A Recovery From Something That Was Just Absurd
The Albuquerque Journal reports from New Mexico. “Real estate development, once one of the economic engines in the Albuquerque metro area, faces tough years ahead as the jobless recovery from the Great Recesssion plays out, according to industry insiders. ‘We should all be cross-training,” said Bob Murphy, a veteran developer who has since moved on to become executive director of the nonprofit Economic Forum. ‘Some of us in this room will not be in this business in five years because there’s no demand.’”
“The metro’s housing market peaked in 2005, when a record 12,796 existing single-family homes were sold and permits were issued for a record 8,818 new homes. The median sales price for a single-family home shot up 34 percent from 2004 to 2007. Foreclosures were rare. The housing market is a much different ball game today. Home building is down 86 percent from the construction peak in 2005. The median sales price has dropped about 16 percent from the peak value in 2007. One out of every 173 homes in the metro is in some stage of the foreclosure process.”
“‘People say we’re in a housing recession,’ said local developer Paul Silverman. ‘We’re in a housing recovery from something that was just absurd. Prices need to drop another 10 percent to get back to the long-term trend line.’”
“Housing, not commercial real estate, will be the better bellwether of turnaround in the local economy, said Silverman. ‘Residential (market) got us into this mess,” he said, referring to the mortgage meltdown that began in mid 2007. “Residential has led the way out of every recession in the past.’”
“Texas is getting its fair share of deals, while Arizona and Colorado are improving from economic doldrums. New Mexico’s ratio is getting worse. ‘Are there great success stories out there? Frankly no,’ Murphy said. ‘Texas just kicks our ass.’”
The Dallas Morning News in Texas. “Don’t expect a turnaround in the housing market this year. The foreclosure glut and the employment market have to get sorted out first. And potential buyers are still on the fence. ‘Consumer confidence is pretty well shot,’ said Jed Smith, a managing director of research at the National Association of Realtors.”
“While home sales are finally stabilizing at a lower level, he said, there’s no bottom yet in prices in all but a few markets. ‘Unfortunately, the banks have unreasonably stringent lending standards,’ he said at a meeting Friday of the National Association of Real Estate Editors. ‘Loans just aren’t getting made. The banks aren’t making loans to creditworthy customers.’”
“Sales of distressed homes now account for about 35 percent of pre-owned home sales nationwide. And there’s an even bigger inventory of yet-to-be-foreclosed, troubled homes out there, said Mark Dotzour, chief economist with the Real Estate Center at Texas A&M University. ‘There are a whole bunch of properties that haven’t been foreclosed on,’ he said. ‘Why do people get to live in their house for 24 months without making a payment? I don’t think the foreclosure thing is going to be over yet, because the banks don’t have the capital to finish the foreclosure process.’”
The Express News in Texas. “About 7 million U.S. jobs have been lost during the downturn, probably permanently, said Jed Smith, managing director of quantitative research for the National Association of Realtors. ‘The good news is we’re in a recovery,’ Smith said. ‘I have to tell you that because otherwise you wouldn’t know.’”
“Of course, since there’s really no such thing as a ‘national’ real estate market, looking at various U.S. housing numbers and reports often does nothing more than cause potential homebuyers in healthier markets to panic, said Mark Dotzour, chief economist with the Real Estate Center at Texas A&M University. ‘They’re not helping people make good decisions,’ Dotzour said. ‘It’s kind of a hindrance.’”
From MyCulture Houston in Texas. “The housing market may have bottomed out, but there’s a long way to go before housing is truly healthy again, according to economists at National Association of Real Estate Editors conference in San Antonio. The nation is not generating enough new jobs to pull the housing market out of the doldrums, said Ted Jones, chief economist for Stewart Title.”
“The lack of new jobs combined with the large inventory of homes for sale - there’s a nine-month supply of homes on the market – makes it likely that home prices will slip on a national basis. ‘I guarantee you that prices will continue to go down,’ Jones said.”
“An estimated 40,000 people have been killed since the drug wars started in Mexico about four years ago. It can make for a very tough real estate market. It’s hard to convince an American to buy a house in Mexico when they just heard on the news that stray bullets flew over the border and hit the El Paso City Hall.”
“The market for selling homes and condos in Mexico is off some 80 to 90 percent from its peak a few years ago, said Christopher Hill, executive director of the Mexico Real Estate Coalition. ‘We’re struggling,’ Hill told journalists. ‘It’s bad and it’s not getting much better.’”
The Houston Chronicle in Texas. “Demand for Houston-area rental properties climbed in May as those who lacked the confidence — or the ability - to buy homes rented them instead. The increase in rentals came at the expense of home sales, which fell for the fourth straight month in May. Housing inventory is being affected. It would take eight months to sell all the single-family homes on the market based on sales activity over the past year, according to the report. This area hasn’t seen such high inventory levels since 1996.”
“Analysts say the 2010 homebuyer tax credit has been skewing year-over-year sales data. ‘We’re still measuring apples to oranges,’ said Jim Gaines, an economist with the Real Estate Center at Texas A&M University. ‘We’re comparing this May to May a year ago when we had the tax credit.’”
“In general, prices have remained stable, and real estate agents are selling about as many homes as they did in the early 2000s before the housing boom. But real estate agent Ken Smith said the market won’t improve until sellers become more realistic about prices. The average number of days it took to sell a property last month also increased from the previous year, going from 71 days to 86 days.”
“Smith said high asking prices are to blame ‘In order for sales volume to pick up, buyers and sellers must agree on the correct price. The gap between what buyers and sellers think has been moving up for the past three months.’”
The Times-Picayune in Louisiana. “The New Orleans area must add jobs to slice through a challenging real estate market, speakers at the UNO Economic Outlook and Real Estate Forecast Seminar said Friday. Ivan Miestchovich, director of the Institute for Economic Development and Real Estate Research at University of New Orleans, said that the New Orleans area remains in relatively good shape compared with the rest of the country, but an uncertain economic climate continues to plague the region. Consumers have low confidence, are squeezed by rising food and gasoline prices, and are concerned about jobs and the housing market.”
“‘A lot of people are still trying to figure out, have we really seen any signs of a true recovery?’ he said.”
“Speaker after speaker at the half-day event said that more jobs are needed to improve the real estate market and sop up available housing and office space. ‘The conversation is really about jobs,’ said Rick Haase, president of Latter & Blum Inc.”
“Foreclosures in Louisiana and the New Orleans area have been increasing, but still remain low: Louisiana ranks 41st in terms of the number of foreclosures nationwide. Slidell is the worst foreclosure market in the state. But when a foreclosed home is sold, Haase said, it generally sells at a 35 percent to 41 percent discount, and when a house sells for such a deep discount, it’s hard for others nearby to command a reasonable price.”
“Haase said that there’s still a tremendous gap in the number of properties available for sale and the number of homes that are actually sold, although inventory is starting to fall. A four-to-five month supply of homes is generally considered a healthy level of sale inventory in a market, but right now, there’s a 10.9-month supply in Orleans Parish, an 11.7-month supply in Jefferson, and 12.9-month supply in St. Tammany. ‘This is still and over-supply, under-demand market,’ he said.
“The lending climate has also put a damper on the market. While ultra-low interest rates have helped people refinance or get into homes, anyone who recently refinanced is unlikely to shop for a new home anytime soon unless they have to relocate, because chances are, they’ll have to pay a much higher interest rate at their new home.”
“Meanwhile, lenders now increasingly require a down payment of 20 percent on a home, which limits the pool of buyers in Louisiana, where 61 percent of home loans were made with less than a 20 percent down payment. Any overhaul of the Federal Housing Authority, which allows smaller down payments and was involved in 64 percent of the nation’s home loans last year, could also affect the availability of financing for buyers.”
From Tulsa World in Oklahoma. “The effects of the mortgage crisis were evident in figures released last month by the U.S. Census Bureau, with data showing Oklahoma homeownership rates declining to levels not seen in 50 years. The last time the homeownership rate was this low in Oklahoma was 1967. The mortgage crisis especially has been bad for business at agencies that offer homeownership programs for those with low and moderate incomes.”
“‘We have properties out there right now for sale,’ said Carl Holmes, a real estate specialist with the Tulsa Housing Authority. ‘The trouble, for the past three years it has been, the lending requirements have really pushed out a lot of the affordable homebuyers that we are trying to get.’”
The Ada Evening News in Oklahoma. “Despite a downward trend in the rest of the United States, local bankers and Realtors say Ada’s housing market is strong. Kay Kelly of Paradigm Realty and president of Ada Board of Realtors said Ada’s housing market has shown a positive trend since 2009. Kelly said she thinks negative publicity keeps Ada’s market from being what it could be.”
“‘I believe it could be way better,’ she said. ‘There’s just so much negative publicity about the housing market that doesn’t apply to Ada. ‘People are afraid to buy because they hear how bad the market is.’”
“George Huckeby of Huckeby and Associates Realtors said he believes Ada’s market is strong. ‘People are starting to look and buy again and interest rates are still super low,’ he said. ‘We’ve got some motivated sellers. Buyers who are sitting on the fence need to get off the fence and take advantage of that.’”
The Oklahoman. “Betty Shaw, of SpiritBank in Oklahoma City, is a big-city banker who lives in a not-so-big-city, and a mortgage specialist who doesn’t make mortgage loans. She has a soft spot in her heart for fictional George Bailey, his Bailey Bros. Building & Loan and his ‘Wonderful Life’ in Bedford Falls — and her own roots are in the very real and tragic savings-and-loan business.”
“Here’s an edited transcript of a recent conversation with The Oklahoman. Q: What makes your work important? To housing? To people?A: As corny as it may sound, there truly is a good feeling to know that a part of what you do every day is helping someone enjoy and experience the pride of homeownership. But with that being said, not necessarily is homeownership for everyone. And it’s our job as a mortgage banker to make the distinction between the two and ensure we are putting people into the right home loan product for the right reason.”
“Q: Quick: Compare and contrast mortgage lending and housing in Oklahoma with the rest of the country. A: When traveling outside of Oklahoma I always pick up real estate market brochures to review home prices. Oklahomans are truly fortunate to have the home prices that we have in our state. The square footage we can purchase for our dollars versus other states is amazing.”
“Also while attending meetings and hearing economists report on foreclosures, delinquencies and sales numbers from other states, it makes you proud once again to live in Oklahoma.”
