The Morning Report
San Diego news and info
you need to take on the day.
The brainiacs over at the Joint Center for Housing Studies at Harvard University just released their annual State of the Nation’s Housing report. (Thanks to the reader who e-mailed in to let me know about it.)
It’s a full six pages long. That’s including the cover and the contents page.
While the document is long on grand statements, most of which support the real estate industry, it’s noticeably short on details. Essentially, it doesn’t say anything new.
“The housing boom came under increasing pressure in 2005. With interest rates rising, builders in many states responded to slower sales and larger inventories by scaling back on production. Meanwhile, the surge in energy costs hit household budgets just as higher interest rates started to crimp the spending of homeowners with adjustable mortgages.”
Hmm, sounds like pretty familiar stuff for voiceofsandiego.org readers, but read on…
“Nevertheless, the housing sector continues to benefit from solid job and household growth, recovering rental markets, and strong home price appreciation. As long as these positive forces remain in place, the current slowdown should be moderate.”
The statement’s not backed up anywhere in the report’s four pages. That information also contradicts a lot of what I and other real estate writers have been reporting. For example, there have been many reports that construction companies are laying people off – see my earlier This Just In entry. (Another reader, who works for a construction company, e-mailed me earlier to tell me several local builders have been laying people off.) Also, construction company stocks are falling in value and home prices in San Diego have been dropping for six months.
The report also doesn’t address the issue of interest-only and negative-amortization loans, an issue many economists have told me is weighing heavily on their minds.
The report merely says that these loans accounted for only 10 percent of total lending last year, and that most people who took them out have a thick cushion of equity to fall back on. But keep tuned for a piece we’re releasing tomorrow that looks at just how many loans in San Diego could be resetting over the next few years and the possible impact that could have on the local economy.
The main problem for the housing market is dropping prices, the report says. I guess that’s what a $30,000-a-year education gets you.
“With building levels still in check and the economy expanding, large house price declines appear unlikely for now. But if the economy falters, both job growth and housing prices will come under renewed pressure,” reads the report.