Fed’s Duke Says Investor Interest Rising in California Housing
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By Steve Matthews
Dec. 9 (Bloomberg) -- Federal Reserve Governor Elizabeth Duke said investor interest in vacant housing is rising in some markets in California as speculation mounts that prices have bottomed.
“As investors sense that home prices have bottomed out, they are approaching servicers with cash offers for the bulk purchase of properties,” Duke said today in a speech at National Harbor, Maryland. “Community organizations in areas of California complain that investor interest has heated up to the point that qualified first-time homebuyers and local community organizations are being crowded out of the market.”
The Fed is purchasing $1.25 trillion in mortgage-backed securities to support recovery. Costs on 30-year fixed-rate mortgages fell to 4.71 percent for the week ended Dec. 3, the lowest since mortgage buyer Freddie Mac in McLean, Virginia, began compiling the data in 1971.
The central bank is seeking to assist communities nationwide to counter high foreclosure rates, Duke said. Fed policy makers said Nov. 4 that “lower housing wealth” was among the factors likely to constrain consumer spending.
Home Prices Decline
Foreclosures on prime mortgages and home loans insured by the Federal Housing Administration rose to 30-year highs in the third quarter, the Mortgage Bankers Association said Nov. 19. Home prices in 20 U.S. cities have declined 9.36 percent from September 2008, the S&P/Case-Shiller home-price index reported Nov. 24.
“Even communities with strong underlying economies have not been immune to the destabilizing effects of high foreclosure rates,” Duke said in the text of a speech at a NeighborWorks Training Institute symposium. “Many coastal cities, even those with jobs and growing populations, now are in distress because of high rates of foreclosure,” citing Florida cities of Cape Coral, Miami, Orlando, Tampa, and Sarasota.
Duke didn’t discuss the near-term economic outlook or monetary policy in the text of her remarks.
“The Federal Reserve is committed to continuing to identify ways in which our strengths as a research institution, combined with our network of Community Affairs outreach staff, can be leveraged to help communities recover from high numbers of foreclosures and related economic impacts,” she said.
To contact the reporters on this story: Steve Matthews in Atlanta at smatthews@bloomberg.net;
Last Updated: December 9, 2009 08:40 EST
