National Housing Bust: Four More Quarters

Moody's Economy.com says look for a housing market turnaround in early 2009 -- provided market conditions cooperate.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - If you've been wondering when the housing market will turn around, Moody's Economy.com says it has the answer -- early 2009 -- provided market conditions cooperate.

The report, "Aftershock: Housing in the Wake of the Mortgage Meltdown," forecasts the beginning of the end to housing market woes early next year, but only with the alignment of significant housing market conditions.

Given the current state of those conditions, a planetary alignment may also be necessary.

Economy.com's report says to generate a 2009 turnaround, home builders must further curtail housing starts, sellers must shave more off asking prices and lenders will have to loosen their purse strings, among other cooperating market conditions.

To put the housing market on the road to recovery, new homes constructed must fall to 1 million this year, down from the estimated 1.2 million last year.

The report, which incorporates the respected Case-Shiller Home Price Index, a measure of home price appreciation, says the national median home price will have to tumble 12 percent from peak levels. Prices have already fallen 5 percent from their high point, according to "Aftershock" data.

Along with a smaller inventory of homes and lower home prices, a market turnaround will also require more loan modifications to help stop foreclosures from flooding the already oversupplied market.

Creditors must also ease their grip on financing so more consumers can buy homes.

"In this scenario, the housing market finds a bottom by early 2009," the report says.

Unfortunately, the downturn could be prolonged if prices slide too much, too many mortgages fail and money stays hard.

"The ramifications of this for the economy, and thus housing, would be overwhelming. Behind this worry is the financial system's substantial exposure to hundreds of billions in mortgage losses that are set to come," the "Aftershock" report warns.

Another risk is home owners suffering equity losses that amount to too much "wealth effect" erosion.

"As consumers turn more cautious in response to their eroding wealth, the economic expansion will surely waver, but if it falters significantly it will ignite a further devolution of the already reeling housing market," the report further warns.

Without a cooperating convergence of key factors, analysts could begin to use the "C" word -- as in "crash," says the report.

Making no mention of a supposed "media effect," postulated by real estate leaders who say media coverage has exacerbated the housing market slowdown, "Aftershock" sees some light in what it considers "promising" federal policy making efforts.

The report says the Bush Administration, federal legislators and federal regulators are fully engaged in heading off the recessionary impact of the hard-pressed mortgage market.

The Federal Reserve has lowered interest rates, Congress recently passed the "Mortgage Forgiveness Debt Relief Act of 2007," effective January 1, 2008, and lawmakers have several more major pieces of legislation in the pipeline to assist homeowner.

"The most significant upside risk to the housing outlook is that policymakers appear fully engaged in stanching the financial turmoil and ensuring that the economy avoids recession," the report concludes.

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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California New Home Rebound Forecast

California's new home market is due to begin its recovery this year, according to the California Building Industry Association

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - If fence-sitting new home buyers in California wait much longer for the bottom of the market, it could very well slip out from under them.

California's new home market is due to begin its recovery this year, according to the California Building Industry Association.

The new home market won't come back with boom, but the Golden State's new home sales in 2008 will outshine those from in 2007.

Alan Nevin, chief economist for the state's new home building association, says you can count on a modest recovery in California's new home market this year.

Nevin forecasts new, single-family home sales will increase enough in the last six months of 2008 to boost sales to more than 80,000 for the year.

Buyers purchased 70,000 single-family homes in 2007.

Condo sales will edge up too. Buyers are expected to acquire 47,000 new condos in 2008, up from approximately 44,000 in 2007, according to Nevin.

What's fueling the California comeback?

Nevin says California's persistent population growth, shrinking new home inventories and a friendlier credit climate will give more consumers incentives to buy new.

However, before there's another real housing boom in the nation's largest western state, California has to tackle a host of issues.

Dwindling land supplies, a gauntlet of environmental reviews before development, and what the association considers "capricious and arbitrary" impact fees all stand in the way of the kind of development necessary to keep prices affordable.

"Making more land available for new homes and controlling fees on homeownership will help stimulate the housing industry and ensure the projected gains in the market are realized and the dream of homeownership and economic prosperity are regained, said CBIA chairman Ray Becker.

For 2008, the projected total 128,000 new home sales pale by comparison to the peak level 213,000 new homes sold in 2004.

The state needs to build 240,000 homes per year to develop the kind of affordable housing market that will meet the needs of its growing population, according to the CBIA

More California news that really hits home.

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© 2008 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Know How Long Your Home Will Last?

Knowledge of components' life expectancies is what homeowner associations use, in part, to build a reserve fund designed to spread, over time, the cost of the inevitable.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - One way to prepare for the costs of owning a home beyond the mortgage payment, insurance and taxes, is to know the expected life expectancy of your home's components.

Such knowledge doesn't supercede the use of a home inspector when buying a home, new or old, but it can help you develop a savings plan so you are prepared for the inevitable.

Sooner or later you'll have to repair or replace many of your home's parts -- inside and out.

Knowledge of components' life expectancies is what homeowner associations use, in part, to build a reserve fund designed to spread, over time, the cost of the inevitable.

When the roof goes, the appliances conk out, or the paint begins to fade, it's a lot easier to come up with the cash if you've already got some socked away for just this kind of rainy day.

Last year, the National Association of Home Builders, along with the Bank of America developed the "NAHB/BoA Home Equity Study of Life Expectancy of Home Components" to help you take the guess work out of preparing for the worst.

The report suggests you use the timelines as a general guideline. Local weather conditions, use habits, regular maintenance -- or the lack of it -- can all affect the life expectancy of many components.

Personal tastes for contemporary upgrades, remodeling needs and other factors may also dictate replacing parts before their useful life time is up.

In any event based on a comprehensive telephone survey of manufacturers, trade associations and researchers NAHB developed information about the longevity of housing components.

From the foundation to the rooftop, here's a quick look at how long, on a national average, some of the most common home components are expected to last.

• Foundations. Poured concrete block footings and slab foundations should last a lifetime, 80 to 100 years or more provided they were quality built. The foundation termite proofing, 12 years, provided the chemical barriers remain intact.

Properly installed waterproofing with bituminous coating should last 10 years.

• Flooring. Natural wood flooring has a life expectancy of 100 years or more with proper care. Marble, slate, and granite, likewise, but again, only with proper maintenance. Vinyl floors wear out in 50 years, linoleum about 25 years, and carpet between 8 and 10 years, tops.

• Electrical system. In the electrical system, copper plated wiring, copper clad aluminum, and bare copper wiring are expected to last a lifetime, whereas electrical accessories and lighting controls are expected to fail not much longer than 10 years.

• Outside materials. Outside materials typically last a lifetime. Brick, vinyl, engineered wood, stone (both natural and manufactured), and fiber cement typically last as long the house exists. Exterior wood shutters get 20 years, well maintained gutters, 50 if they are copper, 20 years if they are aluminum. Copper downspouts last longest, 100 years or more, while aluminum ones give out after 30 years.

• Doors. Exterior fiberglass, steel and wood doors will last as long as the house exists, while vinyl and screen doors have a life expectancy of 20 and 40 years, respectively. Closet doors are expected to last a lifetime, and French doors have an average life of 30 to 50 years.

• Windows. Wooden windows last longer than aluminum ones -- 30 years compared to only 15 or 20.

• HVAC systems. Heating, ventilation, and air conditioning systems require a religious regimen of maintenance. Still, most components give up within 25 years. Furnaces break down in 15 to 20 years, heat pumps 16 years, and air conditioning units 10 to 15 years. Tankless water heaters can go for 20 years or more, but electric or gas water heaters only 10 years. Thermostats have a 35-year lifespan but are often replaced for more efficient models.

• Appliances. Appliances' life expectancies depend largely on how much they are used, but they are typically replaced long before they are done. One must keep up with the Joneses. Among major appliances, gas ranges live15 years, dryers and refrigerators die at 13, compactors, dishwashers and microwave ovens might last until they are 9 years.

• Roofing. The life of a roof is largely dependant upon local weather conditions, proper building and design, material quality, and adequate maintenance. Slate, copper, and clay/concrete roofs have the longest life expectancy, 50 years or more. Wood shake roofs, go for 30 years, fiber cement shingles last 25 years, asphalt shingles give up at 20.

More appliance news that really hits home!

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© 2008 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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