Coming back after the fall
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After the great fall – the housing market is healing
ABJ’s editor in chief SARA KOPAMEES tries to find out what it takes to re-build a safe haven in the real estate industry.
Last year was a tough one to be in the real estate business. In fact, it was a difficult year for anyone planning to buy, or invest in property. Historically, financial planners have said that real estate is the safest investment. However, 2008 showed the world that even the strongest industries fall.
The housing market was the catalyst of the recession that began back in December 2007. The consequent aftershocks that resulted, in real estate and beyond, were drastic and devastating. The world has not seen an economic crash like the one we’re currently coming back from since the Great Depression.
The bad news
Reuters reported that U.S. mortgage foreclosures were still near July’s record high in August, even though significant efforts have been made to keep residents in their homes. According to Reuters, RealtyTrac, a California online real estate company, announced that filings including default notices, bank repossessions and auctions were up 18 percent from this time last August.
In the same report, it was revealed that one out of every 357 U.S. mortgaged households got a foreclosure filing in August. RealtyTrac expects, unfortunately, for the foreclosures trend to last into 2010 and 2011. RealtyTrac told Reuters that it estimates “3.4 million households will get a filing this year” and “if the forecast is realized, it will be more than four times the filings in 2005”. Numbers like this show that the housing market is not on an even keel, yet.
To make matters worse, homeowners that would not normally default are losing their jobs: the jobless rate is currently 9.7 percent, according to the US Labor Department – these people are filing for bankruptcy or being forced out of their homes. In the same press release from the Labor Department, former Federal Reserve Board economist Morris A. Davis was quoted as saying that the foreclosure numbers “are largely unemployment related…as long as 15 million Americans are unemployed, record foreclosures will continue”. According to Bloomberg journalists, Nevada leads with the highest foreclosure rate in August, with Florida and then California following.
Nevertheless, Obama’s administration has been pushing through with its housing rescue plan, which includes a tax credit for new homebuyers.
Efforts by administration are starting to materialize
Since it was introduced earlier this year, an $8,000 first-time homebuyer tax credit has drawn 1.2 million new buyers into the housing market. Many of these buyers couldn’t have purchased a home without this credit, according to The National Association of Realtors (NAR).
Although the window to apply for the US tax credit expires in November, Congress is being urged to act in order to keep the credit from expiring. NAR has called on its 1.2 million members to take up the fight to extend credit, because according to the organization, the credit is working. In a recent press release from the association, president Charles McMillan said that tax credits for first-time buyers are taking effect and helping the industry stabilize. On NAR’s website, McMillan is quoted as saying: “In addition to first-time buyers, we’re also seeing increased activity by repeat buyers. While many entry-level buyers are focused on the discounted prices of distressed homes, they’re also freeing some existing owners to sell and make a move”.
The credit was initialized so that buyer demand would rise and that effect is just starting to show in the industry. In addition to the tax credit, the Federal Reserve has been trying to keep rates low – it has purchased as much as $1.25 trillion in mortgage-backed securities to free up funding. These efforts have showed how committed the U.S. government is to helping the housing market turn around. President Barack Obama pledged to spend at least $275 billion to help keep millions of Americans in their homes. The money is intended for servicers who administer loans to help Americans refinance mortgages and modify terms for delinquent borrowers. However, things are getting more stringent a sign of the times for the industry on a whole. Bad loans are out; stability of the market is in.
The good news… finally
Despite the great fall of housing, signs point to life in the market. A direct result of all forces involved, major organizations have reported that things are going to get better.
Steady and high unemployment rates have cast a dark cloud over the housing market, but homebuilders in the U.S. are starting to act more confidently, according to a report released recently from The National Association of Home Builders (NAHB). Builder confidence, according to NAHB, has reached the highest it’s been since May 2008. The latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released on September 16th showed two out of three component indexes recorded gains this month. HMI tables can be accessed online at www.nahb.org/hmi.
It looks like things will get better in time. Economists have said that the healing housing market will underwrite a broader economic recovery. NAR’s senior economist Lawrence Yun echoes the positive speculation in all recent reports from the association. Yun spoke in a recent podcast about the upturn in the economy and how it will ultimately bode well for the housing market, and vice versa. He said that the last area of the economy to come back will be employment, and thus the housing market will be stronger than ever once people have jobs again. “Things are much better … one of the reasons we’re seeing an end to an economic recession is because the housing market is coming back very strongly we have had six straight months of rising sales activity on existing homes, new homes are following very similar patterns, the building activity housing starters has begun to consistently turn positive home prices they are always the last to turn around,” Yun explained.
Existing home sales show promise
Reports from Washington in early September cited that contract activity was at a record high for pending home sales – a pattern that hasn’t been seen since 2001 according to NAR. As far back as June the industry saw several rises in existing home sales. Existing home sales include single-family homes, townhomes, condominiums and co-ops.
NAR reported that June sales rose 3.6 percent, which pointed to three continual months of gain that have not been seen for five years. Reports from NAR quoted Yun as saying “the housing market is healing after four years of recession”. There is a consensus among analysts that the supply of homes for resale and the slowed pace of falling house prices are a clear indicator that the housing market is stabilizing.
Prices are coming back up, slowly but surely
The S&P/Case-Shiller index, according to Bloomberg, showed home prices in several U.S. areas dropping 18.1 percent this past spring from a year previous. Recent reports showed that home prices have seen the smallest annual drop in 10 months. And so, the “free fall” is finally slowing. NAHB indicated in a recent report that median prices of new homes have gone down by 11.5 percent since July of last year.
On the whole, reports on existing and new home sales couldn’t be more positive. “The housing market has decisively turned for the better. A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales,” Yun commented in a podcast.
Things are also improving on the homebuilding permitting side. Permits for future building reached a nine month high at the end of the summer, which coincided with a lower number of people filing new claims for jobless benefits, according to recent industry reports. Reuters reported numbers from the Labor Department citing a decrease in new claims for jobless coverage. Claims fell by 12,000 to 545,000 – the lowest level since July.
Overall, economists and home associations alike are signaling that the market is coming back – defying expectations from earlier in the year. With help from the powers that be, the U.S. housing market is poised to be strong and healthy. If not right away in 2010, then in 2011 when many analysts say the economy will stabilize.
What does is all mean for U.S. residents? It’s simple. The improved housing market ultimately signals a wider economic comeback, and with any luck, a rejuvenation of the American dream.
The National Association of Home Builders
The National Association of Home Builders (NAHB) is a trade association that helps promote the policies that make housing a national priority. Since 1942, NAHB has been serving its members, the housing industry, and the public.
Mission
NAHB exists to represent the building industry by serving its members and affiliated state and local builders associations. To achieve an overall mission of member satisfaction, NAHB concentrates on the following goals:
* Balanced national legislative, regulatory, and judicial public policy.
* Public appreciation for the importance of housing and those who provide it.
* The premier resource for industry information, education, research, and technical expertise.
* Improved business performance of its members and affiliates.
* Effective management of staff, financial, and physical resources to satisfy the association’s needs.
Vision
NAHB strives to create an environment in which:
* All Americans have access to the housing of their choice and the opportunity to realize the American dream of homeownership.
* Builders have the freedom to operate as entrepreneurs in an open and competitive environment.
* Housing and those who provide it are recognized as the strength of the nation.
The National Association of Realtors
The NATIONAL ASSOCIATION OF REALTORS® was founded as the National Association of Real Estate Exchanges on May 12, 1908 at the YMCA Auditorium in Chicago, IL. With 120 founding members, 19 Boards, and one State Association, the National Association of Real Estate Exchanges' objective was "to unite the real estate men of America for the purpose of effectively exerting a combined influence upon matters affecting real estate interests."
The Association's founding boards included the Baltimore, MD; Bellingham, WA; Chicago, IL; Cincinnati, OH; Cleveland, OH; Detroit, MI; Duluth, MN; Gary, IN; Kansas City, MO; Los Angeles, CA; Milwaukee, WI; Minneapolis, MN; Omaha, NE; Philadelphia, PA; St. Louis, MO; St. Paul, MN; Seattle, WA; Sioux City, IA; and Tacoma, WA, boards and the California State Realty Federation (now the California Association of REALTORS®).
The Code of Ethics was adopted in 1913 with the Golden Rule as its theme.
In 1916, the National Association of Real Estate Exchange's name was changed to The National Association of Real Estate Boards (NAREB). That same year, the term “REALTOR,” identifying real estate professionals who are members of the National Association and subscribers to its strict Code of Ethics, was devised by Charles N. Chadbourn, a past president of the Minneapolis Real Estate Board.
The collective marks REALTORS® and REALTOR® were registered with the United States Patent and Trademark Office on Sept. 13, 1949, and Jan. 10, 1950, respectively, under Registration Numbers 515,200 and 519,789. Since then, the association has maintained a vigilant defense of the trademarks, prevailing in numerous cases. Most recently, in Zimmerman v. NAR (2004), the Trademark Trial and Appeal Board denied a request to cancel the trademarks.
In 1972, the name of the National Association of Real Estate Boards was changed to the National Association of REALTORS® (NAR). The block "R" logo was adopted by the Association in 1973.
In 1989, the Association adopted The Voice for Real Estate as its theme and as part of its official logo. Along with this theme, the Association encouraged more members to include the REALTOR® emblem on their business cards and stationery.
In 1998, a national Public Awareness Campaign was launched to educate consumers about the vital role REALTORS® play in the real estate transaction.
The Association became the largest trade association in the United States in the early 1970s, with over 400,000 members. Today, the National Association of REALTORS® has over 1.2 million members, 54 State Associations (including Guam, Puerto Rico, and the Virgin Islands) and more than 1,400 local Associations. For more information, visit www.realtor.org.
ABJ’s editor in chief SARA KOPAMEES tries to find out what it takes to re-build a safe haven in the real estate industry.
Last year was a tough one to be in the real estate business. In fact, it was a difficult year for anyone planning to buy, or invest in property. Historically, financial planners have said that real estate is the safest investment. However, 2008 showed the world that even the strongest industries fall.
The housing market was the catalyst of the recession that began back in December 2007. The consequent aftershocks that resulted, in real estate and beyond, were drastic and devastating. The world has not seen an economic crash like the one we’re currently coming back from since the Great Depression.
The bad news
Reuters reported that U.S. mortgage foreclosures were still near July’s record high in August, even though significant efforts have been made to keep residents in their homes. According to Reuters, RealtyTrac, a California online real estate company, announced that filings including default notices, bank repossessions and auctions were up 18 percent from this time last August.
In the same report, it was revealed that one out of every 357 U.S. mortgaged households got a foreclosure filing in August. RealtyTrac expects, unfortunately, for the foreclosures trend to last into 2010 and 2011. RealtyTrac told Reuters that it estimates “3.4 million households will get a filing this year” and “if the forecast is realized, it will be more than four times the filings in 2005”. Numbers like this show that the housing market is not on an even keel, yet.
To make matters worse, homeowners that would not normally default are losing their jobs: the jobless rate is currently 9.7 percent, according to the US Labor Department – these people are filing for bankruptcy or being forced out of their homes. In the same press release from the Labor Department, former Federal Reserve Board economist Morris A. Davis was quoted as saying that the foreclosure numbers “are largely unemployment related…as long as 15 million Americans are unemployed, record foreclosures will continue”. According to Bloomberg journalists, Nevada leads with the highest foreclosure rate in August, with Florida and then California following.
Nevertheless, Obama’s administration has been pushing through with its housing rescue plan, which includes a tax credit for new homebuyers.
Efforts by administration are starting to materialize
Since it was introduced earlier this year, an $8,000 first-time homebuyer tax credit has drawn 1.2 million new buyers into the housing market. Many of these buyers couldn’t have purchased a home without this credit, according to The National Association of Realtors (NAR).
Although the window to apply for the US tax credit expires in November, Congress is being urged to act in order to keep the credit from expiring. NAR has called on its 1.2 million members to take up the fight to extend credit, because according to the organization, the credit is working. In a recent press release from the association, president Charles McMillan said that tax credits for first-time buyers are taking effect and helping the industry stabilize. On NAR’s website, McMillan is quoted as saying: “In addition to first-time buyers, we’re also seeing increased activity by repeat buyers. While many entry-level buyers are focused on the discounted prices of distressed homes, they’re also freeing some existing owners to sell and make a move”.
The credit was initialized so that buyer demand would rise and that effect is just starting to show in the industry. In addition to the tax credit, the Federal Reserve has been trying to keep rates low – it has purchased as much as $1.25 trillion in mortgage-backed securities to free up funding. These efforts have showed how committed the U.S. government is to helping the housing market turn around. President Barack Obama pledged to spend at least $275 billion to help keep millions of Americans in their homes. The money is intended for servicers who administer loans to help Americans refinance mortgages and modify terms for delinquent borrowers. However, things are getting more stringent a sign of the times for the industry on a whole. Bad loans are out; stability of the market is in.
The good news… finally
Despite the great fall of housing, signs point to life in the market. A direct result of all forces involved, major organizations have reported that things are going to get better.
Steady and high unemployment rates have cast a dark cloud over the housing market, but homebuilders in the U.S. are starting to act more confidently, according to a report released recently from The National Association of Home Builders (NAHB). Builder confidence, according to NAHB, has reached the highest it’s been since May 2008. The latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released on September 16th showed two out of three component indexes recorded gains this month. HMI tables can be accessed online at www.nahb.org/hmi.
It looks like things will get better in time. Economists have said that the healing housing market will underwrite a broader economic recovery. NAR’s senior economist Lawrence Yun echoes the positive speculation in all recent reports from the association. Yun spoke in a recent podcast about the upturn in the economy and how it will ultimately bode well for the housing market, and vice versa. He said that the last area of the economy to come back will be employment, and thus the housing market will be stronger than ever once people have jobs again. “Things are much better … one of the reasons we’re seeing an end to an economic recession is because the housing market is coming back very strongly we have had six straight months of rising sales activity on existing homes, new homes are following very similar patterns, the building activity housing starters has begun to consistently turn positive home prices they are always the last to turn around,” Yun explained.
Existing home sales show promise
Reports from Washington in early September cited that contract activity was at a record high for pending home sales – a pattern that hasn’t been seen since 2001 according to NAR. As far back as June the industry saw several rises in existing home sales. Existing home sales include single-family homes, townhomes, condominiums and co-ops.
NAR reported that June sales rose 3.6 percent, which pointed to three continual months of gain that have not been seen for five years. Reports from NAR quoted Yun as saying “the housing market is healing after four years of recession”. There is a consensus among analysts that the supply of homes for resale and the slowed pace of falling house prices are a clear indicator that the housing market is stabilizing.
Prices are coming back up, slowly but surely
The S&P/Case-Shiller index, according to Bloomberg, showed home prices in several U.S. areas dropping 18.1 percent this past spring from a year previous. Recent reports showed that home prices have seen the smallest annual drop in 10 months. And so, the “free fall” is finally slowing. NAHB indicated in a recent report that median prices of new homes have gone down by 11.5 percent since July of last year.
On the whole, reports on existing and new home sales couldn’t be more positive. “The housing market has decisively turned for the better. A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales,” Yun commented in a podcast.
Things are also improving on the homebuilding permitting side. Permits for future building reached a nine month high at the end of the summer, which coincided with a lower number of people filing new claims for jobless benefits, according to recent industry reports. Reuters reported numbers from the Labor Department citing a decrease in new claims for jobless coverage. Claims fell by 12,000 to 545,000 – the lowest level since July.
Overall, economists and home associations alike are signaling that the market is coming back – defying expectations from earlier in the year. With help from the powers that be, the U.S. housing market is poised to be strong and healthy. If not right away in 2010, then in 2011 when many analysts say the economy will stabilize.
What does is all mean for U.S. residents? It’s simple. The improved housing market ultimately signals a wider economic comeback, and with any luck, a rejuvenation of the American dream.
The National Association of Home Builders
The National Association of Home Builders (NAHB) is a trade association that helps promote the policies that make housing a national priority. Since 1942, NAHB has been serving its members, the housing industry, and the public.
Mission
NAHB exists to represent the building industry by serving its members and affiliated state and local builders associations. To achieve an overall mission of member satisfaction, NAHB concentrates on the following goals:
* Balanced national legislative, regulatory, and judicial public policy.
* Public appreciation for the importance of housing and those who provide it.
* The premier resource for industry information, education, research, and technical expertise.
* Improved business performance of its members and affiliates.
* Effective management of staff, financial, and physical resources to satisfy the association’s needs.
Vision
NAHB strives to create an environment in which:
* All Americans have access to the housing of their choice and the opportunity to realize the American dream of homeownership.
* Builders have the freedom to operate as entrepreneurs in an open and competitive environment.
* Housing and those who provide it are recognized as the strength of the nation.
The National Association of Realtors
The NATIONAL ASSOCIATION OF REALTORS® was founded as the National Association of Real Estate Exchanges on May 12, 1908 at the YMCA Auditorium in Chicago, IL. With 120 founding members, 19 Boards, and one State Association, the National Association of Real Estate Exchanges' objective was "to unite the real estate men of America for the purpose of effectively exerting a combined influence upon matters affecting real estate interests."
The Association's founding boards included the Baltimore, MD; Bellingham, WA; Chicago, IL; Cincinnati, OH; Cleveland, OH; Detroit, MI; Duluth, MN; Gary, IN; Kansas City, MO; Los Angeles, CA; Milwaukee, WI; Minneapolis, MN; Omaha, NE; Philadelphia, PA; St. Louis, MO; St. Paul, MN; Seattle, WA; Sioux City, IA; and Tacoma, WA, boards and the California State Realty Federation (now the California Association of REALTORS®).
The Code of Ethics was adopted in 1913 with the Golden Rule as its theme.
In 1916, the National Association of Real Estate Exchange's name was changed to The National Association of Real Estate Boards (NAREB). That same year, the term “REALTOR,” identifying real estate professionals who are members of the National Association and subscribers to its strict Code of Ethics, was devised by Charles N. Chadbourn, a past president of the Minneapolis Real Estate Board.
The collective marks REALTORS® and REALTOR® were registered with the United States Patent and Trademark Office on Sept. 13, 1949, and Jan. 10, 1950, respectively, under Registration Numbers 515,200 and 519,789. Since then, the association has maintained a vigilant defense of the trademarks, prevailing in numerous cases. Most recently, in Zimmerman v. NAR (2004), the Trademark Trial and Appeal Board denied a request to cancel the trademarks.
In 1972, the name of the National Association of Real Estate Boards was changed to the National Association of REALTORS® (NAR). The block "R" logo was adopted by the Association in 1973.
In 1989, the Association adopted The Voice for Real Estate as its theme and as part of its official logo. Along with this theme, the Association encouraged more members to include the REALTOR® emblem on their business cards and stationery.
In 1998, a national Public Awareness Campaign was launched to educate consumers about the vital role REALTORS® play in the real estate transaction.
The Association became the largest trade association in the United States in the early 1970s, with over 400,000 members. Today, the National Association of REALTORS® has over 1.2 million members, 54 State Associations (including Guam, Puerto Rico, and the Virgin Islands) and more than 1,400 local Associations. For more information, visit www.realtor.org.
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