Kentucky.com: Real Estate - Wire
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- Home sales plunge, feed recession fears
The housing market plunged deeper into despair last month, with sales of new homes plummeting to their lowest level in more than 12 years.The slump worsened even more than most analysts expected, heightening fears that the country might be thrust into a recession.New-home sales tumbled 9 percent in November from October to a seasonally adjusted annual sales pace of 647,000, the Commerce Department reported Friday. That was the worst sales pace since April 1995."It was ugly," declared Richard Yamarone, economist at Argus Research. "It is the one sector of the economy that doesn't show any signs of life. It doesn't look like there is any resuscitation in store for housing over the next year," he said.The housing picture turned out to be more grim than most anticipated. Many economists were predicting sales to decline by 1.8 percent to a pace of 715,000. - Treasurys rally on weak housing report
Treasury prices rallied Friday, pushing yields lower after news that new home sales hit a more than 12-year low in November, suggesting weak construction will reduce economic growth next year.Signs of economic softness tend to stir safe-haven demand for government-backed Treasurys and other low-risk assets.Treasurys bolted higher after the Commerce Department said purchases of new homes last month plunged 9 percent to an annual 647,000 pace. The Thomson/IFR forecast was for about 720,000 sales. The sales level was the weakest since April, 1995.The shortfall was linked to a tough mortgage-writing environment and came despite aggressive price-cutting in many regions."Housing demand is unlikely to stabilize until homes prices stop dropping, but home prices are unlikely to stabilize until housing demand significantly reduces the inventory overhang," said Michael Gregory, a senior economist at BMO Capital Markets. - 30-year mortgages rates climb
Rates on 30-year and one-year mortgages climbed this week, while rates on some other home loans didn't budge.Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.17 percent this week. That was up from 6.14 percent last week and was the highest since the week of Nov. 21, when 30-year rates stood at 6.20 percent.Just three weeks ago, 30-year rates had dipped below 6 percent, edging down to 5.96 percent, the lowest level in more than two years.Rates on one-year adjustable-rate mortgages rose to 5.53 percent this week, compared with 5.51 percent last week.Analysts blamed the rise in these rates on worries about inflation. Economic reports last week showed both a big jump in consumer spending and a big pickup in inflation for November. - October home prices post record decline
U.S. home prices fell in October for the 10th consecutive month, posting their largest drop since early 1991, according to a key index released Wednesday.The record 6.7 percent slide in the Standard & Poor's/Case-Shiller home price index also marked the 23rd consecutive month that prices either fell or grew more slowly than the month prior."No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim," said Robert Shiller, who helped create the index, in a statement.The previous record decline was 6.3 percent, recorded in April 1991. The index tracks prices of existing single-family homes in 10 metropolitan areas.It is considered a strong measure of home prices because it examines price changes of the same property over time, instead of calculating a median price of homes sold during the month. - Foreign buyers snap up 2nd homes in US
Panden Rota, a Nepalese producer of fine rugs, is about to become a Manhattanite, the owner of a sumptuous apartment in the luxurious downtown neighborhood of Battery Park City.His primary residence will remain Katmandu, but his new home will allow him to spend more time at U.S. showrooms that display his rugs and with a brother and sister in New York. "I looked at many places and I decided that a Manhattan apartment will always hold its value," he said.Rota is part of a growing wave of foreigners who buy second homes in the U.S. for work and play and as an investment.Cosmopolitan cities like New York and Miami have long served as second homes for affluent and accomplished foreigners. But the trend is growing. One in five American realtors has sold a home to a foreign investor in the past year, according to the National Association of Realtors.The events of 2007 have made the U.S. much more affordable for international home buyers. Severe dollar declines against the euro and pound have made U.S. homes much cheaper for Europeans. But even foreign buyers without that sort of currency advantage are benefiting from sharp drops in housing prices at a time when problems in mortgage lending are keeping many Americans out of the market. - Analysis: Gov't tries to contain crisis
After a slow and stumbling start, official Washington is scrambling to try to prevent the unfolding mortgage crisis from pushing the country into recession during an election year. There is a strong feeling, though, that the government will need to do more to avert a financial disaster.One former Treasury secretary advocates temporary tax cuts and emergency spending on the order of $50 billion to $75 billion. Such action could help the U.S. from slipping into what Lawrence Summers, who served under President Clinton, fears could become the worst downturn since the steep 1981-82 recession.Some Republicans are worried, too.From both Martin Feldstein, who was President Reagan's top economic adviser, and former Federal Reserve Chairman Alan Greenspan have come calls for deeper government intervention to deal with the threat.Before it is all over, the government may have to resort to measures last used in the savings and loan crisis of the 1990s. Back then, it was a new agency to take over failing thrifts sunk by bad loans. Today, it could mean a government agency to buy up billions of dollars of mortgage-backed securities that investors are shunning. - States eye ways to rein in property tax
Maurice Gunyon thought he was set for his twilight years.He bought a deteriorating house on Indianapolis' north side, had it torn down and a new one built. The 73-year-old retired from his government job in 2004, thinking he was financially secure. His income included his pension, personal savings, Social Security and rent from the other side of his two-family house.Then he got his property tax bill that had nearly tripled. His bill in 2005 was about $2,900 and was $4,600 last year. This year's bill - $7,568."I almost had a heart attack," said Gunyon. "My reaction was one of pure anger."His problem is not unique. The amount paid in local and state property taxes in the country increased 50 percent from 2000 to 2006, according to Census data cited by some U.S. Congress members when discussing the topic. During that time, inflation rose 17 percent and median household income dropped 2 percent. - Mormon temple lifts spirits in Idaho
After selling houses in this Mormon college town for two decades, Ted Whyte knows what some of his customers want: a home near the new Mormon temple. If only he could use that in his ads."The federal Fair Housing Act kicks in and calls it discriminatory," said Whyte, who like 92 percent of Rexburg's 31,000 residents is a member of the Church of Jesus Christ of Latter-day Saints.Call it the Temple Effect.Towering Mormon temples like the one scheduled for completion in Rexburg in February, and another slated to be finished in mid-2008 in Twin Falls 190 miles away, can have a mighty spiritual - and economic - effect.Home prices in surrounding neighborhoods escalate. Motels offer rooms with temple views. Devout retirees relocate. Members of the community swell with civic pride and excitement. And sometimes, those of other faiths look on with resentment and suspicion. - Bush signs bill to aid ailing homeowners
President Bush on Thursday signed a measure to provide financial relief for financially strapped homeowners facing foreclosure or in bankruptcy.The bill gives a tax break to homeowners who have mortgage debt forgiven as part of a foreclosure or renegotiation of a loan. No taxes would be owed on the value of any debt forgiven or written off. Currently such debt forgiveness is taxable income."When you're worried about making your payments, higher taxes are the last thing you need to worry about," Bush said in a bill-signing ceremony. He stood along side members of his Cabinet and lawmakers who pushed the measure.While the measure is anticipated to reduce taxes of some strapped homeowners by $650 million, the cost to the government would be offset in part by limiting a tax break available on the sale of second homes.The bill was in response to a mortgage crisis touched off this spring by a blowup in high-priced home loans for risky borrowers, throwing a pall over th