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Host: Scott LaMar

PA's Housing Market, Smart Talk TV

Written by Nell McCormack Abom, Host Smart Talk TV | May 17, 2011 8:19 PM

Whether you are in the market to buy, or you are trying to sell a house, the news out of Washington this week was discouraging.  First, a crushing report that the federal government's massive spending to boost housing for the poor is riddled with mismanagement.  The Washington Post's yearlong investigation revealed, "... a dysfunctional system that delivers billions of dollars to local housing agencies with few rules, safeguards or even a reliable way to track projects. The lapses have led to widespread misspending and delays in a two-decade-old program meant to deliver decent housing to the working poor."

Next, the U.S. Commerce Department announced that new-home construction plunged 11% in April to a seasonally adjusted rate of 523,000 homes per year. The pace of construction, experts say, is progressing at less than half the level considered healthy.  Bad weather in the South and a huge slide in apartment building fueled the most recent drop.  The rate of single-family home construction was down 5%.  And when home builders aren't building, lots of related industries and manufacturers feel the drag and even Wall Street tumbles.  That's not a ripple:  it's more like a series of crashing waves.

The tsunami of home foreclosures has further depressed housing prices.  Earlier this month, Zillow.com noted that home values in the first quarter toppled 3% from the previous quarter and were down 1.1% in March compared to February.  Home prices have fallen for 57 consecutive months.

With home prices low, unemployment high, and credit tight, folks scale back their plans to build a "dream house" and instead either continue to rent, stay in the home they own, or purchase one that was previously owned. 

Our panel of experts is prepared to answer your questions about home buying, selling, mortgages and refinancing.  Frank Jacovini, president-elect of the Pennsylvania Association of REALTORS®, and Mark McNaughton, owner of McNaughton Homes, will share their expertise.  Jacovini has been selling houses for 20 years.  He mainly serves customers in South Philadelphia.  Pennsylvania has had, he says, about an 8% drop in home prices since the peak in 2007.  Where Jacovini sees a major problem is with first-timers.  "We're experiencing a little sluggishness in the first-time home-buyer market, I would say the under $300,000 market," according to Jacovini.  "First-time buyers are struggling.  They don't have decent savings.  There's probably less stability in their employment.  And it's so difficult getting loans today.  The mortgage industry went from one extreme to the other.  We're having difficulty getting these people mortgages."

In Jacovini's estimation, Pennsylvania homeowners fare better than most.  "We're not immune to what's going on globally and nationally, that's for sure," he notes.  "But Pennsylvania, in general, did not experience the great highs of the boom and we're not experiencing great lows during this downturn.  Although business is definitely off the last couple of years, Pennsylvania is not doing as badly as other parts of the country.  We have always been more of a conservative state when it comes to financing tools.  For example, most people here use conventional, fixed-rate mortgages, not the exotic mortgages like adjustable-rate mortgages.  So we're not experiencing as many foreclosures.  We're not experiencing a drastic drop in prices.  We are a little more stable than most states."

But Jacovini does sound a warning about the housing crisis and its ripple effects.  "In every one of the most recent recessions, housing has pulled us out of it.  And this time around, the focus is not on housing and it's going to be a very difficult and slow recovery from this recession.  It's a jobless recovery and the housing industry isn't leading the way," he asserts.

Kate Newton, director of homeownership programs at the Pennsylvania Housing Finance Agency, and Bill Pierce, vice president and sales manager of Fulton Mortgage Company, will join the conversation.  They are prepared to address any lending questions you might have and talk about special programs that can help keep owners from losing their homes to foreclosure. 

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