Halstead Property

Mentioned in this Article:

Gregory J. Heym
Executive Vice President, Chief Economist

Warner Lewis
Village Office

More Troubling News From The Housing Sector

TOM HUDSON: Pending home sales fell sharply in January Susie, down by 7.6 percent. That's just some more troubling news here about the nation's housing market.

SUSIE GHARIB: Tom though, part of the blame goes to those nasty snow storms in many areas of the country that we just went through. But when you put it in context, sales were better than a year ago.

HUDSON: Still, no matter how you really look at the data here, the housing market in the U.S. is still on some shaky ground and this spring, two important pillars of support will be removed. Suzanne Pratt tells us what they are and why they matter.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Manhattan real estate agent Warner Lewis is a lot happier this March than he was a year ago. After struggling for months, business is definitely perking up.

WARNER LEWIS, SALES ASSOCIATE, HALSTEAD PROPERTY: I do really feel that buyers and sellers have come together at a certain plane. And, things that are well priced that are coming on are flying off.

PRATT: To be sure, New York City's housing market is faring better than much of the nation. But, lately even battered areas in the south and Midwest appear headed for firmer ground. Experts says super low mortgage rates and homebuyer tax credits have done a lot to end the free fall in home prices. But this month, the Federal Reserve stops holding down mortgage rates when it quits buying mortgage-backed securities. Tax incentives for people buying homes run out at the end of April. Economist Dan Greenhaus says the market may be too fragile to lose that artificial support.

DAN GREENHAUS, CHIEF ECONOMIC STRATEGIST, MILLER TABAK: There's a great amount of nervousness among economists and analysts regarding what the housing market is going to look like following the completion of those two programs. I count myself as one of those individuals nervous.

PRATT: Some predict mortgage rates will spike up as much as a full percentage point when the Fed exits the market. The absence of tax credits for homebuyers is harder to quantify. In the final months of last year, first timers accounted for half of the homes purchased in the U.S. Historically, those buyers made up 40 percent of the market. Experts say the way these programs work is to capture demand from the future.

GREENHAUS: We would be foolish in assuming that we can borrow growth from future quarters to support growth now, without some adverse impact on growth in the coming quarters.

PRATT: Some expect the housing market to fall back into the basement as early as the summer. Besides higher mortgage rates, there is concern about the three million foreclosures expected this year. Others, like economist Greg Heym, say the end of government juice for housing will have only minor effects.

GREGORY HEYM, CHIEF ECONOMIST, HALSTEAD PROPERTY: In light of all the other challenges facing markets in some parts of the U.S., it's certainly something that we have to pay a lot of attention to. I think by itself, it doesn't necessarily mean that we're going to see the housing market dry up.

PRATT: Many experts predict the Fed will return to the housing market at the first sign of significant weakness. If home prices and sales tumble, they say the central back could easily start buying mortgages again. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.

Thursday, March 04, 2010