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The End of the Housing Bust?

Continue Reading Add comment July 29th, 2009

I’m reading with some glee all the national coverage of the end of the housing bust. “Home Prices Rise Across the U.S.” says the front page of the Wall Street Journal. “3-Year Descent in Home Prices Appears At End,” says the same spot on the New York Times. CNBC devoted an hour to the subject last night. Newsweek has called the recession over on its cover this week.

The numbers are cheery. New housing starts were up 3.6% in June. Existing home sales were up 3.6%. New home sales jumped 11%. Even Yale Professor Robert Shiller, who told Fortune just a couple of weeks ago that “prices will continue to fall for a while, but at a slower pace, and then stabilize,” is now more bullish. Fifteen of the twenty cities in his Case-Shiller Index saw a price improvement in May, after 34 months of declines. “The change in momentum here is very significant,” he says now.

I was criticized a month and a half ago when I wrote a blog headline that screamed “Home Prices Have Hit Bottom.” I’m not going to crow about that. If you were on the street, seeing what was happening, the multiple offers, the bids over asking price, the agents not returning your calls. Then you saw what the national numbers would soon report. I’m still hearing and reading about a second wave of foreclosures coming. “September 15,” one real estate agent told me matter-of-factly. There will be more homes coming on the market. More banks will take hits. More people will accept lower prices for their property. It’s still a good time to buy real estate and a lousy time to sell.

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How One City Battles Foreclosures and Crime

Continue Reading Add comment July 29th, 2009

Lancaster, California, a city of 145,000 people about 60 miles north of Los Angeles, is among the hardest hit in the nation by the housing bust. Home prices have fallen from an average of $320,000 in 2007 to $122,000 today. More than 5,000 homes in the city are in some stage of the foreclosure process.

History shows those empty houses are magnates for crime, drug dealing and other nefarious activities. Which is why Lancaster is cracking down on gangs and applying for $5 million in federal stimulus funds to buy up and resell abandoned homes at reduced prices so families can live in them. “The trick is keeping the neighborhoods filled with homeowners,” says Lancaster Mayor R. Rex Parris.

In January Parris pushed through a city ordinance requiring that pit bulls and other vicious dogs be neutered. Why pick on pit bulls? Gangs had been breeding them in abandoned homes and using them to terrorize residents.

The city has taken other steps to fight crime: Picking up truant kids so they don’t end up with gangs. Lancaster recruited more citizens for neighborhood watch programs after finding people are more comfortable reporting a crime or suspicious activity to a neighbor than to the police. The city also came up with the money to hire more sheriffs. Law enforcement officials are also sending out warning letters to kids suspected of running with a bad crowd. Says Parris: “We’ve become totally intolerant of any kind of gang acitivity.”

It’s working. Despite all those empty homes, Lancaster saw a 25% decrease in crime in the first half of this year, exactly the opposite of what you’d expect.

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