Consumer confidence halts slide; homes keep falling

Consumer confidence halted a six-month slide in July, but barely climbed from its lowest level in more than a decade, while home prices continued their record decline in May.

The Conference Board said its overall monthly measure of consumers' mood rose to 51.9 this month -- the first increase since December -- from an upwardly revised 51.0 in June. Last month's reading was the lowest in 16 years.

U.S. home prices plunged 15.8 percent on the year in 20 leading metropolitan areas, accelerating their slide from the previous month, according to the closely watched Standard & Poor's/Case Shiller report, though the decline was not bad as some feared.

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Ohio homeowners need a hand

U.S. Rep Maxine Waters, head of housing subcommittee, wants foreclosure rescue package by July 4; calls Countrywide exec 'poster child' for housing mess.

Congress must come together on a government rescue package to resolve the nation's foreclosure crisis, which has hit Ohio particularly hard, a leading House Democrat said Monday.

U.S. Rep. Maxine Waters, D-Calif., who chairs the subcommittee on Housing and Community Opportunity, told an audience at Cleveland State University that she hopes the House can negotiate a foreclosure rescue package with the Senate that will reach President Bush's desk by July 4.

Ohio has been particularly vulnerable to subprime lending and its aftereffects, Waters said.

"Because of the challenges it has faced economically over the past number of years with the loss of manufacturing jobs and population from certain parts of the state, Ohio was truly the canary in the coal mine of the foreclosure crisis," Waters said.

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The WSJ Is Wrong on the Housing Crisis

The Wall Street Journal editorial page had a piece yesterday titled 'The Housing Crisis is Over'. In my view, this assessment is premature by many years.

The article's main flaws, based on my own research, are its emphasis on pricing as the key driver of housing demand, and its sole focus on the inventory of new homes, ignoring existing homes. The author puts his faith in a rebound based on the issue of affordability: house prices have come down enough that people can afford them again. Fair enough but he treats the inventory of homes with a nonchalance that ignores underlying demographic trends, writing:

Even if home sales pick up, how can home prices stop falling with so many houses vacant and unsold? The flip but true answer: because they always do.

Flip, yes. True, no. This time it will be different because of two demographic factors:

First, the supply of homes is made up not only of new home construction but also of existing homes coming back to market. And we are facing a wall of existing homes coming to market in the next 15 to 20 years. How so? Quite simple: older people will leave their homes as they age or pass away. Some of these homes will be demolished, but most will come back to the market.

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