July housing sales numbers—down 27% from the month before--sentshudders through government, businesses and the investor world. Itwas more evidence of a slowing recovery. Buyers pulled back withoutthe expired federal tax credit incentive. Fears increased thathousing values and sales may sag further, possibly setting off thedreaded double dip. Meanwhile, mortgage rates stand at all timelows and home prices have already dropped 30-40% in many places. Sowhat does this all really mean?

Government leaders (Obama, Geitner, Bernanke) will continue tocheerlead and try jawboning confidence. Politicians may criticizeeach other and throw around blame—“the country is going in thewrong direction under so and so (Obama, Geitner, Bernanke")—butnobody gets elected saying America is starting to fall behind andmay not bounce back for a long time. Economists for big financialinstitutions don’t keep their jobs by turning excessively negativeabout U.S. prospects either—that’s bad for business. Soexplanations for the extended housing malaise range from highunemployment levels—people fear they may lose their job so put offbuying when they otherwise can; and lenders have been toostringent, cutting off people who could otherwise buy; to peoplefear that values will go down even more so they are holding offwhen they otherwise would be back in the market. Therationalizations go on--once the employment picture improves andlenders loosen up, we’ll be back, fears will dissipate, andeverything will be okay.

And you know if employment improves and wages track up that willcertainly help, and if lenders loosened up that would too. But employment prospects look reasonably bleak—the economy isn’tcreating enough jobs and loose credit standards helped get us intothis mess. Wages for most Americans have been stagnant to down formore than a decade. Maybe lenders have over-corrected somewhat, butdo we really want Fannie and Freddie to throw more good taxpayermoney after bad?

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Jonathan D. Miller

A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for GlobeStreet.com, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.