Houston University economist Barton Smith comments that foreclosures have led to a sort of split in real estate markets – “its’ really a tale of two markets”. He is of the opinion that foreclosures will continue to worry the housing markets locally throughout 2009 also. Cost of fuel and job growth in Houston, however will help to weather the national storm. He was speaking at an annual symposium on Thursday on real estate issues. As banks offload more foreclosed units the real estate will get new shocks. But what the local response will be is difficult to anticipate. In regions of intense foreclosure activity the prices of houses are falling but that of high-end units are rising.
In Houston 36% of the 4,400 houses waiting to be sold have come from the foreclosure category. One third of the sales conducted in Houston in 2007 were financed totally by mortgage loans. It seems that the numbers are going to fall this summer. He added “you can bet we’re going to get a lot of those back.”
Another characteristic is that the houses falling into the foreclosure net are doing so more than once. Many thousands were stamped by foreclosures nearly two or three times during the past five years. It points to flipping of property. With foreclosures on the forward march, it is going to get more difficult to sell off these units. Most of the foreclosures are at the lower end of the market. But it will not take long for these to trickle on to the high-end side. The number of new house ventures has already fallen. This will somewhat tighten the supply end.
While Smith was discoursing on the housing issue, those advocating for affordable houses held a rally in front of the Federal Reserve building, Allen Parkway, demanded tougher lending laws. Spearheading the agitation was Jayne Junkin of ACORN. In no uncertain terms he said “our message is for regulators to have a spine and issue stringent regulations that will actually protect consumers and toughen up on lenders.” ACORN wants to help the foreclosure victims but at the same it wants to plug the leak that has been causing this mess – the wild lenders.
Smith predicted that national recession would put a strain on the local market. Energy industry would keep the local office space market stable for a couple of years. Houston’s economy would get a boost from rise in energy prices although energy consumption bills of residents will cause pain.