The Federal Reserve’s minutes from the Federal Open Market Committee’s mid-December meeting show that if the modest pace of economic growth slows or mortgage markets significantly deteriorate, “a few members” of the committee believe that “more policy stimulus” may be desirable. The Fed has been buying $1.25 trillion of mortgage-backed assets to ease lending markets and keep longer-term rates low — a program that is winding down and scheduled to end by March 31. The program was successful for much of last year, pushing mortgage rates below 5%, to levels not seen since the early 1950s. Many economists say the end of the program will push rates back up from a half point to a full point, adding to the cost of a house and diminishing the pool of buyers. The president of the Federal Reserve Bank of St. Louis, James Bullard, said in late November that the Fed should continue purchasing the securities. “I have advocated to keep the asset-purchase program open but at a very low level, and wait and see what happens,” he told Down Jones Newswires. (www.nytimes.com)
New York Times (1/7/10); David Streitfeld and Jack Healy

Wary of taking on a risk on real estate despite some favorable buying conditions, especially as the labor market remains frail, growing families are deciding to stay in their cramped home for at least a couple more years. The recession and the weak housing market are making it somewhat tougher for young and growing families to “trade up” to a larger home, said Rob Carney, a Realtor® with TTR Sotheby’s International Realty in the Washington, D.C. area. “There are some families who may have bought a starter home and would normally have been looking for something larger,” he said. “That normal cycle has been disrupted a bit by the state of the economy.” On the positive side, there’s a lot of pent-up demand from growing families who have been unable to buy a larger home, Carney said. “As the economy turns around and the housing market stabilizes, we are going to see a lot of families making a move at that time to accommodate their growing size,” he said. (www.marketwatch.com)
MarketWatch (1/5/10); Ruth Mantell

The ability to relocate for employment, which helped the U.S. recover quickly after previous deep recessions, is the latest victim of the housing bust. About 12.5% of Americans moved in the year ended March 2009, the second-lowest ever, estimates Brookings Institution demographer William Frey, after a 60-year record low of 11.9% the previous year. Some households are staying put because they owe more on their mortgages than their properties are worth; others have trouble selling houses in depressed areas. “One of the hallmarks of America’s labor market is a high level of mobility,” said Joseph Stiglitz, a Nobel Prize-winning economist, in a Jan. 3 interview in Atlanta, where he was speaking to an economics conference. “We are about to lose that.” The stagnant workforce may raise the long-term trend rate for unemployment by one percentage point and lower economic growth 0.3% a year through 2012, said Michael Feroli, an economist in New York for JPMorgan Chase & Co. It has already contributed to keeping the jobless rate as much as 1.5 percentage points higher than would have been suggested by the depth of the recession, Peter Orszag, director of the U.S. Office of Management and Budget, estimated in July. Pharmaceutical and biotechnology companies have lost potential employees in the past two years as candidates are stuck with houses worth less than their mortgages, said Deborah Coogan Seltzer, a vice president in Atlanta for the Dallas-based executive search firm Pearson Partners International. Some prospects also worry it may take a year or more to sell their homes, even if they have equity in the properties, she said. “It’s a constant factor,” Seltzer said. “Conservatively, in at least 70% of the searches I’ve worked on in the last 12 to 18 months at least one or two candidates have withdrawn from the process after they’ve investigated their real-estate situation.” (www.businessweek.com)
BusinessWeek (1/7/10); Steve Matthews, Mike Dorning and Daniel Taub

Despite a 62% drop in spending on new single-family homes in San Diego County, Scot Sandstrom, a home builder with 20 years of experience, a former president of the San Diego Building Industry Association and founder of New Pointe Communities Inc., is doing a thriving business. After losing his job with the San Diego division of Richmond American Homes as a result of the housing downturn, Sandstrom founded New Pointe in October 2007 with money borrowed from friends and family. The plan had been to do land development, but there was no money for that kind of work, and a few days after he filed the paperwork to open his business, the Witch Creek-Guejito fire destroyed almost 1,100 homes. After a friend suggested to him that there were suddenly a lot of people who might need their homes to be rebuilt, he began to make presentations to the victims. For Sandstrom, the fire reconstruction launched him into a new field. He found that some families didn’t have the money or will to rebuild on the site of so much devastation. The local and county government had cleaned up many of the properties, getting rid of toxic materials as well as the rubble, leaving plots of land in some of the choicest parts of the region. Specializing in Rancho Bernardo, one of the most afflicted neighborhoods where the fire had left gaps like broken teeth, Sandstrom bought three adjacent properties and one more in a different part of the community. “I built those,” he said. “I was everything from chief bottle washer, to superintendent, to at night doing the books.” Since then he has completed four more homes on “fire lot” properties of fire victims who decided not to rebuild, and has eight under way. He has sold all of the homes he’s built, all before they were finished. “It’s a tough market to sell homes in,” he said. “We’re very humbled. I feel extremely blessed to do this when so many friends remain unemployed.” (www.nctimes.com)
North County Times (1/10/10); Eric Wolff

For practical, financial and emotional reasons, there seems to be a growing cohort of men who are falling out of love with the holy institution of homeownership. The numbers behind this disenchantment are only suggestive. Men and women under the age of 40 report roughly equal levels of satisfaction with homeownership, according to a large national study by the Center for Community Capital at the University of North Carolina at Chapel Hill. Yet the behavior of single men and women hints at divergent gender attitudes toward homeownership. Married couples make up the largest group of new home buyers. Next, according to research from the National Association of Realtors®, are single women, who in the last 12 months represented 21% of home buyers; single men were just 10%. That gap has opened up in the last decade, said Paul Bishop, vice president for research at the association. Bishop’s survey is silent on the motivation behind the gender split. Younger single men may be more likely to change jobs and cities, he speculates. They may be more willing to squeeze into an apartment with two or three buddies. Or they may be cowering in the nest with Mom and Dad. For men, rejecting homeownership may involve broader questions of manhood, said Dr. Roy Baumeister, a psychology professor at Florida State University. “There are a lot of extra stresses that men have,” he said. In almost every culture, Baumeister said, “men are expected to produce” more than consume. In a similar fashion, men naturally compete for status. Buying a home, he said, is often tied up with those pressures. (www.nytimes.com)
New York Times (1/7/10); Michael Tortorello

The diminutive Katrina cottages built for some flood victims in the New Orleans area are being used as a model for public-assistance housing on Long Island, N.Y. “Besides its affordability, it’s a smaller house and it fits into the community,” said Gene Murphy, Islip’s commissioner of planning and development. “It is meant as good starter housing to get people out of basements. For what they pay for rent, they can build equity in a house.” Paul Fink, the executive director of the Islip Community Development Agency, said he hoped that eventually 10 Katrina cottages a year could be built to complement the 30 to 40 larger affordable homes that the town erects. The basic Craftsman-style cottage is 918 square feet, with two bedrooms and one bath. At 26 feet wide and 38 feet deep not including a front porch, it fits undersized lots, like those in older neighborhoods like Sunnybrook in Bay Shore, where the plot for the first planned house is located. Some vacant lots there are 50 by 100 feet. The current zoning minimum is 75 by 100. “You can still keep decent side yards,” Murphy said, adding that the compact cottages wouldn’t “impact privacy of neighbors” or “overbuild the site.” Also, the old-fashioned architectural style “fits in with the context of that neighborhood,” he said, which has housing stock built between 1890 and 1920. (www.nytimes.com)
New York Times (1/7/10); Marcelle S. Fischler