In this issue

Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review Feb. 21, 2008 / 15 Adar I 5768

The Haunted Housing Market

By Mort Zuckerman

Mort Zuckerman
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http://www.JewishWorldReview.com | How much longer will house prices keep falling? That collapse is a larger threat to our economic well-being than even the headline-grabbing problems of our increasingly frozen financial system. We've had half a century of rising home values, capped by an inflation-adjusted rise of 85 percent from 1997 to 2006. Now the loss of value tops $1 trillion, and the financial world has incurred hundreds of billions of dollars of losses on the premise that U.S. home prices would never fall. The median price of a new home is at $206,500, receding to where it was in November of 2003, thus wiping out more than three years of price appreciation. It takes 6.3 months to sell a finished home compared with 4.3 months a year ago. The ratio of inventory to sales is the highest since October 1981 — there's an unsold extra backlog of a million single-family homes and condominiums. Builders have cut their housing starts by approximately 40 percent over the past year. David Rosenberg of Merrill Lynch estimates construction will fall from a million units to approximately 700,000 units, an all-time low since World War II.

House prices, though, haven't fallen enough to tempt buyers, despite sales incentives and rebates. According to the Conference Board, fewer Americans plan to buy in the next six months than at any time since 1994. The decline in conventional mortgage rates has failed to spark sales because it has been trumped by tighter lending standards. Speculators, who helped fuel the bubble, have virtually disappeared from the market.

No loans. New mortgages are harder to get now than at any other time in the 17 years that the Federal Reserve has been surveying senior loan officers. Lenders have disqualified thousands of potential buyers. A third of planned home sales were canceled or delayed last fall, in large part because the buyers could not get the loans they needed. Those who do qualify are being asked to make substantial down payments, sometimes going back to the old rule of 20 percent down, with monthly payments that are high enough to pay down the debt. No longer are there interest-only loans or quick mortgage refinancing that used homes as an ATM and produced over $1.2 trillion of free cash for homeowners during the past seven years.

There's also the fact that many who do qualify have lost the desire to buy since nobody can be sure of how far real home prices will decline. But decline they will. Merrill Lynch estimates that home prices could sink an additional 20 to 25 percent over the next two to three years. This would mean that many homeowners, including two thirds of those who bought homes in the past 18 months, would owe more than their homes are worth. It would also wipe out some $5 trillion on the balance sheets of households. Goldman Sachs sees prices declining by 10 to 12 percent this year. Home prices are on track to recede to a more conventional multiple of family income at 2.8 times, declining from the national average today, which is 3.9 times. That would return values to 2000 levels in inflation-adjusted terms, an unprecedented decline.

Lower rates can help those with adjustable-rate mortgages, but they cannot stop the deflation of the housing bubble or prevent a tidal wave of mortgage defaults. This is partly because mortgage rates reflect the 10-year treasury bond yield more than the federal funds rate. That rate has dropped, but the spread of both fixed- and adjustable-rate mortgages over treasuries has widened, which means smaller declines in mortgage rates. Then there are those many borrowers who got mortgages in 2003 and 2004 when the federal funds rate was 1 percent; they're not going to get a better deal than that. And if they now have zero or negative equity in their home, they won't be able to refinance in any event.

We are facing the largest increase in loan defaults in postwar history. As William Gross, head of the PIMCO investment fund, points out, "To revive the housing market, the rates on 30-year mortgages are going to have to come down significantly — no small challenge when inflation is rising." He suggests an expanded Federal Housing Administration program to offer below-market 30-year mortgage refinancings with minimal down payments. Senate Banking Committee Chairman Chris Dodd suggests a variant of having the government buy mortgages in or near default and refinancing them at easier terms so the borrowers can keep their homes.

There is no time to delay in combating the trends. Monetary policy cannot make bad investments turn good. Cheaper mortgages won't cure the market where properties are plunging so much in value. The collapse of value will affect all homeowners and, through them, the whole economy. It's bound to be the most pressing issue in this presidential election year. Voters in the primaries and general election should look to candidates with credible policies in mind to address this downturn.

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JWR contributor Mort Zuckerman is editor-in-chief and publisher of U.S. News and World Report. Send your comments to him by clicking here.


© 2005, Mortimer Zuckerman