POWER
TO THE LANDLORD OR WHAT IS THE HOUSING MARKET UP TO?
No more "mortgaging your future"
perhaps? Or just no future? Left and
Right seem to agree. "Not seasonally adjusted"
as the NYTIMES graphic says, means that vacancies may be overblown in
wealthy areas, such as...Weston, CT?
Fumes from generator
in basement
sickens 10
CT POST
Updated 09:10 p.m., Saturday,
January 7, 2012
BRIDGEPORT -- A potentially deadly
situation was narrowly avoided early Saturday when 10 people fell ill
from carbon monoxide poisoning on the top floor of an apartment house
in the city's Hollow section...
"This is what happens when people
can't pay their electricity bill. But the city does have a Department
of Social Services than can help them out," Fossesigurani said.
"Unfortunately, because of federal cuts in social services funding,
we've had trouble getting the word out...full
story here.
House Prices Fall to New Post-Bubble Low as More Rent
NYTIMES
By DAVID STREITFELD
May
31, 2011
Housing
prices fell in March to their lowest point since the downturn began,
erasing the last little bit of recovery from the depths plumbed two
years ago, according to data released Tuesday. The Standard &
Poor’s Case-Shiller Home Price Index for 20 large cities fell 0.8
percent from February, the eighth drop in a row. Prices are now down
33.1 percent from the July 2006 peak.
“Home prices continue on their downward spiral with no relief in
sight,” said David M. Blitzer, chairman of the S.& P. index
committee.
Housing is in persistent trouble, industry analysts say, not only
because so many people are blocked from the market — being unemployed,
in foreclosure or trapped in homes that are worth less than the
mortgage — but because even those who are solvent are opting out.
The desire to own your own home, long a bedrock of the American Dream,
is fast becoming a casualty of the worst housing downturn since the
Great Depression. Even as the economy began to fitfully recover
in the
last year, the percentage of homeowners dropped sharply, to 66.4
percent, from a peak of 69.2 percent in 2004. The ownership rate is now
back to the level of 1998, and some housing experts say it could
decline to the level of the 1980s or even earlier.
“The emotional scars left by the collapse are changing the American
psyche,” said Pete Flint, chief executive of the housing Web site
Trulia. “There was a time when owning a home was a symbol you had made
it. Now it’s O.K. not to own.”
Trulia, a real estate search engine for buyers and renters that is
based here, is a hive of renters, including Mr. Flint. “I’m in no rush
at all to buy,” he said. He expects homeownership to decline further to
about 63 percent, a level the country first achieved in the mid-1960s.
The new Case-Shiller data did not offer much room for short-term
optimism. The national housing index, which is reported quarterly, fell
4.2 percent in the first quarter after a drop of 3.6 percent in the
fourth quarter of 2010. This, too, is a new recession low.
Twelve of the 20 cities in the index hit a new recession low in March.
Washington was the only city where prices rose both in March and over
the last year. Years of declines are teaching potential buyers to
expect more of the same. Tim Hebb, a Los Angeles systems engineer,
expertly called the real estate bubble. He sold his bungalow in August
2006, then leased it back for a year. Since then, the 61-year-old
single father has rented a succession of apartments.
“I have flirted with buying again many times over the past few years,”
said Mr. Hebb. “Let’s face it, people are not rational creatures.”
But he always resists, figuring housing is still overpriced and even
when it stops declining it will stumble along the bottom for years and
years. He says there is plenty of time to get back in if he should ever
want to.
Housing prices are now back to where they were in mid-2002. Such a
decline was literally unimaginable to the boosters and many of the
analysts in the middle of the boom, who were fond of saying that house
prices never fell on a national basis.
But as credit dried up and the easy refinances disappeared, the
foreclosures began. Prices fell sharply in late 2006, 2007 and 2008.
The market turned around in 2009, prompting hopes that the worst was
over. A government tax credit proved wildly popular but after it
expired a year ago the declines resumed. When demand will
naturally
reignite to stabilize the market is a matter of debate. Most economists
have been saying that they think the price declines will level off in
the second half of the year, although a few think they will continue
until 2012. What no one seems to anticipate is any sort of a brisk
recovery. Instead they see a muddling along until the foreclosure
crisis diminishes and the excess housing supply is soaked up.
The financial blog Calculated Risk estimated the excess housing supply
this week using 2010 Census data, which it compared to 1990 and 2000.
The blog concluded that the excess supply in April 2010 was about 1.8
million units but probably several hundred thousand fewer now.
The market signaled further trouble on Friday when the April index of
pending deals was released by the National Association of Realtors.
Analysts had predicted the index, which anticipates sales that will be
completed in the next two months, would be down 1 percent from March.
Instead, it plunged 11.6 percent.
Many of those in the business of building and selling houses believe
the current disaffection with real estate will pass. After every giddy
boom comes the hangover, they acknowledge, but that deep-rooted desire
for a castle of one’s own quickly reasserts itself. There’s no
question that people are reluctant to own, said Douglas C. Yearley Jr.,
chief executive of Toll Brothers, the builder of high-end homes.
“They’re renting and they’re happy renting because they’re scared.”
Yet those fears will fade, he predicted.
“Most people still want the big house with the big lot in the desirable
school district in the suburbs. No one ever renovated the kitchen or
redid a room for the kids in a rental,” Mr. Yearley said. “I think — I
hope — we’ll be O.K.”
Trulia and another real estate site, RealtyTrac, commissioned Harris
Interactive to take a poll last November about when people thought the
market would recover. A third of the respondents chose 2014 or later.
But in a new poll, released this month, the percentage giving that
answer rose to 54 percent.
The sharp decline in prices since 2006 has meant a lost decade for many
owners. But what may prove even more discouraging to potential buyers
is academic research showing that the financial rewards of ownership
were uncertain even before the crash. In a recent paper, a senior
economist at the Federal Reserve Bank of Kansas City found that the
notion that homeownership builds more wealth than investing was true
only about half the time.
“For many households in many years, renting and investing the saved
cash flow has built more wealth than homeownership,” the economist,
Jordan Rappaport, concluded.
Economics affects potential owners in other ways. A house is a
long-term commitment that many are loath to make in uncertain times
like these.
“What I’m hearing from people is that they don’t want to be tied to a
particular geography, which inclines them to renting,” said Mr. Flint
of Trulia.
San Francisco is one of the country’s most expensive cities, so renting
has a natural appeal here. But the Associated Estates Realty
Corporation, which owns 13,000 apartments in Georgia, Indiana, Michigan
and other Midwest and Southeast states, also is seeing more people
deciding to rent.
“We have more of what we call ‘renters by choice’ than I’ve seen in the
40 years I’ve been in the apartment business,” said Jeffrey I.
Friedman, chief executive of Associated Estates.
For decades, the company has asked former tenants why they were moving
out. During the housing boom, as many as a quarter of those moving on
said they were buying a house. In 2009, the percentage of new owners
fell in the first quarter to 13.7 percent, the lowest ever. Last
year,
as the economy improved, the number rebounded. This year, it fell back
again, to 14 percent.
Builders clearly believe that the future includes many more renters. So
far this year, construction of multiunit buildings is up 21 percent
compared with 2010, while single family-homes are down 22 percent.
Sales of new single-family homes are lower than at any time since the
data was first kept in 1963.
Susan Lindsey, a San Diego software programmer, was once eagerly
waiting for the housing market to crash. She said she would have no
guilt about swooping in on some foreclosed owner who had bought a place
he could not afford. With prices now down by a third, however,
she is
content to stay in her $2,500-a-month rented house. She prefers to
invest in gold, which she has been buying since 2003.
“I could afford a median-priced house, no problem,” said Ms. Lindsey,
48, as she headed off for a holiday weekend in Las Vegas. “But I would
be paying more to live in a place I like less.”
From
our professional planning experience, exactly what happened!!!
The Housing Boom and Bust: A
political crusade gone wrong.
National Review
By Thomas Sowell
April 29, 2009, 0:00 a.m.
In the spirit of bipartisanship, my newest book — The Housing Boom and
Bust — shows how both Democrats and Republicans ruined both the housing
markets and the financial markets.
Like so many disasters, the current economic crisis grew out of
policies based on good intentions and mushy thinking.
For far too long, too many people have regarded homeownership as “a
good thing.” It is certainly true that homeownership has its benefits.
But, like everything else, it also has its costs and its risks.
Weighing such trade-offs is something that individuals and families can
do for themselves. It is when such decisions are made by politicians —
of whatever party — that trade-offs tend to vanish into thin air,
replaced by pursuit of a “good thing.”
Beginning in the 1990s, getting a higher proportion of the American
population to become homeowners became the political holy grail of
government housing policies. Increasing homeownership among minorities
and other people of low or moderate incomes was also part of this
political crusade.
Because banks are regulated by various agencies of the federal
government, it was easy to pressure them to lend to people that they
would not otherwise lend to — namely, people with lower incomes, poorer
credit ratings, and little or no money for a conventional down payment
of 20 percent of the price of a house.
Such people were referred to politically as “the underserved
population” — as if politicians know who should and who shouldn’t get
mortgages better than people who have spent their careers making
mortgage-lending decisions.
But, in politics, power trumps knowledge. Banks whose mortgage-loan
approval rates for “the underserved population” did not match the
prevailing preconceptions found that they could not get government
regulatory agencies to approve their business decisions on opening new
branches or enlarging their financial operations, the way competing
banks did when those competing banks met the lending quotas set by the
government.
If meeting those quotas required lowering the standards for granting
mortgage loans, that was often considered a lesser evil than having
government regulators stalling or vetoing the business decisions
necessary for competing in the financial markets.
While Democrats spearheaded this crusade, Republicans joined in as
well. The George W. Bush administration, for example, urged Congress to
pass the American Dream Downpayment Initiative, which subsidized the
down payments of prospective home buyers whose incomes were below a
certain level.
Who could be against “the American dream” of homeownership or so
mean-spirited as to ask how much it would cost the taxpayers or what
risks it would create for the whole financial system? Certainly not
most Democrats or Republicans in Congress or the White House.
The media were also part of this crusade for more homeownership, more
widely available. If some segments of the population did not own homes
as much as others, that just showed that there was something wrong with
the mortgage-lending process, as far as editorial-office philosophers
were concerned.
As the St. Louis Post-Dispatch put it, “Lending institutions are being
far more conservative than they have to be in determining the
creditworthiness of minorities.”
Later, disastrous default rates and foreclosure rates among “the
underserved population” who had been given mortgage loans to satisfy
government quotas suggest that the old-fashioned mortgage
qualifications that had been pooh-poohed in editorial offices had more
basis than the crusades of politicians and the press.
There are many other complications covered in The Housing Boom and
Bust. But behind all the complexities was a very simple fact: Monthly
mortgage payments by millions of home buyers were what provided the
money for the banks, the financial institutions that bought mortgages
from the banks, and the Wall Street firms that created sophisticated
securities based on those mortgages.
Riskier mortgage-lending practices, imposed by government, were what
set the stage for many mortgage payments to stop and thus for the
financial disasters that followed. Political rhetoric, echoed in the
media, seeks to obscure that painfully plain fact.
— Thomas Sowell is a senior fellow at the Hoover Institution.
© 2009 CREATORS SYNDICATE, INC.