Thursday, February 24, 2011

U.S. Economy: Existing Home Sales Climb to Eight-Month High

By Bob Willis - Feb 23, 2011

Sales of U.S. previously owned homes unexpectedly climbed in January to the highest level in eight months as investors used all-cash transactions to snap up distressed properties.
Purchases increased 2.7 percent to a 5.36 million annual rate, figures from the National Association of Realtors showed today in Washington. The share represented by foreclosures and short sales rose to a 12-month high, pushing the median price to the lowest level in almost nine years.
Affluent investors may continue taking a bigger share of the market as credit restrictions and 9 percent unemployment keep first-time buyers at bay. A pickup in job growth is needed to ensure more Americans will be in a position to consider home ownership.
“It is really a foreclosure-driven market,” said Ethan Harris, head of developed markets at Bank of America Merrill Lynch Global Research in New York, who projected sales would increase to a 5.38 million rate. “I don’t think it is a sign of the market returning to health.”
Stocks fell as oil prices surged and Hewlett-Packard Co.’s forecasts trailed analysts’ estimates. The Standard & Poor’s 500 Index dropped 1 percent to 1,302.51 at 12:22 p.m. in New York. The S&P Homebuilder Supercomposite declined 3.6 percent as foreclosures represent competition for construction companies.
The median forecast of 73 economists surveyed by Bloomberg News projected a 5.22 million sales pace from a previously reported 5.28 million rate in December. The NAR revised the prior month down to 5.22 million. Estimates ranged from 4.86 million to 5.4 million.
Distressed Properties
Lawrence Yun, chief economist at the Realtors’ group, said distressed sales accounted for 37 percent of total sales last month and all-cash transactions represented 32 percent, three times the average of about 10 percent.
The increase in demand was “encouraging,” Yun said in a press conference as the figures were being released. “Right now it is the cleansing of distressed property that is coming on to the market” that is driving sales. Investors with all-cash offers are rushing in looking for “bargains,” he said.
Those sales climbed to about 50 percent of the total in cities like Las Vegas and Miami last month, he said. The share of first-time buyers fell to 29 percent last month compared with an average 40 percent, said Yun.
The median price decreased 3.7 percent from January 2010 to $158,800, the lowest since April 2002. Purchases were up 5.3 percent from a year earlier, when a government tax break was still in effect.
Less Supply
The number of previously owned homes on the market fell 5.1 percent to 3.38 million in January. At the current sales pace, it would take 7.6 months to sell those houses compared with 8.2 at the end of the prior month.
Month’s supply in the eight months to nine months range is consistent with stable home prices, the group has said.
Three of four regions showed increases last month, led by a 7.9 percent gain in the West. Purchases in the Northeast fell 4.6 percent.
NAR’s Yun said the group is hoping to issue its benchmark revisions by the middle of the year. The updates are usually based on census questions relating to homeownership that weren’t included in last year’s decennial population count. He said the group’s figures over the past few years may be showing a slight “upward drift” that will be corrected with the new data.
Housing, the industry that triggered the recent recession, is struggling to gain traction after the lapse of a government homebuyers’ tax credit worth up to $8,000 caused existing sales to plunge to a 3.84 million pace in July.

Lower Prices

The S&P/Case-Shiller index of home values in 20 cities fell 2.4 percent in December from a year earlier, the biggest 12- month decrease since December 2009, the group said yesterday. Prices were down 31 percent from their peak in July 2006.
Industry projections reinforce the concern about housing. The number of homes receiving a foreclosure notice will climb about 20 percent in 2011, reaching a peak for the housing crisis, RealtyTrac Inc., an Irvine, California-based data seller, said last month.
Rising borrowing costs represent a new hurdle. The average rate on 30-year fixed mortgages matched or exceeded 5 percent for a third period in the week ended Feb. 18, the first time that’s happened since April, the Mortgage Bankers Association said today. Rates have been rising from a record low of 4.21 percent reached in October.
Homebuilders are still posting losses. D.R. Horton Inc., the second-largest U.S. homebuilder by stock-market value, on Jan. 27 reported a fiscal first-quarter loss that was wider than analysts expected.
“I think 2011 will be a marginal, weak year in the homebuilding industry,” D.R. Horton Chief Executive Officer Donald Tomnitz said during a conference call the same day. “Given the weak macroeconomic conditions, high levels of existing homes for sale and tight mortgage availability, we remain cautious and realistic in our expectations.”
To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
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Wednesday, February 23, 2011

GOVERNOR O'MALLEY TO NOMINATE MICHAEL D. BARNES TO WMATA BOARD OF DIRECTORS


GOVERNOR O'MALLEY TO NOMINATE MICHAEL D. BARNES TO WMATA BOARD OF DIRECTORSMichael D. Barnes
Former Maryland Congressman to Represent Montgomery County
ANNAPOLIS, MD (February 17, 2011) –  Governor Martin O'Malley announced today that he will nominate former Maryland Congressman Michael D. Barnes to serve on the Board of Directors of the Washington Metropolitan Area Transportation Authority (WMATA).  Mr. Barnes will represent Montgomery County and will fill the seat of Peter Benjamin, who has completed his term.
“Mike Barnes brings a wealth of public and private sector experience to the WMATA board as the organization transitions to a new form of governance, the leadership of a new General Manager and the addition of new board members from our neighboring jurisdictions,” said Governor O'Malley.  “He has witnessed the evolution of Metro since its earliest days and was a strong supporter of WMATA during his time in Congress.  He understands Metro's past and has a clear vision of where the organization needs to go in the future regarding the key issues of safety, customer service and the maintenance of the system.”
Mr. Barnes is currently a senior fellow at the Center for International Policy in Washington, D.C. From 1978 through 1987, he was a member of Congress representing Maryland's 8th Congressional district.  While in Congress, Mr. Barnes chaired the Metropolitan Affairs Subcommittee of the House District of Columbia Committee, which oversaw issues involving WMATA.  Prior to his tenure in Congress, he served as Vice Chairman of the Washington Metropolitan Area Transit Commission and served on the Maryland Public Service Commission.
Since leaving Congress, Mr. Barnes has practiced law and been active in the public policy arena.  He has served on the Metropolitan Washington Airports Authority Board, as well as on the boards of several private sector organizations including his service as Lead Director and Chair of the Governance Committee of WGL Holdings, Inc and its subsidiary, Washington Gas Light Company.  Washington Gas Light Company provides natural gas and electricity service to more than 1,000,000 customers in Maryland, Virginia and the District.
Mr. Barnes and his wife, Joan Pollitt, reside in Chevy Chase.  His nomination to the WMATA Board must be approved by the Maryland Senate.  Mr. Barnes will assume the seat on the WMATA Board currently held by Peter Benjamin.  Mr. Benjamin recently completed a one-year term as Chairman of the Board.
“During his year as Chairman, Peter successfully guided the WMATA Board through one of the most challenging times in the history of the Metro system,” added Governor O'Malley.  “With the hiring of a new General Manager and a renewed emphasis on safety, Peter can be proud of his accomplishments.  I thank him for his years of service to Metro and its customers.”