Showing posts with label housing futures. Show all posts
Showing posts with label housing futures. Show all posts

Tuesday, December 4, 2007

The United Metros of America

by Broderick Perkins
© 2007 DeadlineNews.Com

Deadline Newsroom - Just as real estate thrives -- or doesn't -- by location, so does the nation, according to a recently announced blueprint for national prosperity.

The blueprint is designed as a new partnership with federal, state, local, and private sector leaders to strengthen metropolitan economies, build a strong and diverse middle class, and grow the nation in environmentally sustainable ways.

It isn't federal policy or a presidential campaign promise.

It's, well, metro.

And it has a strong housing component.

"We are a full-fledged Metro Nation and need to change our mental map of the United States, from a union of 50 states to a network of 363 highly connected, hyper linked, and economically integrated metropolitan areas," said Bruce Katz, Vice President and Director of Brookings Metropolitan Policy Program recently, when launching the "Blueprint For America Prosperity".

That a think tank, rather than the federal government, is launching such a bold bid to reshape the nation, is itself indicative of the nation's ills.

Brookings says more and more often, large metropolitan areas are at the forefront of social change, quickly addressing housing policies, sprawl, sustainable development, education, immigration, infrastructure, energy independence, technological innovation, global warming and a host of other pressing social concerns.

"Metropolitan areas are vital to national prosperity because they're the engines of the economy. So much of what happens in America happens in metropolitan areas," says Rey Ramsey, Chairman and CEO, One Economy Corporation a non-profit spreading technology and information to low-income people.

Eighty-three percent of Americans live in metropolitan areas, which contain 86 percent of American jobs. The vast majority -- 94 percent -- of people in the nation's 100 largest metros live and work in the same metro.

It's not surprising then, that with such a constituency, metropolitan leaders, not Washington D.C. politicos, are the ones with their fingers on the pulse of innovation and the need for both swift and long-term change.

Unfortunately, dynamic efforts on the metropolitan level are getting short-circuited by out-dated policy and procedural procrastination from a growingly more detached federal government.

Stuck on political partisanship and legislative lethargy, bogged down in war and embroiled in another national election, the slow, plodding federal government is too often ineffectual when it comes to addressing the national penchant for prosperity.

"America's metros find our national government strangely adrift, ignorant of the dynamic changes sweeping the country and the new spatial geography of our economy.

Our federal government is mostly a legacy government, a collection of ossified agencies carrying out decades-old programs and policies, through means and mechanisms suited to a pre-Internet world. As a result, our federal government is out of step with rapid change, and is failing to leverage those assets that drive secure and sustained prosperity," Katz said.

He also characterized current government's housing policies aimed at "the expansion of McMansions at the periphery of metropolitan areas, while failing to address the rapid suburbanization of poor people and employment opportunities."

While the blueprint calls for plans to fully recognize and further tap metropolitan might, it also seeks an upgrade in the federal government to foster a federal-metro partnership to put the nation back on the right track.

"A metro can focus on building its economic strengths, but its economy is profoundly influenced by federal monetary, trade, regulatory and investment practices. A metro can focus on reducing income disparities, but only the federal government can close the gap between wages and the cost of living. A metro area can focus on environmental sustainability, but only the federal government can regulate industries on a national scale," Katz said.

Following the blueprint's introduction, Katz's Brookings crew will begin identifying specific reforms for the next administration and Congress to advance key national priorities including boosting innovation and productivity, replicating the best examples of urban school reform, increasing the supply of workforce housing, improving transportation within and across metros, and making energy efficiency in our homes part of the solution to climate change.

"We are a metro nation. And now it is time to start acting like one," Katz said.

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© 2007 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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Thursday, October 25, 2007

Housing Woes Dampen Home Improvement Activity

by Broderick Perkins
© 2007 DeadlineNews.Com

Deadline Newsroom – Homeowners are still bullish on home improvements, but the uncooperative housing market, coupled with hardmortgage money, is making them think twice about getting work completed.

For those who can afford home improvements, that could mean it'll be easier to drive a hard bargain and negotiate to get work done for less.

The Leading Indicator for Remodeling Activity (LIRA), which builds on the Remodeling Activity Indicator that the Harvard University's Joint Center for Housing Studies has been releasing since 1998, reveals home improvement expenditures in 2007 will fall 2.3 percent compared to 2006. By the second quarter of 2008, expenditures will be down 4.2 percent from the previous four quarters and the downturn is expected to continue further into 2008, according to the indicator.

That's because homeowners are concerned about the slowing economy, falling home prices, and the resultant impact on discretionary equity-based money.

Some economic indicators say the housing market recovery may not begin until the end of the decade.

One outlook for home prices based on early returns from housing futures contracts sold on the Chicago Mercantile Exchange (CME) sees home prices falling in major metropolitan areas as far out as 2011.

"The recent problems in credit markets are expected to dramatically reduce the level of cash-out mortgage refinancing activity," said Kermit Baker, director of the Remodeling Futures Program of the Joint Center.

"Given that equity withdrawals have been a key source of funding for home improvements, market spending is expected to suffer," he added.

The news comes even as consumers indicate they are aware of the value of home improvements, especially in terms of bolstering home values in a down market.

Seventy-four percent of consumers recently polled by Opinion Research Corporation said that making renovations or home improvements now will help them get the most money when they decide to sell.

Sixty-seven percent said they plan to initiate a home improvement in the next 12 month, but because they are pinching pennies, the majority plan to paint, rather than take on larger remodeling jobs.

The Opinion Research poll conducted for Miniwax Co. asked consumers where would renovations give them the most return and 63 percent of homeowners said a kitchen do-over while 51 percent said just buying new or refinished kitchen cabinets will add to resale value. Sixty-seven percent said painting the interior or exterior will add value. Other jobs frequently mentioned were bathroom remodels, 58 percent; new carpeting, 54 percent and new or refinished hardwood floors, 49 percent.

Remodeling may also be taking a back seat because more and more home owners are considering smaller homes or relocating, rather than building on.

When the Opinion Research survey asked homeowners what would they do if they could get the right price for their home 35 percent said they would downsize to a smaller house, townhouse or apartment; a similar amount said they would relocate to another city for a change of climate, new job or nicer neighborhood and only 26 percent said they would buy a bigger home.

"As homeowners become increasingly concerned about falling house prices and a slowing economy, home improvement spending is dragging," said Nicolas P. Retsinas, director of the Joint Center for Housing Studies.

"Coupled with very modest home sales, spending levels are likely to fall," he added.

• Housing Market Story Gets TV-MA Rating
• 'Psychological Equivalent of Gold' Still Glitters
• Consumers Ignore Energy Tax Credits
• Home Improvements For Dummies
• Home Remodeling For Dummies

© 2007 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.



DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime


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Tuesday, October 9, 2007

Housing Market Story Gets TV-MA Rating

by Broderick Perkins
© 2007 DeadlineNews.Com

Deadline Newsroom – This story is specifically designed for mature adults only. It may not be suitable for children under 17 and those masquerading as adults. This story contains all of the following: graphic reports of realty volatility (V); statistics of doom (S); and really gloomy language (L).

Make sure the kids are safely tucked away in bed.

And wait for the film clip after the credits roll.

Like the TV-ratings before a late night horror movie, headlines have begun to blare with horror, the kind of horror that gives you no quarter to flee or to fight, allowing only the denial of hope.

"The Roof Is Caving In On the Housing Market;" "Think Housing's Bad? You Ain't Seen Nothing Yet;" and now "Housing Market Story Gets TV-MA Rating."

Apparently, the housing market is in the can and all that's left is to slam on the lid.

The latest plot of housing market doom and gloom is written with recent housing futures statistics that indicate home prices in many major markets will rerun price plunges from now until beyond the start of the next decade.

That'd be 2011.

This outlook for home prices is based on early returns from housing futures contracts sold on the Chicago Mercantile Exchange (CME). Available since May, the contracts and trading of housing futures are based on movement in the S&P/Case-Shiller Home Price Indices, a measure of median home price data for major cities in the country.

CME offers futures contracts for 10 of the 20 cities in the S&P/Case-Shiller index and a composite index of the 10 cities over various months from November 2007 to November 2011.

So, there's your graphic volatility.

From November 2007 to November 2010, the futures outlook for homes prices is an 8 percent drop in the composite number, but real crashing prices in many cities.

The biggest drops for the same period are forecast for Las Vegas, Miami and San Diego which are expected to get clobbered as home prices drop 24 percent in each town; followed by, Denver, down 22 percent; San Francisco, by 20 percent; Washington, D.C. and Los Angeles, both off by 19 percent; New York metro, 13 percent; Boston, 12.4 percent; and Chicago, down only 10 percent during the period.

Statistical doom served up right on cue.

"It gets worse in 2011," says SeekingAlpha.com contributor, Matt Hougan, editor of IndexUniverse.com, which covers product and market developments related to index funds, exchange-traded funds, futures, options and the like, as well as investment strategies using such tools.

You were warned about gloomy language.

Hougan's "The Roof Is Caving In On the Housing Market" goes on, "For all of you who think a 15 to 25 percent pullback in the real estate market can't happen, I suggest you take a look at the CME pricing Web site (free membership required)".

More volatility horror.

"The housing picture is not pretty going forward," according to a Bespoke Investment Group (BIG) examination of the futures numbers in another SeekingAlpha piece, "Think Housing's Bad? You Ain't Seen Nothing Yet".

Bespoke charts the housing futures on the back of the S&P/Case-Shiller short-term gloomy out look and finds, looking forward to 2011, "Miami home prices are expected to fall 28 percent from current price levels. San Francisco is second worst at minus 26 percent and San Diego (showing some recovery from 2010) is third at minus 19 percent. Investors are predicting the composite index to fall 14 percent before coming back slightly by 2011."

Pure statistical doom.

Bottom line?

Housings in the dumps for the rest of the decade -- at least that's what the even money on the Mercantile Exchange says.

According to Bespoke, "So while some are hoping home prices have already bottomed, investors actually putting their money to work are betting on much more significant declines."

Now, here comes that post-credits film clip everyone will miss because they were so annoyed by the potentially rotten outcome they turned off the tube and headed for bed.

There could be some respite from the horrific story line.

Trading in the new housing futures is light, less than two dozen contracts a day. That means, as an indicator, housing futures are little more than a trendy guesstimate rather than a solid predictor of housing's future.

© 2007 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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