Lenders Hold the Keys to Housing Recovery
Christian Redfearn, an associate professor of policy and development at the University of Southern California and a faculty member at the Lusk Center for Real Estate, says that a healthy banking sector and a couple more months with no more price declines are needed to spur housing sales and home building. “Right now, banks are looking around and seeing too many vacancies, too much uncertainty about price levels. They are in no position to lend….Until lending returns to rational levels, we won’t have a robust housing market recovery.” Redfearn also notes a sharp distinction between activity at the low end of the market, where financing is available, and at the high end, where it is more difficult. “I’d argue that the pricing models used by banks to value higher-end homes are based on aggregate indexes that are comprised heavily of low-end homes.” Banks using these aggregates, he says, “may undervalue homes and provide too little credit for buyers to reach prices at which owners are willing to sell.” Redfearn says he has seen several friends get back into the market, “realizing what gains they could in their current homes and moving up in the market. These are households with solid credit, savings and good incomes. And they are using all of them to get into markets they never thought they’d be able to just two years ago.” For other households still standing on the sidelines, “the risk that they might miss an opportunity to buy a ‘dream house’ has become greater than the chance house prices could decline further,” he says. “Of course, they could, but these households aren’t speculators and won’t want or need to sell soon, nor will they for many years — when prices are certain to have risen in nominal terms. My sense is that there are lots of households like these, but in many cases, they lack enough remaining capital gains, enough savings or access to enough credit.” He says the credit markets need to improve in order to bring them back into the market. “This is particularly true of California, where so much of the stock requires a jumbo mortgage. So long as this part of the mortgage finance industry is impaired, so long as downpayment requirements are 30%, so long as spreads are high, it’s likely to be a quiet marketplace.” (www.ocregister.com)
Orange County Register (9/26/09); Jonathan Lansner and Jeff Collins
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HUD Secretary: Housing Crisis Improving, Not Over
The head of the federal agency working to stabilize the nation’s slumping housing market says more homes are being saved from foreclosure as lenders rework mortgages, but cautioned that the crisis is not over yet. U.S. Housing and Urban Development Secretary Shaun Donovan said on Sept. 21 that there are other signs of an improving housing market, such as the slowing decline in prices. He estimated that more than 500,000 homes will be saved from foreclosure this year. Donovan was testifying at a field hearing of the U.S. Senate Housing Subcommittee in northern New Jersey, where residents have been hit hard by job losses and home foreclosures. The number of New Jersey homes returned to lenders in August increased 17% to 877 from the same period a year ago. That compares to 16% at the national level, according to RealtyTrac. Inc. (www.philly.com)
Philadelphia Inquirer (9/21/09); Victor Epstein, Associated Press
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Housing Market May Be Stabilizing, Lennar Chief Says
Though home builder Lennar Corp. had a rough third quarter, its executives seem to be seeing the light at the end of the tunnel for the company and for the housing market. “We’re gaining confidence that we’re getting much closer to the end of this housing-led downturn,” said Lennar Chief Executive Stuart Miller. “A combination of low prices, lower interest rates and government incentives have worked to pique the interest of primary buyers and dispel the taboo about home purchases that has deterred so many from the market.” Lennar divisions have seen an increase in traffic and general consumer confidence as the sales and pricing plunge has slowed or stabilized, Miller said. But, he said, the future is still murky. Ongoing foreclosures continue adding to inventory, mortgage rates are fluctuating and tax credit programs are potentially nearing their end. Upswings in unemployment and gas prices continue to pose downside risk. “By no means would I suggest that housing is out of the woods and recovered,” he said. “To the contrary, many headwinds remain.” (www.latimes.com)
Los Angeles Times (9/21/09); Tiffany Hsu
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New York Appraisals Get Shortchanged
Prices have dropped by as much as 30% in the last year in New York City, but agents, mortgage brokers and even some appraisers there say they suspect that some appraisals are mistakenly low. Among the reasons they cite: First, with sales volume having dropped by nearly 50% at the beginning of the year and only recently having reached more normal levels, appraisers are often hard pressed to find the comparable sales that allow them to come up with accurate appraisals. Second, at a time when local expertise is crucial, recent changes in national lending practices have resulted in the assignment of many appraisers who are not familiar with local markets, brokers and appraisers say. Subtleties like the inherently higher value of a second full bathroom in a two-bedroom than in a one-bedroom, or the difference between addresses on Lexington Avenue and First Avenue, can be lost on someone who doesn’t know Manhattan. And without a stockpile of comparable sales for reference, “you have to really know the local market, so you can go beyond the raw sales data and use all the subjective factors you can to really tell the story about a property,” said Jonathan J. Miller, the president of Manhattan appraisal firm Miller Samuel. Dean Feldman, an executive vice president at Halstead Property, said that he recently met with an out-of-town appraiser for a two-bedroom apartment that had been combined from a studio and a one-bedroom. “This person did not understand what a combined apartment was, and he kept asking me if there were two deeds for it,” Feldman said. “I had to explain that this was a co-op and it was a legal combination. It turned out fine, but I basically had to teach him.” (www.nytimes.com)
New York Times (9/27/09); Vivian S. Toy
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Huff and Puff-Proof Your Home’s Exterior
Although NAHB says that the majority of new houses in the Midwest are still clad with brick, wood or vinyl siding, the “other” category is gaining on these favorites. Two forces are at work here, says Stephen Melman, director of economic services for NAHB. “One, home buyers want their houses to be low-maintenance,” he says. “Two, they want environmentally friendly and energy-efficient materials.” So, while brick holds its own among buyers who can afford its steep price tag, other earth-friendly choices such as fiber-cement siding increase their market share. Although it didn’t appear in NAHB statistics until 2005, fiber-cement siding had 8% of the market in the Midwest by 2008. It appeals to wood lovers because it resembled wood, but doesn’t require repainting. Made of cement, recycled fly ash and wood fiber, it is a green product and has warranties as long as 50 years. While vinyl siding is not new, it has entered a second generation, reports Melman. “Used to be, it was pretty noisy inside a vinyl house when it rained,” he recalls. “But the product improved in strength, sound-proofing and energy efficiency.” At the same time, vinyl siding manufacturers added colors to their formerly drab lines of beiges and grays. At the high end of the housing price ladder, stone still rules, at least as an accent. In NAHB’s 2007 Home of the Future report, home builders predicted that stone would be in upscale homes for the next 10 years. (www.chicagotribune.com)
Chicago Tribune (9/25/09); Leslie Mann
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Designer’s Retrofits Assist Residents in Need
Afflicted with post polio syndrome and confined to a wheelchair, North Port, Fla., resident Dan Smith had his home remodeled to make it easier for him to maneuver. Carole Ponzio, who owns Design Solutions! of Southwest Florida, designed the retrofit, which required Smith to live elsewhere for months during the process. “It’s much better,” said Smith, who lived in the home 14 years before the changes were made. “It looks more livable.” Ponzio and medical experts, notably therapists, report seeing a steady need to improve living quarters for the disabled, geriatric and multigenerational households. The NAHB Remodelors Council, Research Center and Seniors Housing Council and the American Association of Retired Persons developed the Certified Aging-in-Place Specialist national designation program. “I think it’s more to the forefront here in Charlotte County,” said Ponzio, who is CAPS-certified and serves on the Charlotte-DeSoto Building Industry Association’s board of directors. She said she started thinking about designs for home owners with limitations after visiting an acquaintance whose husband was in a wheelchair. The home’s layout made her envision ways to improve residences. “Her home was just so open and airy,” Posio said. “That made me want to look into it more.” The remodels have become special to her. “It challenges me to figure out ways to help people get around easier,” she said. “You kind of have to figure out how this particular person can use this home. Every job you go into is totally different. It’s really appealing to me. It really feels good for me to do something special.” (www.floridaweekly.com)
Florida Weekly (9/24/09); Barbara Boxleitner
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