By John Benson
Editor’s Note: The following information is compiled from a White Paper recently released by the author. The White Paper is titled, “60% of the U.S. Can Stop Worrying about Housing Market”.
RISMedia, Aug. 14, 2008 – When it comes to the national housing market, there is a lot of gloom and doom in the daily newspaper. Just look at a few recent headlines:
“Home Builder Sentiment, So. California Home Prices Crumble” – USA Today, 7/16/08
“Home Builders Post Steep Losses as Value of Unsold Land Slips” – New York Times, 7/27/2008
“Home Prices In May Took A Steep Fall” – The Wall Street Journal, 7/30/2008
“Thank God the economy is not as bad as you read in the newspaper everyday.” – Phil Gramm, top economic advisor to Sen. John McCain (R-AZ)
Lost amid the uproar caused by Gramm’s proclamation that the U.S. is a “nation of whiners” was a breath of economic fresh air to Realtors nationwide.
The economic recession that the United States is facing has been portrayed in the media as being brought about by the rising cost of oil and the “burst bubble” in the housing market. There is no denying that the cost of oil continues to stand at near record levels. But while the bubble has burst on the housing market, is it really still a nationwide problem?
A recent report contributed to RISMedia, “Why 60% of the U.S. Can Stop Worrying about the Housing Market,” simply states “no.”
While home values did fall as the bubble burst, the media continues to report constant drops across the nation in national home values.
The Office of Federal Housing Enterprise Oversight’s (OFHEO) House Price Index (HPI) tells a different story than the media is reporting. Citing data from home sales and appraisals for refinancing, OFHEO reported in May that 35 states saw a positive home value price change in the first quarter of 2008. In addition, 164 MSAs showed positive first quarter appreciation when compared to the same quarter of 2007.
“You’ve heard of mental depression; this is a mental recession,” said Gramm on July 9.
According to statistics from City-Data.com, 54 of the 101 cities with the largest population increase from 2000 – 2006 are located inside California, Nevada, Florida, and Arizona – the four states most affected by decreasing home values.
As the populations in these areas have settled, home starts continued…and speculation caused a rapid rise in home values. Now, there is an enormous real estate surplus, and those same four states are witnessing an economic period of leveling out.
Just because four states are still falling, and 11 other states continue to try and stabilize doesn’t mean the entire market will continue to take the plunge. According to PMI Mortgage Insurance Company’s “Economic & Real Estate Trends” report for Summer 2008, almost 68% of the nation’s 322 remaining MSAs experienced positive appreciation during the quarter when Metropolitan Statistical Areas (MSAs) located in California, Florida, Nevada, and Arizona are removed from PMI’s calculations.
For nearly 63% of Americans, the worst of the “housing crisis” seems to be over. As recently as late July, while economists were still not ready to call a bottom, positive signs began to show for home sales and home values.
To access the complete White Paper, “60% of the U.S. Can Stop Worrying about the Housing Market,”.
John Benson is a real estate analyst who helped lay the groundwork for many startups across the Mid-Atlantic, and now works with Realtors in the region as a new media and marketing consultant. He welcomes your questions and comments. Contact him via e-mail: jbenson304@gmail.com.
