Home sales up, but not really
TEXT OF STORY
KAI RYSSDAL: The housing industry had what looked at first glance like great news today. The National Association of Realtors reported sales of previously owned homes were up 6.5 percent in December. That is way more than economists had been expecting. And to be honest, who’s not receptive to good news from real estate nowadays? Scratch the surface, though, and you’ll find the numbers are less than meets the eye.
Marketplace’s Nancy Marshall Genzer explains.
NANCY MARSHALL GENZER: Buyers took advantage of rock-bottom prices in December. In fact, almost half of the December deals were foreclosures, or short sales, where the house is sold for less than what is owed on the mortgage.
Lawrence Yun is chief economist for the National Association of Realtors. He says in California, Florida and Nevada, up to 70 percent of the deals are these distressed sales.
LAWRENCE YUN: We are seeing a stronger level of activity in those market where prices have plunged.
Buyers in these markets will only go for super cheap houses. If I weren’t such a nice person, I might call them vultures. Rick Sharga does.
RICK SHARGA: Vultures actually have their role in the food chain. You don’t want to leave rotting carcasses around because they spread disease.
Sharga is senior vice president of Realty Trac.
SHARGA: Anybody who can help to get families into these homes to get them from being vacant, boarded-up, potential meth labs into a place where a family can live and thrive is actually doing a service.
Sharga knows what he’s talking about. He’s got two foreclosed homes in his California neighborhood. But what about areas that weren’t kicked in the shingles by the subprime crisis? Like my Washington, D.C. suburb? Am I going to start seeing rotting carcasses? Economist David Resler of Nomura Securities says maybe.
DAVID RESLER: With the entire U.S. economy in a severe recession, all local housing markets are relatively weak.
Resler says if unemployment spikes and the economy gets weaker, even healthy neighborhoods like mine will start sprouting foreclosure signs.
In Washington, I’m Nancy Marshall Genzer for Marketplace.
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