It’s been a bit of a gloomy day. Here in New York, cloudy skies and intermittent rainfall aptly underscored the ceremony marking the sixth anniversary of the attacks on the Twin Towers. On the housing front,the National Association of Realtors again cut forecasts, citing tighter credit conditions. While I’m in no way attempting to equate the tragedy of 9/11 with the housing market slump, this latest announcement will certainly be a damper on the nation’s spirits.
Ironically, lower Manhattan is one area of the country where real estate is still thriving in the wake of 9/11, but sales of existing homes in the U.S. as a whole are now projected to fall 8.6% this year to 5.92 million, and rise 5.8% in 2008. This forecast is 2% lower than NAR’s previous. New-home sales should fall 24% to 741,000 by the end of this year and 7.4% in 2008—about 13% less than projected a month ago and the lowest total since 1995. “There’s been an unusual hit to home sales, starting in March when subprime problems emerged and more recently when problems spread to jumbo loans, with many potential buyers on the sidelines,” said NAR senior economist Lawrence Yun.
As builders scale back, housing starts should fall 24% this year and 8% next year, according to the NAR. This is 10% less than the forecast last month and would be the lowest number since 1992.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.