Housing market diagnosis: Bipolar

Source: Money.CNN

NEW YORK-- Bipolar is what comes to mind when diagnosing the post-homebuyer tax credit market. There are two separate forces pulling it in opposite directions, and experts aren't yet sure which path the market will take.

On one hand, sales and prices are rising, indicating recovery. On the other hand, so are interest rates and repossessions, which most certainly do not. And then there are the millions of foreclosures that need to be sold but haven't yet been listed -- so-called shadow inventory -- that could derail a real recovery if they hit the market in floods.

The prognosis? Negative short term but turning positive by the end of 2010.

"In the short run, I see a mini-collapse," said Richard DeKaser, an independent housing market analyst and founder of Woodley Park Research who correctly predicted a downturn back in 2005 when he was chief economist for National City Corp.

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One of market's biggest hurdles is getting beyond the lapse of the $8,000 homebuyer tax credit. Thanks to the incentive, buyers scrambled to beat the April 30 deadline, pushing new home sales up nearly 30% in March.

But that just borrowed buyers from later months. And now we face the hangover effect.

"In the months immediately following the expiration of the tax credit, we expect measurably lower sales," said Lawrence Yun, chief economist for the National Association of Realtors (NAR).

Industry insiders believe the hangover is worthwhile, however, because the credit helped stabilize housing when it most needed help. Home prices have been steadier in recent months, recently experiencing their first year-over-year rise in more than three years.

Still, there are some strong negatives dragging on the market.

1. Interest rates have been intermittently creeping up. Although nobody expects 6% until at least 2011, the days of 4.5% mortgages are behind us.

2. Bank repossessions are on track to surpass a million homes in 2010. But at least foreclosure filings fell in April, the first time since RealtyTrac began reporting.

3. More than a quarter of borrowers are "underwater," meaning they owe more than their homes are worth.

4. "Strategic defaults" -- where underwater homeowners walkway even when they can still afford to pay -- accounted for 31% of all foreclosures in March, according to a recent study.
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But there is one factor that has experts really scared: homes that are ready to be sold but haven't been put on the market. Right now, there could be more than 4.5 million homes in "shadow inventory," according to a recent report by Barclays Capital.

This so-called shadow inventory is a recent phenomenon. In the past, inventory was either tight or it wasn't. But now, with home prices so low and so many foreclosures on the market, both homeowners and banks have been waiting to put properties on the market.

"These sidelined sellers closely watch the market for signs of a possible turnaround and rush in if there's a hint of good news," said Leslie Appleton-Young, chief economist for the California Association of Realtors.

But as more sellers put their homes up for sale, supplies increase, which will depress prices again. Rinse and repeat ad infinitum.

That vicious cycle could cause prices to bounce up and down for years. "I see a saw tooth bottom," Humphries said. "Prices go up; inventory rises, which sends prices down again. That plays out for three to five years of no appreciation. ... Without price appreciation, it leaves more homeowners in negative equity. That's toxic. Any setback, like a job loss, they go into foreclosure."

Green Building Becomes Mainstream

Source: Realtytimes

Green building and remodeling broke into mainstream culture in the past decade, leading to a changing home landscape across the nation.

As this landscape changes, trends are changing as well. So, just what are the trends to be on the lookout for in green housing?

Earth Advantage Institute, a free standing nonprofit organization acting as the Northwest's premier green building program, has identified 10 trends that you'll see in 2010.

The first of these is the smart grid and connecting home. This terminology means, simply, that energy usage now has some accountability. "The development of custom and web-based display panels that show real-time home energy use, and even real-time energy use broken out by individual appliance, will go a long way towards helping change homeowners' energy behavior and drive energy conservation," says Earth Advantage.

Next on the list is energy labeling. This is a great way for builders and homebuyers alike to compare green versus standard. This great tool helps everyone involved know how to get to most "bang for their buck."

Have you heard of BIM software? It's another great green trend on the rise in 2010. And while you may not be seeing its use on small scales, for those larger residential and commercial projects it could be just the ticket to savings. The process includes making and managing building data, through the use of 3D, real-time modeling software. Increased productivity and efficiency are just two of the effects.

Number four on their list is the "buy-in to green by financial community." This means that lenders are wising up about the facts on green homeowners. According to Earth Advantage, "Lenders and insurers are realizing that green home owners are more responsible, place higher value on maintenance, and are less likely to default due to lower operating costs of homes and office buildings."

Another great green trend that comes not a moment too soon is the end of McMansions, and the rightsizing of homes. Homeowners have found over the last few years, that bigger is not always better. Beside the increased cost of construction, energy costs can be extremely high for large square footage homes.

USA Today reported just last year that new homes, after doubling in size since 1960, are shrinking. Reporter Wendy Koch wrote, "Last year [2008], for the first time in at least 10 years, the average square footage of single-family homes under construction fell dramatically, from 2,629 in the second quarter to 2,343 in the fourth quarter, Census data show."

The spread of eco-districts. In definitive terms, eco-districts are "an integrated and resilient district or neighborhood that is resource efficient; captures, manages, and reuses a majority of energy, water, and waste on site; is home to a range of transportation options; provides a rich diversity of habitat and open space; and enhances community engagement and well-being." (Portland Sustainability Institute) Be on the lookout for more of these great areas in your neighborhood and town.

Water conservation is on the minds of many as summer heats up. And because of this, there have been great strides made, to increase the efficiency of the big water users in our homes. Appliances that are Energy Star rated can use a fraction of the water of older models. Low flush toilets and high efficiency showerheads add to the water savings. The showerheads alone can save 750 gallons of water each month.

Carbon calculation is number eight on the Earth Advantage list. They report, "With buildings contributing roughly half the carbon emissions in the environment, the progressive elements in the building industry are looking at ways to document, measure, and reduce greenhouse gas creation in building materials and processes." Did you know you can calculate and counter-balance your own carbon footprint. Visit such sites as The Nature Conservatory to find out how.

Net zero buildings are another trend. This means a building produces less energy than it uses. This is done through the use of geothermal, wind, and solar forms of energy, which are produced at the building's location.

And finally, sustainable building education. The more builders that know about, and are committed to, green building, the more the trend will spread and have greater effect. NAHB chairman, Bob Jones, reports, "Our members are leading the way in sustainable design and construction and helping to drive the market toward greener, more efficient home building."

For example, more than 5,200 builders, remodelers and other industry professionals – including Jones – have achieved the Certified Green Professional educational designation. It is NAHB's fastest growing professional designation, and demand for advanced education and professional credentials is strong.