turn the corner in this market, but the lasting fix will be to make sure that we have learned from this and invest responsibly.

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