NAR: August Existing-Home Sales Slide

Economy may take years to recover, solar could be bright spot
from the Phoenix Business Journal, reports that according to regional economist Elliott Pollack, Arizona’s economy and real estate markets may take years to recover due to a glut of housing and commercial real estate, weak consumer and business spending, and slow job and population growth. Pollack expects more foreclosures with the housing market hitting bottom in 2009, but warned it will take multiple years to recover because of the glut of homes for sale. He expects a similar oversupply to play out next year in the office and industrial real estate markets. Greater Phoenix Economic Council CEO Barry Broome had some positive news, Arizona has prospects in the solar and renewable energy sectors despite other economic difficulties.

NAR: August Existing-Home Sales Slide
from Realtor Magazine Online, reports that according to the National Association of Realtors, existing-home sales, including single-family, townhomes, condominiums and co-ops, declined 2.2% to a seasonally adjusted annual rate of 4.91 million units in August from an upwardly revised pace of 5.02 million in July. NAR President Richard F. Gaylord said, “The difficulty in obtaining a mortgage increased over past couple months, making it more challenging for creditworthy borrowers to find financing. Our hope is that overly tight lending criteria can be loosened with reasonable standards and credit so that sales activity can catch up with demand." Lawrence Yun, NAR chief economist said, “August sales reflect higher interest rates before the government takeover of Freddie Mac and Fannie Mae, and the sudden drop in mortgage interest rates over the past couple weeks is improving housing affordability. With higher loan limits and a beefing up of the FHA program, all the mechanisms have been falling into place to increase mortgage availability. Historically, housing has led the nation out of economic doldrums. There will not be an economic recovery without a housing recovery.”

California State regulator calls lender workouts ‘absurd’-

California Real Estate Commissioner Jeff Davi told Orange County Realtors this week that he doesn’t understand the reluctance by some lenders to help more cash-strapped homeowners keep their homes.

Davi, who oversees the state Department of Real Estate, said that with 650 California homes going into foreclosure daily, lenders should modify more loans — arranging so-called “workout agreements” — to keep homeowners out of default.

“There’s over 200,000 (bank owned) properties on the books right now in California. Fifty percent of the properties sold in California right now are (bank owned) properties. These stats are startling. And they’re going to keep going up,” Davi said Tuesday while meeting with leaders from the Orange County Association of Realtors at OCAR’s Laguna Hills headquarters.

“There are workouts being done, but they’re in the hundreds, and we need workouts in the thousands. And that’s the problem.”

Davi said also that he is puzzled by a practice that requires homeowners to stop making house payments before lenders will consider modifying their loans. “That just seems absurd to me,” he said. “Someone can see down the road: ‘I’m not going to make it. I’d like to talk to you about this. I’d like to work it out.’ The last thing you need is to take that property back and have a foreclosure. The cost to that lender is 10 times if they could work this thing out now. But they don’t.”

Could the DRE have done more enforcement of mortgage brokers with real estate licenses during 2005-07, when a lot of people took out loans they couldn’t afford? Davi said:

• “Now for us to recognize that the two prior decades of encouraging homeownership nationally and providing so many vehicles to put people in housing was going to be the root or the cause of this thing to blow up, when in fact the perfect storm occurred in 2005, ‘06 and ‘07, I think that’s just a little too much crystal balling and wishful thinking.”

When will the housing market recover? “2009 will be like 2008,” he said. “We’ve got to get through 2009.”