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Home Publications Blogs Beat the Press The NYT Finds a Housing Bull!

The NYT Finds a Housing Bull!

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Thursday, 29 April 2010 05:11
University of Chicago economist Casey Mulligan makes the case that housing is now on the upswing. The part of the story that he seems to have missed is that after house prices rose last fall as a result of low mortgage interest rates, a hyperactive HUD, and the first time homebuyers tax credit, they have recently reversed course and are heading downward by most measures. We'll look for Professor Mulligan's account of the second housing slump in 6 months or so.
Comments (9)Add Comment
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written by AndyfromTucson, April 29, 2010 9:02
On my block we had 5 foreclosures in the past year. One was sold to a couple who are now living there, two went to people who are remodeling them, presumably for resale, and the other two appear to be sold (sign down) but nobody is living in them. All this to say, if my block's experience is at all indicative a significant portion of the houses sold in the past year can be expected to go back on the market at the first sign of a recovery, which will tend to dampen any price increases.
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written by vorpal, April 29, 2010 10:11
If he's wrong, will you give a Mulligan a mulligan? Or has he already used his up?
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written by vorpal, April 29, 2010 10:11
If he's wrong, will you give a Mulligan a mulligan? Or has he already used his up?
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written by vorpal, April 29, 2010 10:15
Sorry for the double post. Now that I think of it, it would be really easy to change the blog software so that it checks to see if something is a double post. Why didn't they think of that? Huh.
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written by Queen of Sheba, April 29, 2010 10:19
Demand for housing might pick up legitimately if the banks currently holding mortgage paper were forced to carry that paper on their books at its current worth. The same mess these banks made by overvaluing residential mortgages is about to be duplicated in the area of commercial mortgages, 40% of which are currently underwater and due to reset in the next 2-3 years.

Sometimes it seems as though we'll never get out of this mess - the waves of default just keep washing over us.
more local anecdotes
written by nassim sabba, April 29, 2010 10:36
I live in the more densely populated area of Brookline, a Boston urban satellite, and not a real suburb, at least not in my area.

Within a .5 mile radius of my location, there are four "for rent" signs, two of them have been here for at least three months. Unheard of in Brookline.

There are at least 11 "for sale" signs. Mostly apartments and condos. Some have been up for over two months. One unit was on the market for just over 6 months and sold after about 12% reduction in asking price.

Brookline used to be a "no lose" real estate haven, because of its school system, security, and "stone-throw" proximity to Boston. Median for a household was 82,496 in 2007, before the downturn.

Median house prices was $510,000 in early 2008, last 84 sales had a median price of about $480,000. Four bedrooms had a median price of $1.7 million in 2007, this year, that is down to about $640.

For a town with median household income of around $85,000 the median home prices at around $480,000 are still high.
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written by Ron Alley, April 29, 2010 11:33
The foreclosures continue at a torrid pace -- 930,000 for the past quarter if memory serves. The banks have enough non-performing loans on their books that a high rate of foreclosures is likely to continue until late in 2011. Until the the foreclosures abate improvement in the residential real estate market will be a hope rather than an expectation.

The Mulligan piece adroitly ignores the role continued foreclosures are likely to have in holding down real estate prices.

The anecdotal comments are great.
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written by diesel, April 29, 2010 12:01
Have any of you driven around Florida lately? It's an eerie experience to drive past ghost towns in which every home is brand new. You look down long avenues of pastel houses and see maybe one pickup truck parked in a driveway. They don't even bother putting up for-sale signs in front of the houses, a single billboard at the entrance announces that the whole place is for sale. Cheap. Please. Anyone.

We have acres of empty homes. Millions of new citizens are eager to own. But the market mechanism for connecting the two is lacking. We too need to print up a bunch of money and distribute it to potential homebuyers in the form of higher wages. But any money we create is swallowed by the banking and finance system who are trying to reconstruct their balance sheets. This systemic prejudice--make things right at the top first and the bottom will follow--may be the historically and systemically correct thing to do, I am not wise enough to say, but it is painful to those at the bottom. To simultaneously deny relief in the form of unemployment insurance etc. as the Republicans have done, is just plain callous and cruel.
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written by James, April 30, 2010 4:18
Diesel,

Giving $ to million of eager but unqualified citizens to buy home is back to square one. They need to be able to service the loan for the long term. The prices will come down once all the proping has stopped. So far, they haven't.

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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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