Category: National News

Is the housing crisis over?

The Housing Crisis Is Over

By CYRIL MOULLE-BERTEAUX
May 6, 2008; Page A
The Wall Street Journal

The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.

How can this be? For starters, a bottom does not mean that prices are about to return to the heady days of 2005. That probably won’t happen for another 15 years. It just means that the trend is no longer getting worse, which is the critical factor.

Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005. New home sales are down a staggering 63% from peak levels of 1.4 million. Housing starts have fallen more than 50% and, adjusted for population growth, are back to the trough levels of 1982.

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House OKs Controversial Housing Plan

The House approved a federally backed bailout for the housing market; as skimpy as it may seem.  Not supported by the White House, the foreclosure prevention package was passed in a 266-154 vote.

The package will let FHA insure up to $300 billion in new loans over the next four years as long as lenders agree to reduce the mortgage principle. The lender would have to cut the amount owed to no more than 85% of the current appraised value.  If they FHA insured loans went into default, then the FHA would pay the lender the remaining principal owed.

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Fed Cut Interest Rates .25% Wednesday

In what is likely to be the last rate cut – baring any more financial market blowups – in a while, The Fed cut the federal funds rate another quarter point Wednesday from 2.25% to 2%.  The rate 5% as recently as September.

The statement “downside risks to growth remain” was removed from the Fed statement indicating to many analysts that we should start to see signs of recovery and that we are showing fewer signs of a downturn.

“They haven’t closed the door to further cuts, but they’ve shut it part way,” said Mark Zandi, chief economist for Moody’s Economy.com. “They’re saying they believe they’ve done enough.”

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Analysts say Northwest Florida already prospering

Assuming the current climate of the Florida real estate market, many investors are weary of St. Joe stock.  With it peaking at around $80/share in mid 2005, shares were at $42.30 this morning.  One thing that may not be as commonly known is the powerful position St. Joe is actually in.

If you remember a couple of weeks ago, I quoted Bob Toll in his “hunker-down” statement:

“You move from an expansion mode to protecting your balance sheet immediately. . .  Then you hunker down, build up your cash, wait for the blood in the streets and take advantage of the opportunities.”

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Housing Starts Lowest in 17 years

Housing starts, down almost 12% from February are the lowest they’ve been in 17 years.  With 947,000 starts, building permits were also down to 927,000, from 984,000 in February.

The nationwide foreclosure rate is up 57% from last March with nearly 235,000 homes hit with foreclosure filings last month alone.  Of this number, 51,393 homes were actually lost to foreclosure with “1 in every 538 households being affected by a filing in March.” (The Business Journal of Phoenix)

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Destin property owners refuting beach renourishment?

An article in the News Herald this morning reported on a case before the Florida Supreme Court addressing the Walton County beach renourishment efforts. As the article reads, property owners are suing to prevent this and it may cause renourishment efforts to be their responsibility when they want to do it and how much effort/money they want to put into it.

The argument is that it may be the “unconstitutional taking of private property from beach-front homeowners.” Am I reading this wrong? Beach renourishment, in my opinion is a great thing for the property owners. As a property owner on the beach, why would I not want this? If I had 100 feet of beach in between my home and the water, and now I had 50 feet, I would want back that extra 50 feet.

I know the beach restoration project in Walton County has had problems in the past, with concerns of the sea turtle nests.

As reported, if the renourishment is found unconstitutional, the property owners would have the responsibility to cover the restoration costs.

Have we hit bottom?

Has the real estate market nationwide hit bottom?  I hear Realtors all the time say that business is picking up for them.  In addition, I was looking through the New York Times Real Estate section, and not one article in the  18+ articles posted was negative.  Not one article was telling of how we are all doomed to suffer endless real estate woes for the next million years or that prices have dropped again for the umpteenth time.

The National Association of Realtors is predicting a “notable improvement” in the real estate market in the second half of 2008. Lawrence Yun, cheif economist for the NAR, said “Existing home sales could start to show a sustained increase within a few months, unless there are some additional economic problems or excessive inflationary pressure,” he said.  “We’re looking for essentially stable sales in the near term, before higher mortgage loan limits translate into more sales in high-cost markets.  The wider access to affordable credit should increase sales activity notably this summer as pent-up demand begins to be met.”

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Possible upturn in Luxury Real Estate Market

Pennsylvania-based home builder, Toll Brothers, agrees the real estate market is still soft in many areas, but seems to have bottomed out in other areas.

Quote:

  • “In the Naples-Fort Myers market, sales activity is definitely up for new homes on the market at reduced prices. That’s a definite contrast to late 2007, when you couldn’t give away a home regardless of price.”
  • In the Orlando market, it takes a real bargain to interest buyers, he says. Many buyers are walking away from deposits — a trend that’s prompted the company to require additional funds as its new homes move toward completion. Continue reading “Possible upturn in Luxury Real Estate Market” →

Foreclosures and what the government is going to do about it.

Thursday the Senate began a debate on taking measures to help curb foreclosures nationwide. Highlights for the bill:

  • Make loans backed by the Federal Housing Administration more widely available
  • Makes $4 billion available to communities to buy and rehabilitate foreclosed homes
  • Provides tax credits of $7,000 for buying a foreclosed home
  • Provides tax credits to homebuilders and businesses hurt by the housing downturn
  • Returning soldiers will be given an extra 6 months before foreclosure procedures could begin

This came after outcry that the government was more interested in bailing out the financial industry and less interested in the suffering American public. Many lawmakers are criticizing this bill saying that it isn’t going far enough.

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