Home sales up, but not really
Sales of existing homes rose 6.5% in December. But the new numbers might not be much to celebrate since a lot of those sales are skewed by foreclosures. Nancy Marshall Genzer reports.
A foreclosure sign in Florida (Getty Images)
More on Housing - Real Estate
TEXT OF STORY
KAI RYSSDAL: The housing industry had what looked at first glance like great news today. The National Association of Realtors reported sales of previously owned homes were up 6.5 percent in December. That is way more than economists had been expecting. And to be honest, who's not receptive to good news from real estate nowadays? Scratch the surface, though, and you'll find the numbers are less than meets the eye.
Marketplace's Nancy Marshall Genzer explains.
NANCY MARSHALL GENZER: Buyers took advantage of rock-bottom prices in December. In fact, almost half of the December deals were foreclosures, or short sales, where the house is sold for less than what is owed on the mortgage.
Lawrence Yun is chief economist for the National Association of Realtors. He says in California, Florida and Nevada, up to 70 percent of the deals are these distressed sales.
LAWRENCE YUN: We are seeing a stronger level of activity in those market where prices have plunged.
Buyers in these markets will only go for super cheap houses. If I weren't such a nice person, I might call them vultures. Rick Sharga does.
RICK SHARGA: Vultures actually have their role in the food chain. You don't want to leave rotting carcasses around because they spread disease.
Sharga is senior vice president of Realty Trac.
SHARGA: Anybody who can help to get families into these homes to get them from being vacant, boarded-up, potential meth labs into a place where a family can live and thrive is actually doing a service.
Sharga knows what he's talking about. He's got two foreclosed homes in his California neighborhood. But what about areas that weren't kicked in the shingles by the subprime crisis? Like my Washington, D.C. suburb? Am I going to start seeing rotting carcasses? Economist David Resler of Nomura Securities says maybe.
DAVID RESLER: With the entire U.S. economy in a severe recession, all local housing markets are relatively weak.
Resler says if unemployment spikes and the economy gets weaker, even healthy neighborhoods like mine will start sprouting foreclosure signs.
In Washington, I'm Nancy Marshall Genzer for Marketplace.
Comments
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From HI, 01/28/2009
Interesting comments from you guys. But what do you think about upcoming trends? Will global warming and rising sea-level change home prices at beach? Will people be leaving Florida and moving to Governor Palin Land? Will telecommuters be moving out of edge city? Will retiring boomers be moving to smaller units in retirement golf courses? Will we have no trends but business as usual?
What do you think?
?
?
From Silverthorne, CO, 01/27/2009
>>Sales of existing homes rose 6.5% in December. But the new numbers might not be much to celebrate since a lot of those sales are skewed by foreclosures.
From Dallas, TX, 01/27/2009
I have to agree with the other commenters, I can't see how people buying houses at market value are considered vultures, how short sales of homes should be considered "not really" an increase in sales, or how something that may be bad for one segment of the economy (current home owners) should be considered bad for us all. Where were the stories 3 years ago about how housing prices were up, but "not really" because many of those sales were to vultures who simply wanted to do a few days work and flip the property?
From Grand Rapids, MI, 01/27/2009
After paying $780 a month for a 3 bedroom condo for the last 4 years my wife found a listing of over 2800 properties, 1700 of wich were forclosed properties. After lookin for just a week we were able to find a 4 bedroom house less than 2 blocks from an elementry school for a monthly payment of $520 with taxes and insurance. Although the banks approved us for $100,000 we are paying less than $60,000 for the house. We stayed out of the market and rented for many years, missing out on income tax deductions, but also on the housing bust. The time was finially right for us to make the move into a house, and I am glad we waited, but I cant help but feel what we are taking advantage of is deflation and soon rental properties will be forced to lower thier prices too. This market isn't bad for everyone, just for those who jumped the bandwagon too soon.
From Arlington, VA, 01/27/2009
I must agree somewhat with Scott -- people trying to purchase homes at non-bubble prices (i.e. reasonable compared to income and rents) are not necessarily vultures.
The housing bubble has been even more disruptive then the tech bubble -- stable housing is a cornerstone of American life. It distorts peoples ability to plan and hedge against inflation without taking on excessive debt and risk.
And, Nancy, sorry -- even though we are neighbors -- I am hoping that the downturn hits your neighborhood so prices can return to earth :)
From Whittier, CA, 01/27/2009
Am I a vulture for waiting for housing prices to be reasonable? My wife and I ducked the housing market in 2006 because we could barely afford a two bedroom condo in the Los Angeles suburbs--despite making well over the median income for our area. We couldn't compete with speculators fliping properties or families willing to bet on interest only loans with teaser APRs.
So I find this story offensive. My family and I aren't waiting for "super cheap houses". We want a reasonable home, commensurate with our honestly earned pay. The vultures are the ones who hawked these junk loans, who pumped up the bubble, and made record profits transferring paper back and forth. And you know what? The uglier vultures are now back out in the market scooping up the remains of family dreams at trustee sales and re-selling them at a profit.
From Minnetonka, MN, 01/26/2009
I thought this story lacked journalistic integrity. In my opinion, Nancy Marshall Genzer's "not in my suburb" approach to foreclosures smacked of elitism. Too many Americans are pulling back to their own silos as a way of discounting problems all around them. Genzer sounded as if she was doing the same in this story. Sorry.
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