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Some house hunters are getting cold feet: Real estate experts say slow going on bailout isn't helping [Houston Chronicle]
10/01 03:27 PM
Oct. 1--Tracie Staten has everything she needs to buy a house: a down payment, great credit and a job. But with the nation's economy in turmoil, she lacks the one thing required to move forward -- confidence.
"I don't want to get this house and all of a sudden things go downhill in our economy," said Staten, a 25-year-old insurance adjuster. "I don't know what the next few months will hold."
The government's struggle to reach an agreement on a $700 billion bailout package, a tightening credit market and lingering effects of Hurricane Ike are adding to the woes of Houston's already softening real estate market.
"Right now there's a general pervasive attitude that everything is going down: 'I don't want to buy a home now because prices may go down. I don't want to invest my money because all my friends just lost thousands of dollars in their 401(k) yesterday,' " said Jim Gaines, an economist at the Real Estate Center at Texas A&M University.
Houston-area home sales have fallen each of the past 12 months, making their biggest drop in August when they plunged 20 percent. September figures are still being tallied.
Housing experts said the failure of Congress to complete a financial bailout has only worsened the problem.
Sellers have begun pulling homes off the market as they wonder if it is the right time to sell, said Steve Barnes, president and chief operating officer for the Houston region of Coldwell Banker United, Realtors.
Though perceptions about the economy can be blamed for part of it, some is hurricane-related. Insurance companies are requiring buyers to have homes reappraised, reinspected and recertified.
"With Hurricane Ike, coupled with no bailout, consumer confidence has got to be at an all-time low," Barnes said.
Despite the uncertainty, Houston could be in a better position to weather the storm.
The area housing market has outperformed many others because of energy-related job growth. While sales have been slipping, inventory hasn't gotten out of whack, and prices have remained stable.
That's not to say the credit crunch hasn't affected Houstonians. For months, buyers have been subject to tougher lending standards from banks burned by defaulting borrowers.
Builders have scaled back, too, and some are having a hard time getting loans themselves.
There's little or no money available for land development loans, also known as "ADC loans," which stands for acquisition, development and construction, Gaines said.
For those who sell real estate for a living, volumes are down -- hurting some more than others.
"Our business has just fallen off a cliff," said Shad Bogany of ERA Bogany Properties. "We were doing OK until the bailout. It's almost like the phones have stopped ringing."
Though buyers are skittish and lenders more cautious, it hasn't gotten so bad here that it's halted mortgage lending.
"They're still in business. And if nothing happens, they won't make any money," Gaines said about the lenders.
Complicating matters for would-be buyers, mortgage rates are up over the past week.
In Texas, rates for 30-year mortgages were 5.94 percent at the end of last week, up from 5.75 percent the week before, according to Zillow, a real estate Web site that tracks home prices and mortgage rates.
Still, that doesn't necessarily mean they're on an upward trend, said David Zugheri of First Houston Mortgage.
Rates went down when the government said it was taking over Fannie Mae (FNM:$1.6587,$0.1287,8.41%) and Freddie Mac (FRE:$1.87,00$0.16,009.36%) , he noted.
"The one thing we all know and can agree upon is the government is fully committed to the housing market," he said.
Consumer sentiment should improve when the government agrees on a plan that's expected to put more liquidity in the market, experts said.
Staten, while concerned about her taxes going to rescue banks, is craving some sort of solution. She's been saving for more than a year and is ready to sign a contract on a three-bedroom Humble-area house.
"To at least have something in place, I would feel a little bit better," she said.
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