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Friday, September 1, 2006
We’re at the bottom, economist says
Orlando economist Hank Fishkind has some good news, sort of: Things won’t get any worse.
“Single-family housing markets have reached the bottom for this cycle,” Fishkind told me today. “Prices have stabilized, and demand has stabilized.”
While he doesn’t expect prices to fall, Fishkind warns against getting too excited.
“What we’re going to see is a very long bottom — not a V, not a U, but an L,” he says.
And that applies just to single-family homes, not condos. He sees further pain in overbuilt condo markets such as West Palm Beach and Miami.
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Could banks feel the squeeze?
The slowing housing market could be bad news for bank stocks, The Wall Street Journal and BusinessWeek warn.
The WSJ’s story today (subscription required) says “the cooling housing market is starting to pinch the nation’s banks.” True, banks sell mortgages to Fannie Mae and Freddie Mac rather than hanging onto them, but lucrative loan originations are drying up.
“Any wiggle in the real-estate business has a significant impact on banking because that’s where the growth has been coming from,” analyst Richard Bove tells the Journal.
Meantime, BusinessWeek’s cover story on adjustable-rate mortgages warns that ARMs fueled the boom and “could worsen the bust.” It specifically cites BankUnited of Coral Gables as an institution that’ll be hurt if borrowers can’t make their rising ARM payments.
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