Apr. 26, 2010: UIYB: Housing

>> Rooney: IF YOU BELIEVE
THAT AS THE HOUSING MARKET
GOES SO GOES THE ECONOMY,
WELL, THE SIGNALS HAVE BEEN
MIXED.
NEW-HOME SALES SKYROCKETED
IN MARCH.
BUT JUST LAST WEEK
FORECLOSURE PETITIONS WERE
REPORTED UP MORE THAN 20%.
OUR UP IN YOUR BUSINESS
CONTRIBUTOR KRIS FRIESWICK
IS HERE TO SORT OUT WHAT IT
ALL MEANS, WHAT DOES IT
MEAN.

>> SO THE HOUSING STARTS UP,
THE GREATEST UP IN 47 YEARS.
OF COURSE IT HAD BEEN DOWN
SO FAR.

>> RIGHT THERE WAS REALLY
NOWHERE LEFT TO BUT UP AT
THIS POINT.
BUT WHAT WE'RE SEEING IS
THAT HOUSING SALES ACTIVITY
IS REALLY DOING MUCH BETTER
THAN ANYONE ANTICIPATED,
ESPECIALLY LATE IN
MASSACHUSETTS, ESPECIALLY IN
LIGHT OF THE FLOODS THAT WE
HAD LAST MONTH.
EVERYONE FIGURED THAT WOULD
TAKE A REAL BIG CHUNK OUT OF
WHATEVER THE HOUSING DETAIL
NUMBERS WERE GOING TO BE.

>> Rooney: BECAUSE PEOPLE
ARE HAD TO FIX THEIR HOMES.

>> FIX HOMES, CLOSINGS GOT
DELAYED BECAUSE THE HOUSE
WAS UNDERWATER.
OR THE OWNERS WERE STILL
UNDERWATER TRYING TO GET THE
HOUSE CLEAN KDZ UP IN ORDER
TO SHIFT IT TO THE NEW
PEOPLE.
BUT WHAT ENED UP HAPPENING
WERE THE NUMBERS WERE JUST
REMARKABLY STRONG.
AND ONE CAN ONLY IMAGINE
WHAT THEY WOULD HAVE BEEN IF
WE HADN'T HAD-- .

>> Rooney: WHAT CATEGORYS
WERE THEY, LIKE WHERE.

>> STATEWIDE, THE NUMBERS
WERE UP I WANT TO SAY NEW
SINGLE-FAMILY HOME SALES
WERE ABOUT 21% UP OVER A
YEAR AGO.

>> Rooney: AND CONDOS WERE
UP 38%.

>> CONDOS UP 38%.
IN MASSACHUSETTS
SINGLE-FAMILY HOME SALES
WERE UP 31%.
SO IN METRO BOSTON, THE
NUMBERS WERE EVEN STRONGER
THAN IN THE STATE AS A
WHOLE.
SO THE NUMBERS WERE
SURPRISINGLY OPTIMISTIC FROM
THE SALES PERSPECTIVE.
WE CANNOT, OF COURSE,
DISCOUNT THE IMPACT OF THE
TAX CREDIT.

>> Rooney: THE TAX CREDIT.

>> EXACTLY.

>> Rooney: THAT WAS FOR NEW
HOME BUYERS ONLY.

>> NEW HOME BUYERS, THEY
EXTENDED IT TO EXISTING
HOMEOWNERS, SOME FINANCIAL
LIMITS APPLIED.
AND SO WHAT WE HAVE NOW IS A
SITUATION WHERE VERY SOON
THAT TAX CEDE CITGOING TO GO
AWAY.

>> Rooney: LIKE THIS FRIDAY.

>> RIGHT.
AND YOU HAVE TO CLOSE BY
JUNE 15th.
SO EVERYONE IS HOLDING THEIR
BREATH.
WHAT'S GOING TO HAPPEN NEXT.
HERE IS WHAT I THINK IS
GOING TO HAPPEN.
EVERYONE I TALKED TO WHO HAS
BEEN IN THE HOUSING MARKET
RECENTLY SAYS THAT THERE IS
REALLY A PROBLEM WITH
INVENTORIES.
THERE IS NOT MUCH INVENTORY
OUT THERE.
SO IF THE NUMBERS ARE THIS
GOOD IN A LOW INVENTORY
SITUATION, YOU TAKE OUT THE
TAX CREDIT, THAT IS EVEN
LESS OF AN INCENTIVE FOR
SOMEBODY TO PUT THEIR HOUSE
ON THE MARKET RIGHT NOW,
INVENTORY GOES DOWN.
LAWS OF SUPPLY AND DEMAND
TELL US WHEN INVENTORY GOES
DOWN, PRICES CONTINUE TO GO
UP.
SO WHILE THE ACTUAL NUMBER
OF HOMES THAT GET SOLDS
MIGHT NOT HAVE THE SAME
TRAJECTORY AS WE ARE SEEING
NOW, WHAT MIGHT HAPPEN WHICH
IS MORE IMPORTANT IS IF YOU
OWN A HOME IS THE PRICE IS
GOING TO PROBABLY START
PICKING UP.

>> Rooney: THAT A GOOD
THING.

>> THAT'S JUST MY SORT OF,
YOU KNOW, ECON 101
INTERPRETATION OF I THINK
WHAT MIGHT HAPPEN WHEN THE
TAX CREDIT GOES AWAY I THINK
A LOT OF PEOPLE THAT MIGHT
HAVE BEEN PUTTING THEIR
HOMES ON THE MARKET, YOU
KNOW, KNOWING THE TAX CREDIT
WAS THERE WAS A BIG
INCENTIVE TO GET YOUR HOUSE
ON THE MARKET.
AND NOW THAT THAT IS GONE,
THE INCENTIVE MIGHT NOT BE
THERE.
HOWEVER LIKE I SAID, WE ARE
SEEING A LOT OF ACTIVITY
THAT NOBODY ANTICIPATED.

>> AND WHAT ABOUT THE
FORECLOSURES.
BECAUSE THE COMPETITIONS FOR
FORECLOSURE WERE ALSO UP
LIKE 20% IN MASSACHUSETTS.

>> YES.
AND THEY WERE UP ACTUAL
FORECLOSURES WERE UP
SIGNIFICANTLY.
ONE OF THE HIGHEST LEVELS
THAT WE'VE SEEN IN A YEAR.

>> IN THIS STATE.

>> IN THIS STATE.

>> I FIND THAT AMAZING.

>> I KNOW, IT'S ALMOST LIKE
WHICH IS RIGHT.
WE HAVE GREAT HOME SALES YET
WE STILL HAVE PEOPLE WHO ARE
IN DANGER OF LOSING THEIR
HOME.

>> Rooney: ARE THESE PEOPLE
ON THE TAIL END OF THE
SUBPRIME MORTGAGE LOANS.
WHO ARE THESE PEOPLE NOW,
THIS WAVE.

>> THE THINKING IS THAT THEY
ARE, INDEED, AT THE TAIL END
OF SOME OF THOSE CONFUSING,
SUBPRIME LOANS, AND THEY'RE
NOT JUST SUBPRIME.
THERE ARE ALSO A LOT OF
PRIME LOANS MADE TO PEOPLE
WHO LOST THEIR JOB OR WHO
GOT IN WAY OVER THEIR HEAD.
WHICH IS WHY IRONICALLY,
THERE HAS ALWAYSLY BEEN A
SPIKE IN THE NUMBER OF
FORECLOSURE PETITIONS IN
WEALTHY COMMUNITIES LIKE
WELLESLEY, WESTON AND
SUDBURY, THERE HAS BEEN AN
EBB IN THE NUMBER OF
FORECLOSURE INITIATIONS IN
POORER COMMUNITIES OR LESS
WEALTHY COMMUNITIES.

>> Rooney: BECAUSE THEY GOT
OUT A LONG TIME AGO.

>> I THINK PROBABLY WHAT HAS
HAPPENED IS THE PEOPLE THAT
LOST THEIR JOBS IN THE
WEALTHY COMMUNITYS HAD MORE
OF A NEST EGG TO TAP INTO.
AND SO MAYBE THEIR
FORECLOSURE WAS JUST DELAYED
A LITTLE BIT LONGER BECAUSE
THEY HAD MORE RESOURCES TO
DEPLETE BEFORE THEY WENT
INTO DEFAULT.

>> Rooney: WHAT ABOUT THE
REGULATIONS THAT WENT INTO
PLACE BOTH NATIONALLY AND
STATEWIDE TO STAVE OFF THESE
FORECLOSURES.
I THOUGHT WHAT IS WHAT THE
ATTORNEY GENERAL AND OTHERS
WERE PUTTING-- WHAT IS
HAPPENING WITH THAT?

>> THE HOMEOWNERSHIP
ASSISTANCE AND MORTGAGE
PROGRAM HAS BEEN A
RESOUNDING FLOP.
THE BANKS HAVE DRAGGED THEIR
FEET.
EVERY SINGLE STEP OF THE WAY
AND OF COURSE THE BANKS
WOULD SAY NO, NO, NO, WE
HAVE HE BEEN MODIFYING LOANS
LIKE CRAZY.
THERE SOME QUESTION AS TO
THE NATURE OF THE LOANS THAT
ARE GETTING MODIFIED WHETHER
THEY ARE REALLY ENDANGERED
LOANS OR WHETHER THEY ARE
JUST LOANS THAT THEY
MODIFIED AND LUMPED THEM
INTO THE HONE MODIFICATION
DEFINITION TO MAKE
THEMSELVES LOOK A LITTLE
MORE MAGNAN MUSS THAN THEY
REALLY ARE.
THE FACT OF THE MAT
CERTIFICATE THAT THOSE
PROGRAMS HAVE NOT EVEN BEGUN
TO TOUCH THE FORECLOSURE
CRISIS.
AND THE BANKS ARE IN NO
HURRY TO DO IT.
AND IF HOME PRICES TART TO
GO UP, GUESS WHAT, THEY ARE
GOING TO BE, THEY ARE GOING
TO HAVE EVEN LESS INCENTIVE
TO NOT FORECLOSE.
BECAUSE IF YOU HAVE A
FORECLOSED PROPERTY AND ARE
YOU THE BANK AND YOU OWN IT
ALL OF A SUDDEN, AND THEN
THE PRICES, THE PRICE THAT
YOU CAN GET FOR THAT HOME ON
THE MARKET IS GOING DOWN.

>> FORECLOSE,.

>> ARE YOU A MUCH GREATER
INCENTIVE TO WORK WITH THE
OWNER.
IF THE PRICE FOR THE
PROPERTIES ARE GOING UP,
FORECLOSE AND GET A HIGHER
PRICE.
GET THE DEADBEAT OWNER OUT
OF THERE AND SELL IT FOR A
HIGHER PRICE ON THE OPEN
MARKET.
SO UNFORTUNATELY FOR PEOPLE
THAT ARE FACING THE RISK OF
FORECLOSURE, THE PROGRAM
STICKS ARE STRONG ENOUGH,
MAKE THE BANK COOPERATE AND
THE INCENTIVE FOR THEM TO
NOT COOPERATE IS GETTING
STRONGER.
WE MAY SEE EVEN MORE HIGHER
RATES OF FORECLOSURES GOING
FORWARD FOR THOSE TWO
REASONS.

>> Rooney: JUST IN TERMS OF
THE RECESSION, THOUGH.
I MEAN IS THE HOUSING
INDICATORS A GOOD SIGN THAT
WE'RE COMING OUT OF THAT?

>> IT ABSOLUTELY IS A GOOD
SIGN.
BECAUSE THAT MEANS PEOPLE
ARE CONFIDENT.
THEY ARE CONFIDENT ENOUGH TO
PUT DOWN LARGE SUMS OF
MONEY.
AND COMMIT THEMSELVES TO A
MONTHLY PAYMENT.
WHICH MEANS THAT THEY HAVE A
JOB.
IN FACT, YOU HAVE TO HAVE A
JOB THESE DAYS OR ELSE YOU
WON'T GET A MORTGAGE.
AND NOT MANY PEOPLE ARE
BUYING FOR CASH.

>> Rooney: EITHER THAT ARE
THEY ARE PAYING CASH.

>> BUT WHAT WE ARE SEEING IS
THAT THE ECONOMIC CONSENSUS
IS THAT WE TRUST THE
RECESSION TROUGH IN AUGUST
OF 2009.
WHICH MEANS THAT HALLELUJAH
WE ARE FINALLY ON THE
UPSWING.
NOW THE OFFICIAL BOARD THAT
SORT OF CALLS THE TROV OF
THE RECESSION OFFICIALLY THE
NATIONAL ECONOMIC RESEARCH
BUREAU WHICH IS BASED IN
CAMBRIDGE, THEY RECENTLY
DECLINED TO DECLARE THE
TROUGH, NOT BECAUSE THEY
DON'T THINK IT'S HAPPENED
YET BUT BECAUSE THEY DON'T
HAVE ENOUGH INFORMATION TO
SAY WE OFFICIALLY PRONOUNCE
THAT THIS WAS THE TROUGH.
HOWEVER, AN ECONOMIST I
SPOKE TO TODAY FROM
NORTHEASTERN ALLEN CRAYTON
MATTHEWS SAID THAT
UNEMPLOYMENT IS RAPIDLY
IMPROVING.
RETAIL SALES ARE IMPROVING.
SALES TAX REVENUE ARE
IMPROVING.
ALL THINGS THAT INDICATE
THAT MASSACHUSETTS IS
ON-- WZ WE'LL WAIT FOR THEM
TO BRING THAT IT THANKS FOR
BEING HERE.
NEWSPAPER YOUR BUSINESS.
AND WHEN WE CONTINUE A NEW
TAKE ON THE SCIENCE RELIGION
DEBATE.