Margert in the News
Existing-Home Sales Rise 6.5% as Prices Plunge
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Rex Nutting
MarketWatch
January 26, 2009
WASHINGTON (MarketWatch)....Bargain hunters snapped up more foreclosed homes in
December, lured by the biggest price decline seen in more than 70 years, the
National Association of Realtors reported Monday.
Sales of existing homes rose 6.5% in December to a seasonally adjusted
annualized rate of 4.74 million, led by a big rebound in the West where prices
have fallen more than 30%, the industry trade group said. Sales in December were
down 3.5% from the previous December.
About 45% of the transactions in December were considered distress sales, either
a short sale or a home in foreclosure, the Realtors said. Many foreclosure sales
are handled outside the Realtors' system and are not reported by the Realtors.
"Rising foreclosures and the large inventory overhang continue to exert downward
pressure on prices," wrote Anna Piretti, an economist for BNP Paribas.
For 2008 as a whole, sales fell 13.1% to 4.91 million, the industry trade group
said. November and December were the weakest sales months of the year on a
seasonally adjusted basis as credit dried up.
The median sales price fell to $175,400 in December, down a record 15.3%
compared with a year earlier. For all of 2008, median prices dropped 9.3% to
$198,600, the lowest level since 2004.
The price decline is likely the largest since the Great Depression in the 1930s,
according to Lawrence Yun, chief economist for the trade group.
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Margert
Weatherization Highlighted at First 2009 RWA Community Weekend Workshop
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January 28, 2009, Far Rockaway...On Saturday, January 31, 2009, the Rockaway
Waterfront Alliance (RWA) will launch its 2009 Community Weekend Workshop
series.
These workshops are expected to be presented monthly, and topics will address
environmental and social justice issues of interest to the Rockaway community.
The January kick off workshop will feature presentations from Margert
Community Corporation, National Grid and the NYC Office of Emergency Management.
Presenters will discuss energy efficiency, storm preparation and money savings
tips for homeowners and renters.
Seniors, adults, families and children are welcome to attend.
Highlights will include a free raffle for the adults and solar race car
activities for the younger participants.
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Comptroller Warns of State
Grab on NYC Affordable Housing Dollars
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February 17, 2009
Posted: 1:48 am
New York Post
THE state government is looking to raid a fund that was established
specifically to build affordable housing in New York City.
As New York City's comptroller, I certainly understand that our state is facing
a massive budget deficit and must consider every revenue source. But the city
finds itself in the grips of both a severe economic recession and an
affordability crisis.
Even as Wall Street's implosion dealt a crippling blow to our economy, personal
expenses in our city remain wildly uneven with the rest of the country.
In January, my office reported that our real gross city product fell an
estimated 5.5 percent in the fourth quarter of 2008. Meanwhile, a study released
last week by the Center for an Urban Future found that New York City today is by
far the most expensive city in the country.
In January, my office reported that our real gross city product fell
an estimated 5.5 percent in the fourth quarter of 2008. Meanwhile, a study
released last week by the Center for an Urban Future found that New York City
today is by far the most expensive city in the country.
And housing costs are a major reason our cost of living is skyrocketing. The
center found that the average monthly rent in New York City - $2,801 - is 53
percent higher than it is in San Francisco, the second most expensive US city.
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The Foreclosure Five: A National Crisis?
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By Alan Reynolds
Posted: 1:28 pm, The New York Post
February 21, 2009
When President Obama discusses his $275 billion mortgage bailout, he talks as
if it was a national problem, caused by a national decline in home prices. "We
must stem the spread of foreclosures and falling home values for all Americans,"
he says. But there is no national market for homes and no national price for
homes. Instead, most of the United States will pay for the folly of few.
The beneficiaries of taxpayer charity will be highly concentrated in just five
states - California, Nevada, Arizona, Florida and Michigan. That is not because
the subsidized homeowners are poor (Californians with $700,000 mortgages are not
poor), but because they took on too much debt, often by refinancing in risky
ways to "cash out" thousands more than the original loan. Nearly all subprime
loans were for refinancing, not buying a home.
It turns out that the five states with by far the highest foreclosure rates have
some things in common with each other, but very little in common with most other
states.
I studied the latest available figures for state foreclosure rates, changes in
home prices over one and five years, existing home sales, the percentage of
mortgages that are underwater, and unemployment. Then I compared figures for the
five most foreclosure-prone states with New York and also with the 25th-ranking
(median) state.
One out of 76 homes in Nevada went into foreclosure in January, for
example, compared with one out of 173 in California, with Arizona and Florida
close behind. In New York, by contrast, only 1 out of 2,271 homes went into
foreclosure.
Nationwide, foreclosures fell 10% in January, to one out of every 466 homes. But
that is a "mean" average dominated by places like California and Florida. In the
median state with the 25th highest foreclosure rate, by contrast, only one out
of 949 homes was in foreclosure - just one-tenth of 1%. Foreclosure rates were
even lower in 25 other states. In Vermont, foreclosures amounted to just one out
of 51,906 homes. Foreclosure can be a personal crisis, but it is not a national
crisis.
Now consider the change in home prices between the third quarters of 2007 and
2008, using the OFHEO price index - the only measure available by state. Like
most of the new mortgage-relief plan, the OFHEO index covers mortgages that
qualified for Fannie and Freddie financing. It excludes jumbo mortgages larger
than $729,750 in high-cost areas like New York City.
As of the third quarter of 2008, OFHEO home prices were still higher than a year
before in 18 states, and down less than 2% in a dozen others. Double-digit
declines in home prices were confined to just four states - surprise, every one
of the Foreclosure Five except Michigan.
Even though California home prices fell 20.8% over the year ending in the
fall of 2008, however, they were still 50% higher than they were just five years
ago. In Florida and Nevada too, the bust in home prices obviously followed a
speculative boom. Back in April 6, 2008, a New York Times graph showed that
default rates on only the riskiest subprime mortgages had already reached 21% in
Merced and Stockton, California, and ranged from 19% to 24% in Fort Myers and
Naples, Florida.
So what's happening now? By looking at sales, you can see the free market is
working very well. Sales of existing homes over the past year have soared in
four states where home prices fell the most. Reducing the inventory of unsold
homes, foreclosed or not, makes it easier to sell remaining homes and thereby
works to arrest falling home prices. Falling home prices are not the problem,
they're the solution.
Obama is particularly interested in mortgages that are underwater - that is,
larger than the value of the home. But again, this varies enormously by state.
The state with the tenth highest percentage of underwater mortgages, Texas, has
the same 16.5% underwater as the so-called national average. The other 40 states
have a below-average percentage of homes that are worth less than their
mortgages, which means the mean average is not at all typical of most states.
A similar report from First American Core Logic reports that only 4.4% of New
York mortgages are underwater, not even a tenth as many as in Nevada.
Looking at the Foreclosure Five, you find another consistency - unemployment
rates far above the national average (half the states were below 5.9% in
December).
The exception is Arizona, where unemployment is a more reasonable 6.9%. Stephen
Miller of the University of Nevada and Rangan Gupta of the University of
Pretoria explained the apparent anomaly by explaining that migration and the
market for second homes make Phoenix housing dependent on economic conditions in
Los Angeles and Las Vegas. Miller and Gupta found that "Los Angeles housing
prices cause housing prices in Las Vegas (directly) and Phoenix (indirectly). In
addition, Las Vegas housing prices cause housing prices in Phoenix" to rise or
fall in step.
Boosting the Obama team's selective mortgage subsidies, Mark Zandi of Moody's
Economy.com recently told NBC, "either you can help your neighbor, and help them
so they can stay in their home. Or don't help them, and they'll lose their home,
and it will cost you money, because . . . your home will have just dropped in
value." On the contrary, federal subsidies for over-indebted homeowners will not
often involve helping "neighbors" but rather those who live thousands of miles
away, mainly in just five states.
In reality, the "Homeowner Affordability and Stability Plan" compels taxpayers
in most states to help those in just a few. Aside from Michigan's unique
dependence on autos, the other four states' problems are already being solved
the old-fashioned way: If something becomes too expensive, cut the price. Or
move.
Alan Reynolds is a senior fellow with the Cato Institute and the author of
"Income and Wealth" (Greenwood Press, 2006).
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