NAR: Hurricane Katrina impact mixed for economy, housing
Real Estate Forum.BY JOYCE NENNINGER AND ALLISON SIMSONQuestion: Allison, does the NAR have any information about how the hurricane will impact the real estate market?
Answer: According to the National Association of Realtors (NAR), the direct housing needs for evacuees of Hurricane Katrina and lower interest rates that will soften its economic hit mean there will be long-term consequences for housing as well as the overall economy. David Lereah, NAR’s chief economist, says shortages of building materials, made worse by the need to rebuild in areas hit by Katrina, will increase construction costs.”Given the generally tight inventory of homes available for sale across the country, rebuilding in the region of the Gulf Coast will place additional pressure on overall home prices,” Lereah says. “As displaced residents try to get back on their feet in new locations, home sales have spiked – along with rental demand – in regions surrounding the disaster zone.”Existing-home sales are expected to increase 3.4 percent to 7.02 million this year, while new-home sales are forecast to rise 6.7 percent to 1.28 million for 2005 – both would be records. Last month, the totals were projected to be 6.98 million and 1.26 million respectively. Total housing starts – single-family and multifamily – should grow by 4.8 percent to 2.04 million units this year, the highest since 1973; single-family starts are expected at a record of 1.69 million.”Mortgage interest rates will rise more slowly as a result of post-storm economic conditions to accommodate the losses of homes, jobs and businesses,” Lereah says. “The lower level of borrowing costs will provide additional lift to home sales in other regions. Demand will continue to outstrip supply in most areas, which will keep pressure on home prices.”
The 30-year, fixed-rate mortgage is forecast to rise more slowly, reaching 5.9 percent in the fourth quarter, and 6.7 percent by the end of 2006. The national median existing-home price for all housing types is projected to rise 10.8 percent in 2005 to $205,100. With a greater concentration of construction in lower cost areas, the median new-home price should increase 3.8 percent to $229,300 this year before rising faster (6.2 percent) in 2006.NAR President Al Mansell of Salt Lake City says the association is focused on people displaced by the storm. “The Realtors Relief Foundation is providing emergency relief for hurricane victims,” he says. “Working with our state and local associations, this is helping to provide immediate shelter needs and essential supplies. We connect very strongly with these needs because 28,000 of our own members have lost their homes and businesses.”The foundation has already collected more than $2.9 million for relief efforts; NAR is absorbing all administrative costs to provide emergency relief for hurricane victims in Louisiana, Mississippi and Alabama, including displaced real estate agents. Many Realtor associations throughout the region have developed a special information template that members can use to forward information to the federal government about available inventory that could be used to house people displaced by the storm.It is estimated that most of the flooded homes will have to be rebuilt, including about 80 percent of the homes in New Orleans. Along with homes that will have to be replaced along the Mississippi and Alabama coastline, a minimum of 200,000 homes have been lost. However, the level of new housing construction will be only 130,000 higher than pre-Katrina projections.
Mansell is meeting with real estate agents and member associations in the Gulf Coast region this week to present relief checks and assess long-term consequences.The Louisiana Realtors Association has helped two of its members launch HurricaneHousing.net. Realtor members and property owners can submit data on available shelter in Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi and Texas; people displaced by the hurricane can search the database directly.The storm’s impact will cause the economy to grow more slowly than in earlier projections; the economy will get a lift once rebuilding gets under way. The U.S. gross domestic product (GDP) is forecast to grow at a pace of 2.3 percent in the third quarter and 2.7 percent in the fourth quarter, with GDP for 2006 pegged at 3.8 percent.For answers to your real estate questions, call JOYCE NENNINGER or ALLISON SIMSON at (970) 468-6800 or 1 (800) 262-8442. E-mail Info@SummitRealEstate.com or visit their website at http://www.SummitReal Estate.com. Summit Real Estate – The Nenninger/Simson Team is located in the Dillon Ridge Marketplace. Both are Certified Residential Specialists (CRS), the highest designation awarded to a Realtor in the residential sales field. Their philosophy is simple, whether buying or selling, they understand that the most important real estate transaction is yours.
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