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Bernard Madoff, convicted of running an $65 billion Ponzi scheme, was sentenced to 150 years in jail. What’s your take on his punishment?
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Expect housing starts to hit bottom by early next year. They'll total just under 1 million this year and slightly higher in 2009. But the housing industry's upturn will be long and slow. Strict lending rules requiring a down payment of at least 5%, as well as more foreclosures this year, will be big drags on the recovery.
Still-plummeting housing starts are setting the stage for a housing rebirth by helping to trim the number of homes for sale. As those homes are purchased, with the help of more realistic selling prices -- finally -- the inventory of unsold homes in many areas will shrink, allowing building to perk up.
But full health is about three years away. It will take until 2011, when we expect starts as well as sales of new and existing homes to near the numbers of the late 1990s. Mark Vitner, senior economist with Wachovia Corp., says that "there are a lot of problems." Potential buyers at the lower end of the market can't qualify for a mortgage because of tighter lending standards. At the same time, buyers of high-priced homes are being put off by unusually high mortgage rates. In between, things are improving.
Meanwhile, home prices will continue to fall in many areas into 2009. Hurting the most: Detroit, Cleveland and other Midwest cities heavily dependent on the beleaguered auto industry for employment. Also, New York City and nearby suburbs in New Jersey and Connecticut, hit by a large wave of layoffs in financial services industries.
The rate of decline is slowing in once superhot cities such as Las Vegas and San Diego, where prices have fallen about 20% over the past year or so. Ditto for Miami, Phoenix and Los Angeles.
Among cities with climbing prices: Houston and Austin, Texas; Salt Lake City; Huntsville, Ala.; Knoxville, Tenn.; Raleigh, N.C.; and Oklahoma City. They can expect more single-digit increases this year.
Home builders aren't finished with additional markdowns -- up to $100,000 on homes once priced at $300,000, for example. And they're still sealing deals by adding flat panel TVs and other amenities. Even with such deals, Mario Ricchio, housing analyst with Zacks Investment Research, says, "We still have too much inventory. Builders need to go on vacation for two years."
But more and more buyers won't wait much longer to try and catch the absolute bottom price. With mortgage rates at low levels -- under 6% for a 30-year fixed -- qualified buyers are pulling the trigger.
A new housing law will also help the recovery by giving local governments $4 billion to buy foreclosed properties plus providing more mortgage revenue bonds to refinance subprime loans. Don't expect too much, though. Thomas Lawler of Lawler Economic and Housing Consulting, says, "Having a government solution to provide liquidity is a good thing, but it's not a panacea because a huge number of loans shouldn't have been made."
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POSTED BY: TKsk53 (April 24, 2008 01:45 PM)
The media has a big part to do with the down turn in the housing market too
Look what they did to the rice market
They said there was a shortage and the growers say that is not true
Let's cool it a little - ABC -NBC - CBS
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