sharon sanders
Editor-in-Chief & President
http://www.latimes.com/news/opinion/commentary/la-oe-krueger28-2009mar28,1,4122039.story
From the Los Angeles Times
Opinion
California housing may have a new foundation
Despite the shaky economy, resales have been booming. That may be a sign that basic economics is working to stabilize the market.
By Douglas C. Neff and Gerd-Ulf Krueger
March 28, 2009
Other than perhaps McDonald's hamburgers, what is selling better today than it did a year ago? Resale homes in California.
Sales in the last six months have gone up 89% compared with sales for the same period a year ago, according to the California Assn. of Realtors. Despite a worsening economy and a media and government afflicted with a bad-news disorder, something strange is happening in the California housing market. There is strong evidence that basic economics is addressing the housing meltdown in a direct manner, which might set the stage for stability and give a hint as to what policies work best.
Resales have been booming in the worst foreclosure markets in the state. Declining prices, severe job losses and pervasive foreclosures are supposed to stifle the market, yet we see record sales and significantly reduced listings in the foreclosure areas. For example, in Stockton, seasonally adjusted resales in December 2008 were up more than 440% from September 2007, according to MDA DataQuick, the definitive source for tracking California home sales. That December sales rate was a record for this market. By March, stories continued to abound of strong sales and multiple offers.
Similarly in Moreno Valley/Perris, the heart of the foreclosure badlands in Southern California, resales rose 720% to a record high. After steep home-resale declines in 2006 and 2007, the snapback in volume can be observed in the California interior from Chula Vista near the Mexican border to Sacramento.
snip
Although no one likes foreclosures, they are serving a number of valuable purposes, which are barely cited by the media or politicians. They are establishing a sustainable and affordable pricing floor, albeit low, in many markets. And before we label the prices as unduly low, we should note that they are returning pricing to the 2000-2002 pre-bubble levels. Foreclosures are also letting some borrowers out of very bad contracts, which often committed them to crushing monthly payments on loans unsupportable in the post-bubble pricing market.
Fortunately, government policy has already done the most important thing to maximize sales of foreclosure properties. It has made FHA and GSE (Fannie Mae and Freddie Mac) loans readily available to those who qualify under new and more sustainable standards. And gathering from the amount of demand we're seeing in the California interior, lending doesn't seem to be a problem.
more......
http://www.latimes.com/news/opinion/commentary/la-oe-krueger28-2009mar28,1,4122039.story
From the Los Angeles Times
Opinion
California housing may have a new foundation
Despite the shaky economy, resales have been booming. That may be a sign that basic economics is working to stabilize the market.
By Douglas C. Neff and Gerd-Ulf Krueger
March 28, 2009
Other than perhaps McDonald's hamburgers, what is selling better today than it did a year ago? Resale homes in California.
Sales in the last six months have gone up 89% compared with sales for the same period a year ago, according to the California Assn. of Realtors. Despite a worsening economy and a media and government afflicted with a bad-news disorder, something strange is happening in the California housing market. There is strong evidence that basic economics is addressing the housing meltdown in a direct manner, which might set the stage for stability and give a hint as to what policies work best.
Resales have been booming in the worst foreclosure markets in the state. Declining prices, severe job losses and pervasive foreclosures are supposed to stifle the market, yet we see record sales and significantly reduced listings in the foreclosure areas. For example, in Stockton, seasonally adjusted resales in December 2008 were up more than 440% from September 2007, according to MDA DataQuick, the definitive source for tracking California home sales. That December sales rate was a record for this market. By March, stories continued to abound of strong sales and multiple offers.
Similarly in Moreno Valley/Perris, the heart of the foreclosure badlands in Southern California, resales rose 720% to a record high. After steep home-resale declines in 2006 and 2007, the snapback in volume can be observed in the California interior from Chula Vista near the Mexican border to Sacramento.
snip
Although no one likes foreclosures, they are serving a number of valuable purposes, which are barely cited by the media or politicians. They are establishing a sustainable and affordable pricing floor, albeit low, in many markets. And before we label the prices as unduly low, we should note that they are returning pricing to the 2000-2002 pre-bubble levels. Foreclosures are also letting some borrowers out of very bad contracts, which often committed them to crushing monthly payments on loans unsupportable in the post-bubble pricing market.
Fortunately, government policy has already done the most important thing to maximize sales of foreclosure properties. It has made FHA and GSE (Fannie Mae and Freddie Mac) loans readily available to those who qualify under new and more sustainable standards. And gathering from the amount of demand we're seeing in the California interior, lending doesn't seem to be a problem.
more......
http://www.latimes.com/news/opinion/commentary/la-oe-krueger28-2009mar28,1,4122039.story
