First-Time Home Buyers Jolt Market Into Life

There is a surge of first-time home buyers in California and across the country who are taking the plunge into the still-shaky housing market, exchanging rents for mortgages. Lured by a combination of a drastic drop in home prices, expanded FHA-insured loans, record-low interest rates and an $8,000 federal tax credit, these newcomers are breathing new life into a beleaguered market. Their entry, many hope, will help slow the fall in home prices and sales. First-time buyers bought more than half of the existing homes sold in February, according to the National Association of Realtors®, and helped add to the 5.1% increase in sales from the month earlier. Enticed by the huge drop in prices around her neighborhood, first-time buyer Ucilia Wang says she’s willing to take the chance that prices could slide further or that the economy could worsen. Overall, in Oakland, Calif., where she rents a tiny one-bedroom apartment, the median home price dropped 66% over the past year. In her sought-after neighborhood of the Piedmont District, Wang is finally finding homes in her price range of about $500,000, which would have been hard to find two years ago. “You don’t have to spend $500,000 for a one-bedroom condo [anymore]. You might be able to get a single-family house for that now,” says Marci Orler, a Realtor® in San Jose, Calif., who bills herself as a first-time home buyer specialist. With six active clients, Orler is much busier today than she was this time last year when few first-timers, or anyone else for that matter, were shopping for houses. Prices have finally fallen to a level that people without equity can consider buying, she says. (www.csmonitor.com)
Christian Science Monitor (4/15/09); Michael B. Farrell

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Housing Affordability Trumps Luxury in New Home Market

At least for the foreseeable future, home builders say, brand-new houses in the north San Diego County region will be smaller and focus on affordability and energy efficiency. Gone are the days when “new home” was synonymous with marble bathrooms and tricked-out kitchens. “Do you need stainless-steel appliances?” asked Mark Connal, sales director for Michael Crews Development, an Escondido builder. “Yeah, it looks nice, but do you want a home you can afford, or do you want to sleep in a shopping cart?” Connal said his company has sold all of its standing inventory and is now searching for cheap land so it can build homes at low enough prices to compete with a glut of foreclosures priced 50% below previous sales in Southwest Riverside and 40% off in San Diego County. KB Home, a giant builder based in Los Angeles, has taken a similar tack, already offering new, single-family houses in Wildomar starting at $199,990. The new KB Home “Open Series” products start at 1,239 square feet and focus on efficiency of design, providing a lot of living space in a small, affordable space, said Steve Ruffner, president of the company’s Southern California division. “You don’t need giant hallways you don’t live in and giant bathrooms you don’t live in,” Ruffner said. “It’s more about what you need.” (www.nctimes.com)
North County Times (4/17/09); Zach Fox

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Weyerhaeuser CEO Predicts Rebound

Dan Fulton, Weyerhaeuser Co.’s chief executive, predicted that the market for new homes would level out this year and begin returning to normal in 2010. “What it feels like to me, and this is coming from both the wood products perspective and home-building perspective, is that we’re at a point now where single-family home prices have come down to a point where they are more affordable than they’ve been in some cases for 20 or 30 years. I think in California, because of a combination of home prices and low mortgage rates, homes are more affordable than they’ve been in 40 years,” he said. But buyers are reluctant to commit because of anxiety about their jobs, he said. “The reason that people have not been buying homes is not so much price. For the last three or four months it’s been the feat of unemployment. We’ve seen unemployment continue to rise, and that’s caused discretionary buyers to move to the sidelines,” Fulton said. “If unemployment starts to stabilize, I think you’ll start to see some movement in the market. If there’s a significant inventory of existing homes and an overhang of foreclosures, that will continue to be a drag on the market for a while. But I expect a modest recovery in 2010 and the market picking up steam in 2011,” he said. (www.thenewstribune.com)
Tacoma News Tribune (4/20/09); John Gillie

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Decreases in Home Inventory Are Helping Some Developments More Than Others

In a glimmer of good news for the moribund housing market, the number of homes for sale in Palm Beach County, Fla. has slowly but steadily fallen for the past two years. But this ray of sunlight is shining more brightly on some neighborhoods than others. In many older neighborhoods, relatively few homes are on the market. At Addison Reserve, a country club community west of Delray Beach built in the 1990s, about 7.5% of the development’s 714 homes are on the market. And at Fairmont Place, an over-55 community west of Boynton Beach, built in the 1980s, none of the 192 homes is for sale. But in newer, boom-time developments, for-sale signs flourish. At Versaille in Wellington, for instance, nearly 20% of the 450 homes are on the market, according to Multiple Listing Service Data. “There are pockets of ridiculous amounts of inventory,” said Scott Agran, head of Lang Realty in Boca Raton. “But if you take established communities with no new construction in the past five years, inventory is normal.” (www.palmbeachpost.com)
Palm Beach Post (4/19/09); Jeff Ostrowski

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Bank Lending Keeps Dropping

Lending at the nation’s biggest banks has fallen more sharply than previously realized, despite government efforts to pump billions of dollars into the financial sector. According to a Wall Street Journal analysis of Treasury Department data, the biggest recipients of taxpayer aid made or refinanced 23% less loans in February, the latest available data, than in October, the month the Treasury kicked off the Troubled Asset Relief Program. The total dollar amount of new loans declined in three of the four months the government has reported this data. All but three of the 19 largest TARP recipients with comparable data originated fewer loans in February than they did at the time they received federal infusions. (www.wsj.com)
Wall Street Journal (4/20/09); David Enrich, Michael R. Crittenden and Maurice Tamman

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Tough Times for Town Fathers; Leading Businesses Fall, and Life Gets Lean in Loganville

Business leaders like builder Tommy DeMilio and banker Stanley Kelley have long been pillars of the town of Loganville, Ga. about 35 miles from Atlanta. Each year they contributed millions for parks, buildings, classroom books, even a gymnasium and church. In the process, they acted as a safety net for everything from the local schools to the Chamber of Commerce. Now, with the credit crisis causing the traditional support systems to crumble, life in Loganville is harder on just about everybody. “I’ve lost 80% of my net worth in this downturn and since I put it all back in my company, I’m not floating in cash,” says Darrell McWaters, president of Meridian Homes USA Inc., a big home builder and another of the area’s major donors. “We’ve had to cut out everything.” As long-time patrons of their community DeMilio, 48, and Kelley, 68, had ambitious plans to create a four-acre park for the city’s 9,500 residents. It’s a quarter finished and won’t likely be completed. DeMilio’s construction business has dried up and Kelley’s bank failed in November. Driving by the site in his SUV recently, DeMilio looked dejected. Only a few climbing and jungle-gym sets are in place. The recreation center isn’t likely to be finished this year, if ever, “unless something turns around,” DeMilio says. “I feel like we failed the community.” Owner of the Wayne Thomas Group, DeMilio is a transplanted New Yorker who made a name here as a builder and developer. Today, his problems are twofold. Few new homes are being built, which has killed most revenue from that end of his business. At the same time, he can’t collect on agreements he has made to sell land to other builders because their credit has been frozen. “I can’t go after them, they don’t have the money,” he says. At the height of the building boom, his company, which offered free lunch and gym memberships to employees, had 62 people on the payroll and about 450 subcontractors. He’s now down to about 100 people. “I’m operating month to month now,” he says. (www.wsj.com)
Wall Street Journal (4/11/09); Gary Fields

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