ProfNet Wire: Business & Technology: Housing Market
ROUND-UP: HOUSING MARKET
Following are experts who can discuss the rise in the nationwide median price for sales of existing homes -- up 15.1 percent over the last year and breaking the $200,000 level for the first time, according to the National Association of Realtors. A growing number of economists are worried that a bubble in the housing market is coming, while Federal Reserve Chairman Alan Greenspan only acknowledges concerns about a "froth" in certain parts of the country:
**1. CHUCK DANNIS, adjunct lecturer at SOUTHERN METHODIST UNIVERSITY's Cox School of Business, has been a real estate appraiser and consultant since 1972: "Are we about to see the real estate 'bubble' burst? Housing bubbles pop for two reasons: prices get so far out of line with household incomes that the next set of buyers can't afford them, and/or the real estate is simply a commodity whereby speculators seek to buy low and sell high to the next speculator. California is at risk of popping because of the former, and condominiums in Florida because of the latter. Housing prices in Dallas, however, have barely kept up with inflation." Dannis co-founded the Dallas- based firm Crosson Dannis, Inc., in 1976. The firm provides real estate appraisal and consultation services throughout the U.S. for many of the nation's largest real estate lenders and owners. Dannis can discuss the current state of the real estate market.
**2. VALERIE PATTERSON, senior producer of REALESTATEJOURNAL.COM: "While there have been some housing 'busts' after booms, they have been relatively rare, and always driven by some local economic condition, such as severe job losses and a resulting exodus of residents. Some examples of this would be 'oil patch' cities in Texas, Oklahoma, Louisiana and even Alaska that boomed until crude oil prices dropped in the mid-1980s. In some of those cities, housing values dropped precipitously from year to year. Similarly, parts of California saw severe declines in housing values in the late 1980s with the end of the Cold War, a downturn in the commercial real estate market and a decline in defense-related employment. It's true that the 20 percent to 25 percent year-to-year gains that housing values in some U.S. cities have been experiencing can't be sustained, but I don't think a bust is likely to follow."
**3. NORM MILLER, Ph.D., director of the Real Estate Center at the UNIVERSITY OF CINCINNATI: "Californians are more optimistic about housing and more willing to take on greater financial risks, but less able to find new supplies of affordable housing. This makes several markets in California more susceptible to a housing price dip than other markets. Combine the factors unique to California with those affecting the rest of the country, and we can understand that while home prices there have increased more than any other state, they will also fall more quickly, should rates rise. More likely, they will move sideways in California, with less appreciation the next five years compared to the rest of the country."
**4. JEFF LYONS, general manager at REALESTATE.COM: "While recent trends in home appreciation probably aren't sustainable, especially in certain markets, continued low mortgage rates and improving job prospects give consumers the ability and confidence to buy homes. I think we will see a leveling off of what has been a tremendous run for home sales across the country. Consumers looking to buy a home to live in for some time can be less concerned about any slowdown in housing that results from rising rates than those with a shorter time horizon."
**5. ANTHONY MARGULEAS, owner/broker of A.M. REALTY: "We are in a balloon, not a bubble. Real estate isn't like the stock market; it doesn't crash. 'Experts' saying it's a bubble are all financial people with no experience of selling homes. In Los Angeles, the market is driven by supply and demand, and there is still very little for sale. Even in the 'worst' market, prices only fell by four percent annually. Even if interest rates rise, the market will flatten slightly, but that's the air coming out of the balloon, not a bubble bursting. Changes in capital gains and property tax in L.A. are the only things that will force a change."
**6. CHRISTOPHER A. BROWN, co-president of PRUDENTIAL NEW JERSEY PROPERTIES: "The predicted demise of the real estate market is greatly exaggerated. Unlike the stock market, which by its very nature can witness massive price swings in a matter minutes, shifts in the real estate market are more gradual and generally don't involve 'bursting bubbles.' The concept of one real estate market is also somewhat misleading, as markets differ from state to state and town to town and, in some cases, neighborhood by neighborhood. In the end, the market will set the price; it's the ultimate lesson in supply and demand. As real estate professionals, our role is to educate and inform the consumer, allowing them to make informed decisions about buying and selling real estate. As the market evolves, real estate professionals will continue to serve that vital role, ensuring that homes are priced properly to meet the needs of the marketplace."
**7. MAUREEN MCENEARNEY DUNN, general manager of MCENEARNEY ASSOCIATES REALTORS: "Nationally, there is a great deal of discussion concerning the housing bubble, generating anxiety for homeowners and potential buyers alike should such a bubble burst. It's important to note that a bubble is based upon the economic factors of a city or metropolitan area and is not a nationally sweeping condition. We see peaks and valleys in real estate markets across the United States. For instance, the way the housing market performs in Miami has no bearing on how the housing market performs in Chicago. Speaking on behalf of the Washington, D.C., metropolitan region, the real estate market is constantly being driven by the demand of consumers seeking out places to live. In 2004, our area added 70,000 new jobs, and the individuals who fill those jobs need to find a place to live. Due to an employment market that continues to thrive here, there is no chance for a housing bubble to exist."
**8. JAMES BERMAN, president of JBGLOBAL LLC: "Is it possible that a faraway currency gambit is responsible for our housing bubble? Yes, if you consider that China must buy massive amounts of dollar-denominated assets, including Treasury bonds, in order to maintain its much-maligned peg of the yuan to the dollar. Thus, China is forced to buy our bonds to peg its currency. This yield distortion fuels the easy money that has fed the binge on real estate. With mortgage brokers pushing ARMs at 3.85 percent, any six-figure Babbitt can afford a McMansion on Main Street -- that is until rates climb."
**9. JONATHAN NICHOLAS, regional director of RE/MAX OF INDIANA: "Higher medians are due to the high number of buyers in the U.S market. Median prices will continue to increase due to simple supply and demand. Taking average household size into consideration and the high percentage of homeownership rates (67 percent), there are approximately 6-million-plus homebuyers in the market each year. This will continue to provide for a strong market in the future."
**10. JOHN FOLTZ, president of REALTY EXECUTIVES PHOENIX, is long considered an industry expert on the real estate market in the Southwest: The 'bubble' is not going to burst -- it just may sputter a bit." Foltz frequently speaks and writes on real estate subjects and serves on a national strategic planning think tank. He has been active in REALTOR Professional Standards and Ethics matters, and served as president of the Arizona Association of REALTORS in 1998.
**11. NORM BOUR, owner of PRIORITY PLUS LENDING and co-host of a real estate and finance radio show: "As we so lovingly refer to 'Uncle' Alan [Greenspan] on our radio show, and there's no question he is a smart man, he correctly predicted the stock market fallout. But there is, overall, no bubble looming on the real estate horizon. No question, there will be pockets where prices drop; it will primarily driven by interest rate run-ups and employment numbers. Could it drop significantly like in the early 1990s? Too hard to predict, but local areas based on specific situations could see a 10 to 25 percent drop over time."
**12. BRUCE FENTON, founder and president of ATLANTIC FINANCIAL INC., an independent investment firm with corporate and individual clients across America: "People who are part of a bubble rarely realize that they are. One major concern is the similarity between the manias of today's real estate market with the dot-com bubble. When people think they can achieve a 30-40 percent plus consistent annual return on real estate, or that it is a sure thing that can't lose, then it is a sign that irrationality and greed are at play more than logic. Real estate will crash, and some of those people who are now chasing performance will be harmed."
**13. TONY GREEN, managing partner of THE PINEHILLS, a master-planned community in Plymouth, Mass.: "I am seeing a rise in custom homes in the million-dollar range, which may account for the rise in median price home sales. When we started the community years ago, condo sales and townhomes were big sellers. Now, we're seeing the high-end custom home sales really on the rise. Our buyers want top-of-the-line appliances, huge decks, marble bathrooms -- and they have the money to make it happen."
**14. GRAINGER DAVID, writer-reporter at FORTUNE MAGAZINE, recently wrote a cover story called "Real Estate Gold Rush." According to the article, of all the phenomenon the real estate boom has wrought, none is more telling than the emergence of swarms of real estate speculators who snap up properties, flip them and then chase the next hot market: "Comparisons to the stock market bubble of the late 1990s imply that this is a party that will be over soon. At least that's what analysts, experts and the media have been saying for about two years now -- except it hasn't turned out that way."
**15. TOM LAUDANI, principal of NORTHPOINT REALTY DEVELOPMENT, which develops residential projects in Massachusetts and Florida markets: "Southeast Florida is ripe for continued growth over next two to four years. Conversely, Massachusetts' lack of population growth is spurring concerns of a drop-off in the real estate market."
**16. RICK FEDELE, president of SUMMIT MORTGAGE: "Housing supply is not growing quickly enough to satisfy demand. As a result, I expect continued strength in unit sales and pricing throughout the Northeast." Fedele can provide additional perspective on the housing markets and how an increasingly diversified array of lending products are helping more people secure housing.
**17. JANET LEAVITT, is a licensed California realtor and certified loan specialist. She has satellite offices in France, Germany and Hong Kong, and is designated as a Certified International Property Specialist (CIPS) from the National Association of Realtors. Leavitt is also a member of FIABCI, an international real estate organization, and was part of a FIABCI/U.S. trade mission to the United Kingdom and France last December. She can comment on a wide variety of domestic and international real estate issues and has both written articles for and served as an ongoing editorial source for numerous real estate and business print/online publications.
**18. ANTHONY CUTAIA is a licensed mortgage, real estate broker and host of "Talk About Mortgages and Real Estate," a live call-in radio show heard daily by 3-million-plus listeners in South Florida, parts of New York and New Jersey. Cutaia has 35-plus years of diverse experience in the financial markets. He started his career as a stockbroker and registered investment advisor, and has developed residential and commercial real estate properties valued at over $120 million. He is a member of the National Association of Mortgage Brokers, Florida Association of Realtors, National Association of Realtors and the Commercial Realtors Society.
**19. JACKY TEPLITZKY, executive vice president at PRUDENTIAL DOUGLAS ELLIMAN, a New York-based brokerage firm, and leader of THE JACKY TEPLITKZY TEAM, a Manhattan-based group of real estate professionals, is considered an expert market resource and is frequently quoted by influential press outlets. Teplitzky is an in-demand guest speaker and has presented at leading financial, trade and consumer venues, such as Smith Barney, Merrill Lynch, the Real Estate Board of New York and the Learning Annex.
**20. JAMES R. GILLESPIE, president and CEO of COLDWELL BANKER REAL ESTATE CORPORATION, can discuss real estate issues and the possibility of a bubble in the housing market. Gillespie is only available for national media.
**21. DONNA AND SHARON FREEMAN, co-hosts of HGTV's "Designed to Sell," specialize in transforming homes to sell for top dollar in the highly competitive game of real estate and are former real estate brokers.
ROUND-UP: BANKRUPTCY REFORM BILL (continued)
We've added the following to items posted previously at http://profnet.prnewswire.com/organik/orbital/thewire/lst_leads.jsp?iLRTopicID =8904
**1. TIMOTHY P DUGGAN, shareholder and chair of the Bankruptcy & Creditor's Rights Group for the Lawrenceville, N.J-based STARK & STARK: "The Reform Act, as a whole, is a bad law. Although certain provisions of the act address minor abuses (i.e., multiple bankruptcy filings, super-discharge in Chapter 13), on a whole, consumers who need relief will be hurt. The credit card industry flexed its muscle and convinced Congress to pass a law that was not necessary."
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LEADS
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**2. MANAGEMENT: OUTSOURCING CFOs ARE BECOMING A VIABLE OPTION. JEFF KUHN, managing principal and co-founder of the San Francisco Bay Area consulting firm FINANCIAL LEADERSHIP GROUP: "Sarbanes-Oxley, options expensing and other pressing issues have made the CFO role more challenging and stressful, which, according to recent studies, including one by Russell Reynolds Associates, is at least partly why turnover is appreciably higher year over year. In today's regulatory climate, boards of directors and their CEOs cannot afford prolonged searches for CFO talent. Outsourcing for interim solutions is becoming a more viable option. At least that's the case for Financial Leadership Group. Four of its 13 members are the CFOs of record for their client companies. All of the firm's members have CFO credentials, and assignments can be structured and implemented quickly. I suspect similar situations can be found elsewhere around the country."
**3. REAL ESTATE: ALTERNATIVE MORTGAGES CAN HELP THOSE WITHOUT A STEADY PAYCHECK. DAVID HERPERS, director of consumer affairs at AMERISAVE MORTGAGE: "In light of soaring home prices, how can an atypical homebuyer compete with the mainstream? Many homebuyers don't draw a steady paycheck -- they own businesses, make commissions, live off investments or get their income in cash. Others don't want to give up financial privacy. Alternative mortgages are available to help you get more 'house' for your money. With higher rates than typical mortgages, borrowers pay for flexibility and privacy. It's also a way for these customers to establish creditworthiness in the eyes of mainstream lenders. When obtaining these types of loans, find a lender who understands the product, and decide if it's worth paying an extra fraction of a point to get approved for the mortgage you want rather than continuing to rent, keeping your existing mortgage, increasing your down payment or choosing a less expensive home."
**4. TECHNOLOGY: RANSOM-WARE IS A NEW TRICK OF THE SPAM-SCAM WORLD. JOEL SMITH, chief technology officer at APPRIVER, an e-mail security managed service provider: "Ransom-ware is a new type of malicious spam capable of encrypting files on your computer and demanding ransom money in exchange for the digital keys to unlock the files. Because of the logistics involved and the risk of getting caught, I don't think this will be a widespread 'for profit' scam for some time to come. This type of bold tactic is the stuff of which movies are made. A less aggressive angle would be requiring the victim to visit a political propaganda or 'spamvertised' site for a code to unlock the sequestered files. The actual codeword or phrase would likely be propaganda as well. For best protection, be sure your security software is updated, your operating systems are all patched with automatic updates, and report any suspicious emails to your anti-spam service provider."
**5. TELECOM: THE FCC'S RULING FORCING VoIP TO PROVIDE e911. YARON RAPS, solution partner at BUSINESSEDGE SOLUTIONS INC.: "For VoIP to become widespread, it must perform like regular telephone service. There are many differences between basic 911 and e911. With the new ruling, VoIP providers must offer e911. There are challenges for some providers to comply with the FCC ruling. Where VoIP had been marketed as a low-cost alternative to regular phone service, with the new requirements of e911, some cost savings of VoIP will disappear." Raps can comment on how the e911 ruling affects providers. He can also talk about which segments have the most to gain or lose, and how VoIP will change for consumers.
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