Economic optimism tinged with a few critical ifs dominated Wednesday's 10th annual Weigand Real Estate Forum at the Hyatt Regency Wichita.
The news on the national level was mostly good from Mark Dotzour, Texas A&M's chief real estate economist: There's a clear path to stabilizing an American economy that is turning the corner, he said.
Americans have "banged the (government) pinata" and "all the candy is gone," Dotzour said.
So it's time for governments to begin the same "right-sizing" that businesses and families have done, he said.
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But that's not the complete jump-start the economy needs, Dotzour said: Banks and the government need to shed $115 billion in "broken" residential and commercial real estate — preferably to some of the real estate entrepreneurs in Wednesday's crowd.
And, Dotzour said, stop "extending and pretending... extending your loan and pretending my bank is solvent."
"A rolling loan gathers no loss," Dotzour said, to laughs from a capacity Hyatt crowd.
Weigand's George Laham, the architect of Bradley Fair, told a mostly positive story about the Wichita market.
Real estate investors are returning as residential markets begin to stabilize and commercial activity picks up, Laham said.
"Retail's the bright spot in the market," Laham said, reciting several new Wichita projects, the most recent the proposed Cabela's at K-96 and Greenwich Road.
"Anything would be after the market going pitch black."
Here's a summary of the Weigand forecast for Wichita, by sector:
* A soft market should stabilize.
* That stabilization should bring the market to a more neutral position that doesn't favor buyers over sellers.
* New construction will be limited, allowing the market to gradually absorb the 472 new houses still on the market at the end of 2010.
* Inventory for class A office space will be limited.
* Demand for class B and C properties will be soft.
* New construction will be limited to owner-occupied properties.
* Medical practice consolidations could affect the market.
* Increasing activity from regional and national retailers.
* Limited speculative construction.
* Market conditions still favor tenants.
* Land sales will continue to be soft.
* Uncertainty in the aviation industry will continue to be a factor.
* Vacancies and asking rates should remain stable.
* New construction will be limited.
* Few options for large tenants looking for high-grade space.
* Older properties will struggle to find buyers and tenants.
* Activity will be sluggish.
* Lenders will scrutinize properties and buyers involved in investment transactions.
* The gap between sale prices and offers will continue to narrow.
* Buyers will continue to wait for opportunities.
Farm and ranch market
* Land sales will continue to be strong due to demand from farmers and non-farm investors.
* Farm credit will remain positive.
So be optimistic, Dotzour urged the crowd. Surely Congress is serious about a plan to cut spending and the federal deficit.
"We have to hope," he said. "The good news is households have right-sized their budgets. Businesses have right-sized their budgets. The only leg of the economy that hasn't are governments, and they're going to have to fire people. And that's going to be an ugly headline.
"When you're living beyond your means at some point you have to stop living beyond your means.... Be thankful that there's some common sense coming into the country."