With financial firms tumbling and the stock-market gyrating, it?? sometimes easy to forget that, behind the turmoil, much of the mess can be traced back to real houses ?houses in foreclosure, houses that aren’t selling, houses that their owners can no longer afford.
A sounder housing market could go a long way toward reassuring Wall Street and putting the economy back on track. But when is that likely to happen? Well, to hear Steve Preston, secretary of Housing and Urban Development, tell it this morning, patience remains a virtue.
Preston, speaking to a smattering of reporters at a Christian Science Monitor breakfast, reaffirmed his forecast that the housing market would struggle into next year.
And for the hardest hit areas, where conditions continue to worsen, "I think it's going to be a long time," Preston said, citing in particular parts of California, Florida, Arizona and Nevada, where new subdivisions sprang up in anticipation of new arrivals who haven't materialized.
"You just have more homes than you have a need for right now," he said. "Either people are going to buy second homes, or they're going to move into the marketplace," through ordinary population growth or when home prices fall low enough to tempt renters. He cited estimates of 2 million to 2.5 million foreclosures this year, up from about 1.5 million last year.
That doesn't mean he sees no bright spots. "Many communities, many regions are beginning to show month by month improvement," Preston said. "Even in Los Angeles, there are communities that have seen very little decline." So while parts of the country are likely to struggle for a while, others will slowly recover, though likely not back to 2005's superheated levels.
Meantime, he called arguments that the Bush Administration caused the housing crisis "absurd." President Bush called for tighter regulation of Fannie Mae and Freddie Mac, and promoting "affordable, responsible" home-ownership, he said. "In many ways, there's been a breakdown in the private market."