Tuesday, December 23, 2008

Existing home sales, prices drop at record pace; info via Yahoo

WASHINGTON (Reuters) – The pace of existing home sales plunged a record 8.6 percent in November and prices fell a record amount as layoffs and a stock market crash worsened an already grim housing market, a real estate trade group said Tuesday.

The median home price fell 13.2 percent on an annual basis, down for a fifth straight month to $181,300. It was the largest drop since the current data series began in 1968 and probably the largest since the Great Depression, Lawrence Yun, the chief economist for the National Association of Realtors, told reporters.

The pace of sales fell to a 4.49-million-unit annual rate.

Economists polled by Reuters were expecting home resales to set a 4.90-million pace. October's figure was revised downwards to 4.91 million, from 4.98 million.

"The quickly deteriorating conditions in the job market, stock market and consumer confidence in October and November have knocked down home sales to another level," Yun said.

"It is, therefore, imperative to provide incentives for homebuyers to get back into the market, Yun said.

Past experience shows when home resales slid after the 1987 and 2001 stock market crashes, they then rebounded after the third month to what had been the trend, he said.

"We hope the home sales impact from the stock market crash turns out to be short-lived, as was the case in 1987 and 2001," Yun said.

The inventory of existing homes for sales rose 0.1 percent to 4.203 million from 4.198 million in October. That translates into 11.2 months of supply, matching the record peak set in April, Yun said.

The housing malaise, which triggered a global financial crisis, has infected other sectors of the broader economy and sent unemployment rates higher.

Analysts says stability in the housing sector is key to any recovery in the U.S. economy, which has been in a recession since late last year.

Thursday, December 18, 2008

Help may be on the way

The Four Point Plan

The most recent economic stimulus bill, the Emergency Economic Stabilization Act, was a good first step towards stabilizing our nation’s economy. Unfortunately, a number of the Act’s provisions have not proven to be as useful at stabilizing the nation’s housing markets as was first thought.

Congress may consider a second economic stimulus bill this month. If they do, there are a number of changes that could help to provide more stability to the nation’s real estate markets which most agree is a necessary step towards recovery.

The National Association of Realtors (NAR) has urged Congress to include the following provisions in any future legislation:

1. Make the $7500 tax credit available to all purchasers and eliminate the repayment requirement. The credit’s limited availability and required repayment terms have severely limited the credit’s appeal to potential homebuyers. As a result, the credit has not been widely used or proven effective at stimulating sales.

2. Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent. New rules for 2009 would significantly reduce the FHA, Fannie Mae and Freddie Mac loan limit from their 2008 levels. Now is not the time to limit the availability of affordable mortgages.

3. Get the Emergency Treasury bank relief program back on track by targeting more funds to mortgage relief efforts and increasing efforts to mitigate foreclosures. Don't just give the banks unrestricted cash. Make the program work to improve mortgage and housing markets as it was originally intended.

4. Permanently bar banks and banking conglomerates from engaging in real estate brokerage and management. The banks have proven they have enough to do to simply properly manage their current lines of business. Do we really want them to manage the home buying process? Imagine what could have been the situation now if they already had the added ability to engage in real estate sales.