Market Up, or Down, Or?
UPDATED 5:13 p.m.
And the housing market predictions went on, and on. One afternoon panel included 15 (yes!) speakers. With all the panels all day packed so tightly with big names, there was little opportunity to get in-depth answers to the good questions from the market pros in the audience.
When the speeches finally ended, the Realtors went to put on their evening wear for a night of receptions, and probably a lot more talk about the market.
UPDATED 3:00 p.m.
Alan Greenspan on the conflicting info we're getting from major home-price indexes:
A real estate agent from Boulder, Colo., complained to Greenspan about the media's use of the S&P Case-Shiller home price index, which continues to show steep declines, instead of the government's Federal Housing Finance Agency's index, which shows a flattening of prices.
"There's a big dispute within the economics profession about this," he said. "The media is simply reflecting that." FHFA has eliminated all evidence of foreclosure sales from its price index, he noted. "Case-Shiller has a big chunk of foreclosed properties."
"Economists generally believe the right answer is probably in between," he said. But the question won't be addressed until sometime after the crisis has passed.
No new homes: Jerry Howard, president and chief executive of the National Association of Home Builders, said there are only
300 300,000 new houses on the market now, nationwide. "And none are being built."
UPDATED 2:49 p.m.
From former Fed Chairman Alan Greenspan: His big concern now is the potential for rising defaults among conventional, conforming mortgages -- that is those fairly conservative loans that qualified for purchase by Fannie Mae and Freddie Mac. Typically buyers made down payments of 20 to 22 percent, but prices have declined enough to wipe out even their equity. The economy could withstand about another 5 percent decline in home prices and the resulting increase in defaults and foreclosures, he said. "But I think we run into trouble if it's very significantly more than that," Greenspan said. "With further price declines you're digging into the real segment of where the remaining home equity is."
About the inventory of unsold homes, he said, "We are at the edge of a major liquidation of that excessive inventory." Greenspan said he hopes that the signs of a market bottom that we are beginning to mean prices will stabilize before there is even more effect on the economy.
UPDATED 1 p.m
More news snippets from this morning's sessions:
What stabilizing market? Harvard economist Martin Feldstein sees no such thing. "We need to stop the downward spiral" of home prices, foreclosures, and bad assets dragging down banks' balance sheets, he said, repeatedly. His answer? More government spending to get bad assets off banks' books.
Condos and FHA: HUD will be looking at how FHA borrowers are getting stymied when trying to buy a condo if the condo association has a right of first refusal clause in the bylaws. FHA won't allow loans in such instances. HUD Secretary Donovan promised "clear guidance on that, definitely before the end of the year."
Uncooperative lenders: A real estate agent from Ft. Myers, Fla., complained to Donovan that banks in her area are turning down home buyers using FHA loans in favor of lower all-cash deals from investors that unfold faster. Jim Park, president and chief executive of the Asian Real Estate Association of America, criticized investor "bottom feeders" crowding out first-time buyers. "Servicers and REO departments [that sell off foreclosures] have traditionally been biased against homeowners because of delays," he said. The real estate industry's preferred answer to that seems to be making federal incentives available for all comers, according to big brokers such as Roberty Sibcy, president of Sibcy Cline Realtors in Cincinnati. —
UPDATED 10:23 a.m.
HUD Secretary Shaun Donovan said the department is seeking a way to make the $8,000 first-time buyer tax credit available to borrowers to use on down payment and closing costs, instead of waiting for their tax refunds. HUD wants permission for HUD-approved lenders and nonprofits to issue bridge loans to make the $8,000 available to borrowers at closing. "I expect details within just a few days," he said.
UPDATED 10 a.m
Look to the percentage of vacant houses and condos to see where prices are going, panelists are saying. Barry Bluestone, professor of political economy at Northeastern U., says it works this way:
Harvard economist Martin Feldstein Eric Belsky, head of Harvard's Joint Center on Housing studies, says the age of homes is linked directly to foreclosure rates. Among homes built before 2000, vacancy rates are about 2 percent. For those built in the current decade vacancies are running about 10 percent. "So much of the problem is newer subdivisions," he said. "When the jobs come back, will they come back in these areas?"
UPDATED 9:39 am
Robert Reich, Labor Secretary during the Clinton Administration, said we are very close to economic recovery, and "very, very close" to a bottom. The question is how long and how strong that recovery will be. Unemployment will hit double digits by the end of the year, he said, and even once jobs come back, it will take a long time for the newly employed to feel confident enough to spend money again. "Plan for economic uncertainty," he told realtors gathered here in D.C. today for the National Association of Realtors' day-long economic summit.
Home prices are not going to return to 2006 levels for a long time, and the economy is not going to return to the levels seen between 2002 and 2007, he said. "That economy was built on a huge volume of unsustainable debt," he said.
"Median incomes are not rising, even when we get jobs back," he said. Controlling health care costs can help put money in consumers' pockets for other purchases--like homes.
Check back through the day for updates filed from the National Association of Realtors' day-long economic summit. We're in the Marriott Wardman Park's giant ballroom, and through the day we'll hear from former Labor Secretary Robert Reich, Havard's Eric Belsky and Martin Feldstein, the Wharton School's Susan Wachter, former Federal Reserve Chairman Alan Greenspan, Carnegie Mellon University's Allan Meltzer and others, roughly in that order.
The day started with a policy brawl between Harold Ford, Jr., the former Democratic representative from Tennessee, and conservative commentator Pat Buchanan. They sparred over which party is most responsible for deficit spending--and heard from attending Realtors that banks are still looking for excuses not to lend.
The schedule is packed tighter than a Japanese subway, so they got cut off just when the questions got interesting.
May 12, 2009; 9:18 AM ET
Categories: Buying , Foreclosure , Mortgages , Selling , The economy , The market
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