Economists present mixed views of the housing industry with some saying it will get worse before it gets better and others claim the inverse. Meanwhile, record-low interest rates do nothing to increase sales because thresholds for qualifying for loans are beyond the reach of most would-be homeowners.
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Housing sector seen limping along: Reuters poll
Reuters September 9, 2011
The struggling U.S. housing market is expected to fall a little further as it searches for a bottom, but home prices are seen ticking up modestly in 2012, according to a Reuters poll released on Friday.
Economists were divided on whether the worst would be over for the housing market by the end of the year or if it will take more time to reach a floor.
Existing home sales are expected to improve only modestly. The forecasts from the poll are consistent with expectations the housing sector will continue to limp along in a weakened state for years to come.
Housing has been unable to find its footing since its collapse in 2007, despite multi-billion dollar government programs and ultra-low interest rates.
Indeed, fixed and one-year adjustable mortgage rates hit new record lows in the week ended Sept 8, but analysts did not expect it to spur a rush of buying.
Concerns another recession is looming, high unemployment and tight credit have kept buyers out of the market, leaving a glut of homes for sale that has driven down prices.
Mortgage rates lowest in decades, but few qualify
By Derek Kravitz Associated Press September 8, 2011
WASHINGTON — Mortgage rates have reached their lowest levels in six decades, making this the best time in most Americans’ lives to buy or refinance a home. For people who qualify, today’s rates could save thousands of dollars a year.
Yet most people can’t take advantage. Half of would-be buyers say they’ll never save enough for the 20 percent down payment now usually required. And shrunken home values have erased much of the equity people need to refinance.
“Low rates are great, but the real issue is that the pool of people who can get a loan or refinance is small,” said Greg McBride, Bankrate.com’s senior financial analyst.
This week, the average rate on a 30-year fixed mortgage fell to 4.12 percent. It’s the lowest for a 30-year fixed loan since mortgage buyer Freddie Mac began tracking rates in 1971. The last time rates were cheaper was in 1951, when most long-term home loans lasted just 20 or 25 years.
The average on the 15-year fixed loan, a popular refinancing option, dropped to 3.33 percent this week. That’s also an all-time low, according to most economists.
Record-low rates have done little to energize depressed home sales. The average rate on the 30-year fixed loan has been below 5 percent for all but two weeks this year. Yet sales of previously occupied homes are on pace for their weakest year since 1997.
Richmond struggles to hold banks accountable for blight
By Hannah Dreier Contra Costa Times September 9, 2011
Richmond Chief Chris Magnus has for months watched trash accumulate and knee-high weeds grow at a boarded-up house near his home in the city’s North and East neighborhood.
The city identified the owner — Deutsche Bank — but has been unable to get the property cleaned up, despite having some of the most stringent rules in the Bay Area for maintaining foreclosed homes.
Richmond got tough on blighted properties in 2008 with a law subjecting absentee owners — often banks — to fines of $1,000 a day up to $30,000 for neglecting properties.
But with nine code enforcement officers and about 1,500 homes in foreclosure, enforcement has proved difficult, city leaders and staffers say.
Assigning responsibility for empty homes can be tricky. Sometimes, owners walk away or banks avoid retaking the title quickly. Mortgages often change hands several times, and lender information in government databases can lag by as much as six months.
Across the Hall, Diversity of Incomes
By Marc Santori New York Times September 2, 2011
MARIETTA HILL lives in a luxurious studio in one of Manhattan’s newest rental high-rises.
The building has a top-of-the-line fitness center and a lap pool in a pristine white-tiled atrium, and a yoga room with bamboo floors. The children have a playroom, and so do the adults — a sleek lounge. A media room is outfitted with a 110-inch screen and plush white leather chairs. The apartments have high-end finishes in the kitchens and bathrooms, and two things every renter covets: ample closet space and a washer/dryer.
Ms. Hill, an orthodontic assistant, pays about $500 a month, even though the starting market-rate rent for a studio in her building is $2,950.
For her, luxury housing is also affordable housing.
In the past, when a developer of market-rate residential buildings included affordable housing in exchange for tax incentives, the affordable units were often put in another complex or even in another borough altogether.
In 2008, however, a change in city regulations made it almost impossible for developers to sequester the affordable units away from luxury digs. And as apartment buildings become ever more extravagant, the diversity within the walls of a single structure can be striking.
Are Bike Lanes Expressways to Gentrification?
By Paul M. Davis Shareable Cities September 7, 2011
A plan to widen the bike lane on Portland’s N. Williams Avenue has reignited an ongoing debate over whether cyclists serve as the front line of gentrification. Jonathan Maus of Bike Portland reports that many in the neighborhood believe the attention given bicycle safety issues, in a community where pedestrian safety has long been ignored, represents a double standard. At a public meeting about the North Williams Traffic Safety Operations Project last month, Donna Maxey was among the attendees who raised these concerns:
“What is causing the anger and resentment is that it’s only an issue of safety now that whites are the ones who are riding bicycles and walking on the streets. Because we have been in this community for years and it has not been an issue and now it’s an issue. So that’s the resentment you’re hearing…years of people being told, you don’t count, you don’t matter…but now that there’s a group of people who’s coming in that look like the people who are the power brokers — now it’s important. That’s the anger. That’s the hurt.”
This is only the latest salvo in a debate taking place in many of the nation’s cities over bike lanes and how they affect disadvantaged communities. In Washington DC, where a 31% increase in white residents in the past decade has been met by an 11% decline in the black population, debates over gentrification have reached a fever pitch.
Household energy use expected to decline
Associated Press September 11, 2011
American homes are more cluttered than ever with devices, and they all need power: Cellphones and iPads that have to be charged, DVRs that run all hours, TVs that light up in high definition.
But something shocking is happening to demand for electricity in the Age of the Gadget: It’s leveling off.
In the next decade, experts expect residential power use to fall, reversing an upward trend that has been almost uninterrupted since Thomas Edison invented the modern light bulb.
In part it’s because Edison’s light bulb is being replaced by more efficient types of lighting, and electric devices of all kinds are getting much more efficient. But other factors exist.
New homes are being built to use less juice, and government subsidies for home energy savings programs are helping older homes use less power. In the short term, the tough economy and a weak housing market are prompting people to cut their usage.
Reaching out to the mentally ill homeless
Haven for Hope is planning a new dorm and outpatient clinic to provide psychiatric care for a hard-to-treat population.
By Melissa Fletcher Stoeltje San Antonio Express-News September 12, 2011
It’s supper time at Prospects Courtyard, the outdoor sleeping area at the Haven for Hope homeless shelter.
A young man plops down in the middle of a wide walkway under the hot September sun and begins a series of baffling hand gestures that could be some sort of prayer or supplication.
When he’s done, he walks to a nearby ledge and sits down, speaking animatedly to no one but himself.
Since opening more than a year ago, the courtyard has regularly drawn 100 to 200 more residents a night than the 400 originally anticipated, Haven officials said. Figuring heavily among this group — as many as three in four — are homeless people who struggle with serious mental disorders, many of whom self-medicate with drugs or alcohol.
Given the high rate of mental illness, plans are in the works to transform an existing men’s dorm on the campus into an 80-bed mental health dorm for male courtyard residents. Retrofitted to face the courtyard instead of the campus, the dorm will house men for 90 to 120 days who volunteer to receive intensive psychiatric care, medication and substance abuse treatment.