Building on lessons of housing collapse
With housing sales up and prices rising again in most neighborhoods around the Tampa area, letís not forget what we learned from the financial crisis. Local government, when it absolutely had to, found cost savings that in the years of rapidly rising tax revenues would have been considered cataclysmic. Despite deep cuts, we heard few complaints that important services suffered. The suffering has been on the family level as jobs were lost, and then homes. The risk of an economy overly dependent on high-velocity homebuilding become apparent. We also have seen that when bubbles burst on the scale of the one in housing, thereís not much the federal government can do it ease everyoneís pain.The $8,000 credit given three years ago to first-time homebuyers injected $26 billion into the housing market. We see little evidence it was worth the cost, except perhaps for the psychological value of showing government concern. Other stimulus efforts appear broadly useful. By keeping short-term interest rates near zero, the Federal Reserve is helping hold the rate for a 30-year mortgage to under 4 percent. And the fed continues to buy mortgage-backed securities to enhance confidence and make sure the economic recovery doesnít run out of gas. Here and in cities across the country, investors with cash or good credit are snapping up housing bargains, especially in good neighborhoods. The pace might be even faster were loans easier to get. Almost no one expects a return of a buying frenzy built on naÔve expectations that real estate prices will always go higher, no matter how far ahead of incomes they climb. Locally, peak housing value arrived way back in June 2006, according to the Standard and Poorís/Case-Shiller index. It wasnít apparent then what was in store for us. Despite persistent predictions that recovery was right around the corner if not already here, prices just kept slipping. The bottom finally came in November 2011, with prices off 48 percent from the peak. Now theyíre going back up. The value of all property in the county is up about 3 percent over last year, estimates Hillsborough County Property Appraiser Bob Henriquez. The value of many homes is up much more than that from their lows. But even at 9 percent annual increases, prices wonít get back to their 2006 levels until 2020. Homebuyers wonít soon forget how fast equity can evaporate and how long recovery can take. And investors wonít soon forget what happened to Federal National Mortgage Association, known as Fanny Mae, and the Federal Home Loan Mortgage Corporation, known as Freddie Mac. Their publicly traded shares sold in the summer of 2006 for around $50 to $60 a share and seemed as safe as a government guarantee. Now the shares go for around 65 cents. Letís not forget that for many homeowners, the worst is not over. Foreclosures continue. In many local neighborhoods, according to information compiled by RealtyTrac.com, the number of addresses named in foreclosure filings this February is significantly higher than a year ago. Banks have found missing paperwork and have re-filed some cases that were initially rejected. But the market now seems capable of absorbing this property. The National Association of Realtors notes that monthly home sales across the county have surpassed the same month a year ago for 20 months in a row. Clearly a recovery is under way, and optimism is justified. Florida is not over, as one major national publication once suggested. Florida is coming back, rebuilding on a firmer foundation.