Housing-Price Economist Sees Market as Near Bottom
Wellesley College economist Karl Case, of the S&P/Case-Shiller index of U.S. housing prices, says he thinks that the housing market may be near a bottom. In a paper presented before the Brookings Institution in Washington on Sept. 11, Case argues that there is cause for optimism. He notes that of 20 metropolitan areas covered by the Case/Shiller index, nine have shown prices slightly improving in recent months. He also says that the relationship between incomes and home prices has neared a level seen at the end of past housing slumps. How far home prices fall matters greatly for financial institutions, Goldman Sachs economist Jan Hatzius argues in another paper presented at Brookings. If the Case/Shiller index stays at its June level, total mortgage losses will come to $473 billion, Hatzius estimates, which is more than he projected in an earlier study conducted with economists David Greenlaw at Morgan Stanley, Anil Kashyap at the University of Chicago Graduate School of Business and Hyung Song Shin at Princeton University. Hatzius estimates that a further 10% decline in home prices would lead to losses of $636 billion and a 20% decline would lead to $868 billion in losses. (www.wsj.com)
Wall Street Journal (9/12/08); Justin LaHart
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‘Fire Sale’ Housing Mostly in Poorer Areas
Real estate observers are seeing a spike in the number of single-family houses and condominiums available in certain areas of Massachusetts for $100,000 or less, as the housing sector continues to grapple with a wave of foreclosures and falling housing prices tied to the subprime-mortgage meltdown. Real estate agents say they’re seeing some eye-popping retro-like prices for some homes and condos in lower-income areas, often sold off by banks in bargain-basement deals just to get them off their books. About 503 condos under $100,000 were sold statewide during the first eight months of this year, up 34% for the same period in 2003. Listings show that the vast majority of the units are in “distressed” areas hard hit by foreclosures — such as Lowell, Lawrence, Springfield and other towns in western Massachusetts. In Boston, there are very few single-family homes that have been sold, or put on the market, that were or are below the $100,000 mark. The city’s Beacon Hill and Back Bay areas have continued to see slight price increases for condos. (www.bostonherald.com)
Boston Herald (9/15/08); Jay Fitzgerald
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Arizona Housing Market May Be Perking Up
Although Arizona’s unofficial recession enters its third quarter, the state’s housing market is finally showing signs of life. For three months, from May through June, closings of existing single-family homes have been higher year over year, said Robert Bemis, chief executive officer of the Arizona Regional Multiple Listing Service. They were 26% higher in July than a year earlier. “A three-month trend is a strong trend for us,” he said. “September 2005 was the last time we sold more properties than the same month a year prior. So the first time in almost three years, that’s a good sign.” Unfortunately, in one-third of the 5,966 closings reported by Realtors® to the Arizona Multiple Listing Service in July, the sellers were lenders, indicating the sales were foreclosures or that the previous owners turned over the deeds in lieu of being foreclosed upon, Bemis said. Foreclosures are driving down median housing prices because lenders are so eager to unload the houses, experts say. The good news is that the increased sales are helping to chip away the large inventory of homes on the market. “Getting property off the books so we can get back to a healthy market is a good thing,” Bemis said. “The more we can get rid of, the better.” (www.tucsoncitizen.com)
Tucson Citizen (9/15/08)
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Wichita State University Market Forecast Predicts Rise in Sales
Wichita State University’s Center for Real Estate is looking for a dramatic rally in the area’s home sales in 2009. The local housing market should rebound in 2009 once buyers adapt to tighter mortgage lending policies and regain faith in the housing market, said Stan Longhofer, director of the real estate center. While first-time buyers are being squeezed out of the market by tighter credit regulations, current home owners are backing off of plans to buy a bigger house out of fear, he said, and hearing all the bad news about the housing market. In fact, there’s no such thing as a national housing market, Longhofer said, only local and regional markets. In Wichita, the market remains solid. Homes are still appreciating in value — at a 4.1% rate in 2008. Interest rates remain low, home inventories remain steady at between four and five months worth and prices are lower than on the coasts. “Our economy is good,” he said. “We don’t have the impact of foreclosures in Kansas like the coasts. We don’t have the negatives. It’s really a matter of us saying, ‘That’s enough of feeling funky about that. It’s time to move forward and do what’s best for us.’” Buyers and sellers in Wichita think there’s no credit available for a real estate deal. But that’s not true, said Gary Schmitt, executive vice president for real estate lending at Intrust Bank. While the days of zero downpayments may be gone, “you can get as much as a 95% loan as long as you’ve got a downpayment (generally 5% of the purchase price) and a credit score in the 700s,” Schmitt said. “And I’ve seen scores as low as 625 for a 90% loan.” (www.kansas.com)
Wichita Eagle (9/12/08); Bill Wilson
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We’re Married, Sleeping Separately
A 2001 random telephone survey of 1,004 adults conducted by the National Sleep Foundation found that 12% of married Americans slept alone; a similar 2005 survey of 1,506 people found that number had jumped to 23%. In addition, a March online survey of 1,408 couples conducted by the Sleep Council of England found that one in four people regularly retreats to a spare room or sofa to get a good night’s sleep. The preference for separate spaces has even begun to affect home design. According to NAHB, there’s been a steady increase in the number of requests for “two-master bedroom” homes since 1990, prompting the organization to predict that by 2015, 60% of all custom upscale homes will be built with two “owner suites.” (www.cnn.com)
CNN.com (9/12/08); Diane Mapes
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Why Libraries Are Back in Style, It’s Not Because of Books
In the latest annual NAHB consumer survey, 63% of home buyers said they wanted a library or considered one essential, a percentage that has been edging up for the past few years. Many mass-market home builders are including libraries in their house plans, sometimes with retro touches like rolling ladders and circular stairs. Jeani Ziering, an interior designer in Manhasset, N.Y., says the newfound popularity of libraries is part of a general movement toward traditional design and décor. “When the economy turns bad, people turn to the classics,” she says. Libraries are especially appealing during anxious times because they project coziness and comfort, she adds. For home builders who are scaling back the size of houses to make them more affordable and cheaper to construct, libraries are a more functional way to create an upscale look than the “old, crazy massive foyers and ‘Gone With the Wind’ staircases,” that characterized houses a few years ago, says Memphis, Tenn. architect Carson Looney. (www.wsj.com)
Wall Street Journal (9/12/08); June Fletcher
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