Housing buzz: Rising short sales, below-cost appraisals and a chance for another bubble
Are we building too many new homes if so many are appraised for less than the cost of constructing them? Photo: Maurice Rivenbark, Tampa Bay Times
Wake up and good morning. Some mixed signals on the housing front. Feels like one step forward and one step back, But you decide.
The Good News: The number of U.S. home short sales surpassed foreclosure deals for the first time as banks became more agreeable to selling houses for less than the amount owed on their mortgages. So says a report from Jacksonville-based Lender Processing Services as reported here by Bloomberg News. That signals new flexibility by banks -- including a greater willingness to take a financial hit -- and assures swifter resolution of housing problems.
The Bad News: U.S. home building is falling in part because a big chunk (as much as a third) of new homes being built are getting appraised for less than the cost of constructing them. "Roughly a third of builders say the appraisal amount was less than the cost of building the homes, says a Smart Money magazine posting, citing data from the National Association of Home Builders. Nobody's going to build homes whose value is less than cost, and nobody's going to buy homes appraised for less than the cost to buy it. The housing glut continues to depress values.
Is Another Housing Bubble Possible? You bet, say economic experts at this International Economic Forum of the Americas, as reported by the Palm Beach Post here. Lawrence Yun, economist for the National Association of Realtors -- an organization with a long history of pro-housing Pollyanna predictions -- says Florida existing-home prices (not sales but prices) will jump 10 percent by the end of 2012.
Hey, I'd settle for half that forecast.
-- Robert Trigaux, Business Columnist, Tampa Bay Times