Housing Crisis: I'm Offering A Glimmer Of Hope
The home builders appear to be stuck, unwilling to say that anything is going to get better any time soon. The National Association of Home Builders puts out a monthly “sentiment” index, and so far it’s been stuck on the very low end for a very long time. They are not anticipating improvement until at least the second half of 2008.
The CEO of Wells Fargo isn’t much more bullish. “We expect the environment to remain challenging in 2008, particularly in the consumer sector,” says CEO John Stumpf. He also added that the housing market was in the worst shape since the Great Depression.
This morning I did a little mini-analysis of homeowner vacancy rates. They are sky high. So are inventories of both new and existing homes for sale. That means that not only are there too many houses for sale, but they’re empty, and that in turn weighs on communities and prices equally.
In addition, the ICR today announced the results of its survey of the institutional investment community on the state of the consumer industry. It asked respondents to rank the economic factors that directly correlate with sales patterns. Number one: housing.
The economy has become center stage in the political race, with candidates putting out plans to save the housing market. I realize that all real estate is local, and I understand the emails from so many of you that I seem to focus on the negative when there are plenty of markets in the U.S. where housing is healthy. But let’s face it, the economy, which includes housing, is as emotional as I am watching an old GE refrigerator commercial. It’s all about confidence.
I’m going to offer a glimmer of hope here: Interest rates last week were way down, and mortgage applications surged 28 percent from the week before and up 36 percent from a year ago. The four-week moving average, which helps with all that weekly volatility, was up 10 percent.
Confidence. When interest rates come down, opportunity knocks and confidence somehow squeezes its way in the door as well. I’m not saying this is the fix, but it’s a start.
Questions? Comments? RealtyCheck@cnbc.com