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Eonomist says buyers' psyche waiting for sellers' fear, panic

November 03, 2006|by ANDREW SCHOTZ

HAGERSTOWN - An economic "soft landing" is likely in 2007, with the housing market worsening before rebounding, consultant Anirban Basu said Thursday, mixing insight with levity.

Consumer spending is bound to taper off, Basu said, adding, "How many flat-screen televisions do you really need?"

Basu, the chairman and CEO of Sage Policy Group, a Baltimore economic and policy consulting firm, was the keynote speaker at the Fourth Annual Washington County Economic Summit.

Zipping through charts on building permits, unemployment and the value of the U.S. dollar, Basu talked about trends in housing, manufacturing, trade, spending and more.

"The key to this decade has been to be an owner of assets," he said. The person who doesn't own a house or other equity is finding the road to homeownership much tougher.

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In the meantime, what was a seller's housing market has shifted toward the buyers.

Basu said interest and mortgage rates are not the driving force; rather, it's a "buyers' psyche," waiting for "fear and panic" in sellers' eyes. Locally, the result has been rising inventory, with more existing houses for sale as new construction drops off.

Still, "Washington County is safe for now ... because the demand is still very much in place," he said.

Referring to an English economist, Basu quipped, "Keynes said supply rises up to meet demand, but Keynes never went through the Anne Arundel County permitting process."

For its size, Washington County has a diverse economy with an unemployment rate matching the national average, he said. Of the 1,500 jobs added from the first quarter of 2005 to the same period in 2006, distribution topped the list, followed by construction, then education and health services.

The Hagerstown-Washington County Chamber of Commerce and the Hagerstown-Washington County Economic Development Commission presented the summit, which was held at Four Points Sheraton on Dual Highway.

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