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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (23993)	2/20/2005 7:02:27 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

PNC economist doesn't expect 'housing bubble' to burst anytime soon By Ron DaParma TRIBUNE-REVIEW REAL ESTATE WRITER Sunday, February 20, 2005 The so-called "housing bubble" isn't about to burst just yet, says Stuart G. Hoffman, chief economist for PNC Financial Services Group. But that doesn't mean the end to what has been a prolonged run of robust residential real estate sales and rising prices isn't drawing near. "I would not be surprised that in the next three or four months -- if we have a typical spring season -- that it's going to be an extremely active and hot housing market, both in terms of sales and in terms of price appreciation," said Hoffman at a recent real estate program in Pittsburgh. "I'm not in the housing bubble category, but I have to tell you I'm getting a little closer," said Hoffman, who was among the speakers at the program hosted by the Pittsburgh office of Grubb & Ellis Co., a commercial real estate firm. "If we have another year of 10-plus percent increases in home prices nationally, and as high as 20 percent in a lot of selected coastal metropolitan areas, I will become more and more worried," he said. But the housing market isn't to that point yet, Hoffman said, explaining that a healthy volume of mortgage applications, still-affordable mortgage rates and increases in lumber prices all are indicators of market strength. The National Association of Realtors projects a 2 percent decline in existing home sales to 6.54 million units this year but notes that's down from a record 6.68 million units in 2004. The organization also sees new-home sales falling by 6.2 percent to 1.11 million units, but that's also down from a record 1.18 million units in 2004. And it projects a decline of 1.8 percent in housing starts to 1.92 million units this year, down from 1.95 million 2004, which was the highest level of housing construction since 1978. As for home prices, the association sees a 5 percent increase in the national median existing-home price to $193,300, and a 6 percent increase to $232,000 in the median new-home price. By contrast, appreciation rates in 2004 were 8.3 percent for existing homes and 12.3 percent for new homes. While it may take time for the national real estate market to cool, PNC economists are projecting that both home sales and new-home construction will decline in the Western Pennsylvania region this year. Building permits for single-family homes should drop 5.7 percent this year, while home sales should slide 5.8 percent. The local market includes Allegheny, Beaver, Butler, Fayette, Washington and Westmoreland counties. According to a report released in January by West Penn Multi-List Inc., the number of homes placed under agreement for sale in 2004 increased 5.1 percent and the number of closed sales increased 2.7 percent over 2003 totals in the six-county Pittsburgh area. Also, Pittsburgh Construction News reported a 4.4 percent decline in single-family housing starts in 2004, but a 29 percent gain in multifamily construction. The company, which tracks building permits, is projecting a 9 percent decline in single-family construction in 2005, with the multifamily market expected to remain stable. pittsburghlive.com