Wednesday, April 01, 2009
SUZANNE PRATT, NIGHTLY BUSINESS REPORT ANCHOR: The housing industry is showing some positive signs. The National Association of Realtors says pending sales of previously owned homes jumped more than 2 percent in February. Those sales were mostly due to low mortgage rates and lower home prices. But they do hint at a possible pickup in activity in the all important spring selling season. Tonight, we begin our series "Reviving the Economy: Real Estate" and as Stephanie Dhue reports, after three years of declines in housing, it looks like things may be turning around.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: With distressed sales bringing prices not seen since 2003, buyers swooped in in February driving new and existing home sales up. Construction is also showing signs of life. Mark Zandi of Moody’s economy.com says the market is beginning to thaw.
MARK ZANDI, CHIEF ECONOMIST, MOODY’S ECONOMY.COM: I think the very worst is behind us, at least in terms of sales, I think we’re finding a bottom in sales and in construction, I think we are pretty close to a bottom in housing construction. In terms of pricing we probably have a bit more to go, I think prices will fall through most of ‘09 bottom out at the end of the year.
DHUE: Policy prescriptions are beginning to help. Government efforts have sent mortgage rates on a 30-year fixed loan down to nearly 4.5 percent. Anticipation of the Obama administration’s loan modification program slowed the pace of foreclosures. And the tax credit for first time homebuyers is expected to lure people off the fence. Builders report the first weekend of spring brought increased traffic into models. National Association of Home Builders chief economist David Crowe expects sales to pick up in the next few months.
DAVID CROWE, CHIEF ECONOMIST, NATIONAL ASSOCIATION OF HOME BUILDERS: We’re basically waiting on the consumer to say, ah, the deal is good. Prices have come down, interest rates are low, I can get a first time home buyer tax credit if I qualify. There’s a lot of options, a lot of available inventory, builders are dealing.
DHUE: The location, location, location mantra of real estate still holds. Areas of the country that have lost fewer jobs are expected to do better. Detroit is under pressure. Manhattan has seen prices drop 25 percent since Wall Street hit the skids. Florida, which enjoyed some of the largest gains in the boom, saw a 31 percent drop for the year. It’s a similar story in California, with home prices down by half in several metro areas. Prices in the Washington, DC area fell 8 percent overall. Zandi expects the housing picture to brighten nationwide by the end of this year. But the biggest wildcard is jobs.
ZANDI: If we continue to lose jobs at this clip, we’re losing 650,000 per month. If that doesn’t slow, then the housing market isn’t going to find a bottom any time soon.
PRATT: Stephanie joins me live to talk about the housing outlook. One of the things that strikes me when I listened to your story, Stephanie is the question of supply. Here in Manhattan, we are fortunate. We don’t talk about things in terms of inventory by months or how much inventory is left. But the rest of the country is facing years of inventory. So how are we going to work through all the supply do you think?
DHUE: There’s about a 10-month supply nationwide. It is going to vary by region. But the hope is that the low prices coupled with the low interest rates and some of these incentives for first-time home buyers are really going to help clear out that inventory by the end of the year, maybe (INAUDIBLE) into next.
PRATT: All right, now next week we’re going to do the profile of the five cities that we looked at last year and you’re going to look at Prince William County outside of DC. Things have changed significantly certainly in Manhattan and they’ve changed a lot around the country. What about in that that area that you’re going to be profiling? How have things changed?
DHUE: Well, I was surprised to see how much further prices have fallen (INAUDIBLE). They’ve fallen 25 percent just in the last year and investors are starting to swoop in here and grab up the bargains. There’s jobs here so people are able to rent out properties and there’s a lot of interest. The properties are distressed, but they’re starting to see some kind of life there.
PRATT: OK. Thanks. I think we have to leave it there. Thanks, Stephanie, for joining us.
DHUE: Thanks, Suzanne.
PRATT: Stephanie Dhue in Washington. Tomorrow, our series continues with a look a commercial real estate and the challenges it faces, including falling demand and a surprising bright spot for investment.
