Headlines: Volume 12 Issue 27

Foreign assets

Good news from financial analysts: Foreign investment in real estate—particularly in Florida—is likely to pick up. So says Mark Vitner, chief economist for Charlotte, N.C.-based Wachovia Corp. “The dollar is on sale,” said Susan Wachter, a professor of real estate at the Wharton School at the University of Pennsylvania. She points to the declining value of the dollar against the euro—the currency of 13 European countries: Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal, Slovenia and Finland. Today, a foreign buyer would need only 34,100 euros to make a $50,000 downpayment on a house, compared to 37,920 euros to make the same downpayment at the beginning of the year.

What buyers want most in a home: air conditioning, over-sized garages and walk-in closets, according to NAR’s recent analysis of economic indicators.

U.S. House OKs natural disaster legislation

Property owners in disaster-prone states are one step closer to obtaining affordable property insurance. Last week, the U.S. House of Representatives voted 258-155 in favor of legislation intended to stabilize the catastrophe insurance market by expanding the private sector’s capacity to cover a natural disaster and helping states to better manage risk. The Homeowners’ Defense Act of 2007 (H.R. 3355), authored by Florida Congressmen Ron Klein (District 22) and Tim Mahoney (District 16), would allow states to contribute to an insurance fund to help pay the unusually high number of claims that result from a natural disaster. States would have to ensure that private insurance companies pass along savings to homeowners in the form of lower premiums. “The increased security and predictability of a national backstop will help to stabilize markets following a catastrophe, prevent insurance availability problems, and reduce insurance costs for consumers," says Rep. Klein. Three natural disaster bills were introduced in the Senate last week.

People watching

Reports of Florida’s declining population boom are greatly exaggerated. That’s according to Stan Smith, director of the UF’s Bureau of Economic and Business Research. “There have been a number of news articles lately focusing on the idea that population growth in Florida has fallen off and practically come to a standstill, and that simply isn’t true,” says Smith. “Florida has a strong economy and adds jobs every year. That is a major factor in last year still being a big year for population growth, even though it was less than in the previous three years.” According to new UF research, Florida’s population grew by 331,000 between 2006 and 2007, or about 900 people per day. That’s slightly less than the 1,100-people-per-day rate recorded a few years ago. Florida’s total population is 18,680,367 as of April 1, 2007. Where are all these people going? To Orange, Miami-Dade and Hillsborough counties, according to UF. But in terms of growth rates, Flagler, Sumter and Osceola counties lead the state.

Take five

How do you fix a troubled housing market? Forbes.com asked that question of a broad range of housing experts, including CEOs of real estate firms, real estate practitioners, economists from lending institutions, and research directors at analytics firms. Here are their suggestions:

Restore investor faith. “Mortgage fraud, by both borrowers and insiders, must be identified and prosecuted in order for faith to be restored in the market,” says Anthony Sanders, professor of real estate finance at Arizona State University.
Expand Fannie Mae, Freddie Mac and FHA loans. “Our local banks and community banks have done a great job providing funding. FHA should be there as a supplemental for people who have good credit,” says Congressman Lincoln Davis (D-Tenn.)
Cut construction and prices. “The market will only hit bottom after builders cut construction and sellers slash prices,” says Mark Zandi, chief economist at Moody’s Economy.com. “The longer builders and sellers hold on, the longer the market will struggle.”
Bring back non-agency loans. “The dramatic seizing of the mortgage-credit markets caused the elimination of almost any loan that wasn’t backed by Fannie Mae or Freddie Mac,” says Bob Walters, chief economist at Quicken Loans. The revival of non-agency loans “will add much-needed mortgage funding to potential home buyers and folks looking to refinance.”
Buyers and sellers get real. Nelson Gonzalez, senior vice president of Esslinger, Wooten Maxwell, believes that once buyers realize that they’re not going to convince a seller to accept a rock-bottom price, fluidity and activity can return to the market. “There is much pent-up demand,” he says, “and buyers have been sitting on their hands for some time now.”

Got a better idea? Send your suggestions on how to fix the housing market to lisaw@far.org.