Home sales rise as Eurozone lending rates drop
Top 5 havens from US real estate storm
The “real estate” (land prices, actually) rollercoaster didn’t reach everywhere. We trim, blend, and append three 2009 articles from: (1) Reuters, May 4, on home sales; (2) BBC, May 7, on the Eurozone; and (3) Christian Science Monitor, May 7 on cities of stable land value by Laurent Belsie.
by Reuters, by BBC, and by Laurent Belsie
Home sales rose 3.2% in March
Pending sales of existing US homes rose 3.2% in March for a second straight month. Compared to the same period a year ago, pending home sales rose 1.1%.
The rise in signed contracts for home purchases was due to first-time buyers, enabled by lower prices and persuaded by the $8,000 tax credit.
The NAR's Housing Affordability Index edged down to 166.7 in March from a record 174.4 in February due to higher home prices in March. The index was 30.8 percentage points higher than a year ago.
JJS: While the land-price cycle takes care of itself, the powers that be act like they’re making a difference.
Eurozone interest rates cut to 1%
The European Central Bank (ECB) has cut interest rates in the eurozone to a record low of 1%, down from 1.25%.
In a significant departure from previous ECB policy, the central bank also agreed a plan to pump about 60bn euros (£53.5bn; $80.6bn) into the eurozone economy by buying up debt.
It is the seventh time the ECB has lowered its key rate since October 2008, when it stood at 4.25%.
The ECB said it would lend banks unlimited funds for up to 12 months, up from six months.
The ECB's decision followed the Bank of England's announcement that it would keep interest rates unchanged at 0.5%. The Bank of England also said it would pump an extra £50bn ($75.5bn; 56.5bn euros) into the UK economy by buying government and corporate debt, extending its planned spending to £125bn.
JJS: While most of the world is in a frenzy, some less popular places benefit from being unpopular.
Top 5 havens from US real estate storm
New Orleans -- the city partially built below sea level -- is one of the least “underwater” when it comes to real estate.
Only 3.8 percent of its homeowners owe more on their homes than those homes are worth, according to new survey released by Zillow.com, an online real estate marketplace. That’s the second-lowest rate of the 160 metropolitan areas surveyed.
Of course, it’s easy to buck the trend when a major hurricane wipes out a good portion of your housing, pushes out a third of your people (especially the poor), and causes federal and state governments to pump in millions of dollars in aid.
Low underwater rates
But take a look at the other metro areas that have become havens from the real estate storm: Augusta, Ga., where only 2 percent of homeowners are underwater; Cumberland, Md., (5.0 percent); Corvallis, Ore., (5.3 percent); and Oklahoma City (6.3 percent).
Their numbers would look a little worse if they included just mortgageholders, rather than all homeowners. But they come nowhere near the national average (21.9 percent) or the shocking rate in some cities like Stockton, Calif., (51.1 percent) or Las Vegas (67.2 percent).
What makes the haven cities different?
Slow growth helps. While the population of Las Vegas and surrounding Clark County grew by more than a third this decade, New Orleans (of course) and metro Cumberland lost population. Augusta and Richmond County, Ga. were flat. The most growth any of the havens saw was 7 percent in Oklahoma County, Okla.
Not exactly a boom.
Four of the cities have lower unemployment rates than their state average -- but higher poverty rates. All have median household income roughly the same or lower than the state average. And of course, most of the real estate bubble passed them by.
While the nation has seen no housing appreciation on average in the past five years, homes in each of these haven cities are still worth more than they were in 2004, according to Zillow.com. Oklahoma City has seen no decline at all from its peak, the survey found.
Perhaps what stands out most about these cities is that they don’t stand out. They’re small and mid-size metropolises. They didn’t get caught up in the growth mania of the go-go years. If you’d driven through them earlier in the decade, you might have yawned.
Now, they occupy the high ground -- a perfect place to ride out the economic storm.
JJS: All places could be safe, when storms become a thing of the past. What’s needed to flatten the business cycle is to adopt geonomics. Places that already do recover the socially-generated value of land, while forgoing taxes on buildings, actually prove to be recession resistant. Those places spur owners to keep using locations efficiently, no matter what the economy is doing elsewhere. Justice does work; people just need to use it.
Jeffery J. Smith runs the Forum on Geonomics.
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