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Home Builders See Prices Dropping 29% in 2009
Tweet Share on Facebook January 21, 2009 Comment (21)At the International Builders Show in Las Vegas, the National Association of Home Builders' top economist predicted another tough year for real estate despite low mortgage rates and more affordable homes:
From the Las Vegas Review-Journal, via Calculated Risk:
None of that matters when people fear for their jobs and are afraid to commit to a major purchase such as a car or a house, [NAHB chief economist David] Crowe said.
"We have consumer confidence at or near a historic low," the economist said Tuesday at the building industry trade show, "and it will probably deteriorate in 2009…"
Crowe said he expects prices to fall another 29 percent this year and new home sales to decline 14 percent.
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Americans Want More Information on the Use of Bailout Funds
Tweet Share on Facebook January 20, 2009 Comment (3)A Gallup poll released last Thursday found that Americans want more information as to how the financial bailout funds will be used.
From Gallup:
In general, the threat of blocking the release of the TARP funds appears to be one with which the average American is sympathetic. Given three choices of what to do with the remaining funds, 62% say Congress should block the release "unless more details are provided about how the funds will be used," and another 12% say Congress should block the funds entirely. Only 20% favor Congress' simply allowing the funds to be released.
In a sense it's a moot point, because the Senate voted last week to give President Barack Obama access to the second chunk of $350 billion. But the larger issue is that Americans appear quite unhappy with how the first portion of the bailout cash was managed. Critics have grumbled that the hundreds of billions of dollars in tax-payer money that was injected into banks did not spark an increase in lending. (Instead, funds have been used mostly to beef up bank balance sheets and in some cases to finance acquisitions.)
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Barack Obama to Bankers: Get Ready for Tougher Regulation
Tweet Share on Facebook January 20, 2009 Comment (3)While Barack Obama's inaugural address surely stirred optimism in the minds of many struggling Americans, the captains of the nation's floundering financial system couldn't have missed this allusion to what's in store for them:
Nor is the question before us whether the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched. But this crisis has reminded us that without a watchful eye, the market can spin out of control. The nation cannot prosper long when it favors only the prosperous.
Translation: Get ready for tougher financial regulation.
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Henry Paulson to Stay In Washington
Tweet Share on Facebook January 20, 2009 Comment (3)Surprising, I would have thought Hank Paulson would get as far away from Washington, D.C. as possible when his term ends. But it looks like the Treasury Secretary's next move will be a position at Johns Hopkins School of Advanced International Studies, which is located right in the nation's capitol.
From The Washington Post:
In an interview on his last official workday at the department, Paulson said he decided on SAIS to have an office and "a place to hang my hat." He said he plans to stay for at least several months before deciding what to do next.
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The Other Real Estate Bust: Apartment Demand Drops
Tweet Share on Facebook January 20, 2009 Comment (2)Looks like the home-purchase market isn't the only real estate sector facing dwindling demand. According to the National Multi Housing Council, the apartment market is hurting as well:
The stunning job losses and economic deterioration recorded over the past four months have eroded demand for apartments, putting the sector—like other real estate sectors and the economy itself—in a clearly "down" phase of the cycle, according to the National Multi Housing Council's (NMHC) latest Quarterly Survey of Apartment Market Conditions.
"Once again, apartment firms are facing tough market conditions not of their making," noted Mark Obrinsky, NMHC's Chief Economist. "Earlier in the decade the bubble-induced rise in homeownership eroded apartment demand; now the economic and financial collapse caused by the bursting of that bubble is taking a toll…"
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Real Estate Trends in Chicago
Tweet Share on Facebook January 16, 2009 CommentIn the second installment of a new regular feature at the Home Front—in cooperation with our partners over at Trulia—here's a look at some key housing trends and statistics for Chicago. (Click here for more stats and trends on Chicago's real estate market.)
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Your Real Estate Budget in Chicago
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Tumbling Asking Prices: Chicago
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How Barack Obama's Bailout May Differ From Henry Paulson's
Tweet Share on Facebook January 16, 2009 Comment (16)After all their griping and groaning about the shortcomings of Hank Paulson's gigantic financial bailout, lawmakers moved Thursday to ensure that Barack Obama will have access to the second chunk of $350 billion when he takes office. By a 52-to-42 vote, the Senate rejected a measure that would have denied him access to the cash. How did this happen? Well, in addition to the still-perilous state of the economy and financial system—Bank of America just hit up Uncle Sam for another $20 billion—the incoming Obama administration has promised to make a number of specific changes to the bailout's implementation. Here's a look at some specific areas where the second half of the bailout may differ from the first.
1. Foreclosure mitigation. Even after being prodded by lawmakers and other members of the Bush administration, Paulson steadfastly refused to use bailout cash for foreclosure mitigation. This infuriated some members of Congress—such as House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat—who moved to impose foreclosure mitigation as a condition for the release of the second $350 billion. As a result, the new administration is promising to include foreclosure mitigation in the bailout. "The Obama Administration will commit substantial resources of $50-100 [billion] to a sweeping effort to address the foreclosure crisis," Larry Summers, the incoming director of the National Economic Council, said in a letter to top lawmakers. "We will implement smart, aggressive policies to reduce the number of preventable foreclosures by helping to reduce mortgage payments for economically stressed but responsible homeowners, while also reforming our bankruptcy laws and strengthening existing housing initiatives."
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Mortgage Rates Drop Below 5 Percent: 4 Things to Know
Tweet Share on Facebook January 16, 2009 Comment (23)With all the doom and gloom in the housing market, you might have missed this nugget of good cheer: 30 year, fixed mortgage rates have fallen below 5 percent—to 4.96 percent—for the first time ever, according to Freddie Mac. Lower rates have already triggered a wave of refinancing applications and could work to spark some much-needed demand in the housing market. Here's five things you need to know about the trend:
1. Uncle Sam is behind the dive: Fixed mortgage rates have been falling in recent months for a number of reasons, such as lower inflation and investors' flight to quality, which has helped drive down yields on 10-year treasuries. (Fixed mortgage rates typically track the yields on 10-year T-bills.) More important, the Fed has recently undertaken an initiative to purchase hundreds of billions of dollars in Fannie Mae and Freddie Mac debt and mortgage-backed securities. The Fed also has suggested that it may begin buying long-term treasuries directly. Both moves have been big factors in the decline.
[Check out Mortgage Rates in 2009: 7 Things You Need to Know.]
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