Real estate fix: Foreclosure report spurs housing recovery debate; FHA loans for high-end property
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Home prices may be showing signs of stabilization in hard-hit markets such as Southern California but foreclosures will nevertheless likely be a major problem in the near term as the tough economy makes it harder for people to keep up on their payments.
The Mortgage Bankers Assn. said Thursday that the level of delinquencies and foreclosed homes in the U.S. had jumped to their highest levels since 1972, when the Washington-based lenders group began reporting the statistic. Check out our story here.
Combine that news with a report earlier this week from the Commerce Department that builders pulled back their construction of new homes in October, and the housing pessimists are out front and center arguing that residential real estate is headed for more trouble.
From Bloomberg News:
“I don’t think the housing crisis is over,” Mark Zandi, chief economist with Moody’s Economy.com, said in a telephone interview. “I think we’re going to see another leg down.”
And Calculated Risk quotes Goldman Sachs chief economist Jan Hatzius in a note to clients: A Renewed Sag in the Housing Market:
‘Our current working assumption is a 5%-10% drop in home prices through the middle of 2010. ... house prices and credit quality ... to weigh on the US financial system, the availability of bank credit, and ultimately the pace of the economic recovery.’
Plenty of others, of course, argue that the government’s efforts in propping up the market -- including Congress’ extension and expansion of the home-buyer tax credit and the Federal Reserve’s campaign to keep interest rates at rock-bottom levels -- along with the increase in affordability of homes will continue to stabilize the real estate market. But the debate is certainly stirring.
In more news, the (other) Times has an interesting tale of how the Federal Housing Administration is helping to prop up the market. It’s a story about how one San Francisco man and a couple of his buddies went from broke to buying a two-unit apartment building that cost nearly a million dollars with a government-backed loan.
-- Alejandro Lazo