If the economy is to recover the housing market has to make a comeback – it has become an urgent necessity that cannot be ignored anymore. There are signs of houses up for rentals as well as the usual for sale posters. The rentals indicate good days ahead. It indicates that more people are holding on to their properties and not pushing them into the market to be sold at any damaging price.

Realtors are saying that the biggest problem currently is that of shadow inventory. The owners are withholding the foreclosed units waiting for prices to increase. But the irony is that once these enter the market the prices will tumble again. Short sales and foreclosures will harm the nascent market.

Many house owners have started to rent out rather than try to sell – hoping that meanwhile the housing market will turn. Some homeowners floated a plan – the setting up of a trust dealing with real estate funded by all the participants. The money would be used to purchase the risky properties in the locality prior to their entering the foreclosure zone. This would prevent prices from tumbling and give protection to the investment.

Today nobody trusts anybody and it is understandable that everyone wants guarantees and this puts things at a standstill. One house owner does not know what the other neighbour has in mind. Each wants bidding to commence to see if the price goes up.

But the idea of the American dream is interwoven in the psyche of the people. A house should be primarily a home. It is the most costly purchase of a lifetime. Although greed and recklessness did play its part in creating havoc with the market the real estate continues to be a ground for investment. It is to the interests of individuals and the nation to keep it so.

Here comes in the responsibility of the banks to see that the real estate market is protected. The banks are fortunately realizing this and are becoming much more conservative in chalking out their strategies while dealing with the embattled house owners. The banking sector is slowly realizing that by simply dumping the foreclosed houses in the market hurts all – the individuals, the banks, the investors and the nation. It may not be wishful thinking – real estate is really coming back because it simply has to it is pivotal to the economy.

Ben Bernanke, the chairman of the Federal Reserve, is holding his own facing a barrage of criticism targeting his handling of the real estate crisis. He continues to work all through the week but lately he took two days rest – it being a record for him since the last two years. He had to attend to the wedding of his son. Lately he sometimes returns home for dinner and even occasionally makes an appearance for baseball games.

In all likelihood Bernanke would be given a heroes welcome when bankers and economists from across the globe converge for the annual retreat of Federal Reserve in Jackson Hole, Wyoming. Washington as well as Wall Street would be taken aback if Bernanke did not win a second term although Bernanke is a Republican and was first appointed by Bush.

White House however is remaining tight lipped. Although Bernanke’s credentials in financial circles have always been high, lately both he and the central bank have been facing ire over the handling of certain bailouts and the limitations of the powers of the Federal Reserve.

Bernanke is not happy about many in the Congress not giving the Fed sufficient credit for what it has undertaken. Privately he has contacted hundreds of legislators recently to explain the policies undertaken by the Federal Reserve pertaining to the financial crisis.

Bernanke is being lauded by his peers for pulling out the economy and preventing further damage. He had deviated from the usual norm and aggressively courted rescue measures like bailouts, quick mergers, emergency loan granting, vast printing of new money and staggeringly low interest rates.
Even Nouriel Roubini, his toughest critic has nothing but praise for him. Roubini said, “He realized that the great recession could turn into the Great Depression 2.0, and he was very aggressive about taking the actions that needed to be taken.” Roubini had been criticizing the Federal Reserve officials for not taking note of the impending housing crisis when it was bubbling.

But it is not curtains to troubles as yet. Bernanke continues to be uneasy with unemployment at 9.4%. The central bank itself makes the forecast that it will remain so all through 2010.

White House is silent about the future of Berananke. Lawrence Summers, Janet Yellen and Alan Blinder are the likely candidates being proposed by the Democrats to replace Bernanke. Bernanke is battling two fronts, economic and political. The Federal Reserve has to come to a decision about reversing all assistance measures without putting the economy on reverse gear. On the political front the question is about its power and independence.

There has been a sharp increase in purchases made by first time nest builders. But this surge has not helped the agents and brokers who link the deals. In 2009 the commissions dropped to record levels – the lowest since the last seven years. This has been because of the drop in house prices. The increase in sales has been due to the tax credit offered by the federal government. The commissions in last November fell by 6.2% to $40.6 billion, from one year previously as per the calculations of Bloomberg.
The tax credit helped the sale of those houses that were on the lower end and this brought down the commissions of the agents said Steve Murray of Real Trends. The benefit from tax credit and increase in sale of foreclosed houses lowered nationally the nationally median price of residential units by a staggering 13% in 2009. It fell to $172,700. The median sale price is calculated to be the point at which half the houses are sold for more and half the houses sold for less. In last November nearly 75% of the houses sold were priced at $250,000 and below.

Speaking at an interview Murray said, “The impact of the tax credit has been huge. The average commission rate inched up this year and the number of real estate sales have gone up too, but the average price has dropped significantly because of the bulge of first-time buyers.”

Since 2002 the dollar value of commissions had never fallen so low albeit the average rate for each deal in the country increased to nearly 5.29% in 2009 – it being the 4th running annual increase. In 2008 the average rate for commission was 5.26%.

The commissions pocketed by the realtors are calculated in proportion to the sale value. The agents talk it out with the sellers to fix the rate and the latter are expected to pay the brokers for whom they work.

The price of homes as gauged by S&P/Case-Shiller index went down by 7.3% last October from what it was one year previously. The prediction had been that the drop would be by 7.2%.

Realogy Corp is the biggest brokerage and franchiser in residential houses. Its income fell from $2.8 billion in 2008 to $2.1 billion during the first three quarters of 2009. The firm is based in Parsippany, New Jersey.

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The rental market is getting squeezed with landlords finding tenants getting scarce. But this is giving an opportunity for pet shops to expand. The residents of New York may be shy to purchase luxuries but they are not hesitating to meet the needs of their pets. Consequently according to reports coming in from realtors there is a splurge of retailers dealing with pets in New York City.

This is not because of any outburst in pampering the pets. In a slow rental market the previous hesitant landlords are more amenable to talk with pet shop dealers – in particular those who keep animals on their premises. They are making hay while the sun is shining and trying to expand.
The instance of Spot can be citied. Previously it was a Paw Stop. It inked a ten year lease in December. The business deals with providing boarding and grooming together with day-care for dogs. It s owners comment that they are on the look out for more retails area to expand their business. Anisha Khanna, the co-owner of the Spot was happy that their business was doing well. She said, “People don’t stop spending on their pets and their kids in a recession. I guess with the emotional connection, they’re spending more than ever.”

Rent rates of offices have fallen by nearly 25% in the past one year. This is encouraging other pet retailers for space hunting. Last October a dog day-care enterprise named Fetch NYC inked a lease for occupying 6,000 square feet in Lower Manhattan. Another firm named Paws and Relax rented 1,300 square feet on 220 Avenue B and East 13th Street. Both the deals were steered through by JDF Reality – brokers in commercial real estate.
A lease was contracted last November by Dogmatic Products (dog product manufacturer sold on the net) for leasing 2,850 square feet for office purposes on Broadway and Broome Street.

Victor M. Menkin of Menkin Reality Services said, “The pet industry is a real niche business that has established itself in New Hork”. He has been dealing with retail real estate for more than 30 years in New York City and has noted this expansion in demand for space for pet related business. He added, “The fact that this niche is continuing to show strength in times of strife is a real statement about the importance of pets to people. There are a lot of single people in New York, and an animal becomes, to a certain extent, an interim connection emotionally for people if they don’t have a child, spouse or mate.”

The real estate sector is in the throes of a crisis. Home prices have increased in the second quarter. But prices are still lower by 9 per cent. This was pointed out by a housing market number. Across the nation, prices increased by 3.1 per cent in the quarter ending September 30. This was revealed by S&P/Case-Shiller Home Price Index, which watches the market.

Prices, however, are yet to be what they were in 2008. Prices are below 8.9 per cent when compared to the third half of 2008. That was, however, an improvement on the double- digit decrease, that was reported in 2008. In the first half of 2009, prices had declined by 19 per cent.

David Blitzer, Chairman of the Index Committee at Standard & Poor’s, says that there has been a marked improvement in prices of homes in the last 180 days.
The problem plaguing the real estate sector is the foreclosures. The worst affected are California, Nevada and Arizona. In fact, the worst market is Las Vegas. Prices in this city have dropped for the last 37 months in a row. The prices are at least 55 per cent lower than what they were earlier. Cities in the Midwest have made a comeback. In fact, Detroit and Minneapolis prices have gone up by 1.8 per cent. In Chicago, prices have gone up by 1.2 per cent, while in Phoenix and Los Angeles prices have increased by 0.8 per cent. In San Francisco, the figure stands higher at 1.3 per cent.

Experts say that recovery could happen only if home prices stabilize. As prices fall, many homeowners get embroiled in negative equity – meaning the prices of homes are much below what the owners owe to the banks. These “underwater” homes, will soon be lost to foreclosure. San Diego State University real estate professor, Mark Goldman, said it is very important that the tide of foreclosure is stopped. It is very crucial for the recovery of the real estate sector. For instance if a house is valued at $200,000, while the homeowners owes $250,000, the person would naturally default. Even if the house is sold, then also it will not be enough to pay the debt.

The First American CoreLogic report has pointed out that nearly 25 per cent of the homes are underwater. Home prices will not stabilize as long as there is a problem.

Foreclosures have led to an increase of homeless public school students especially in Indiana. In the past few years the figures have jumped thanks to heavy foreclosure and high unemployment figures. More and more parents are finding it difficult to provide their children with stable homes.

In the school year of 2005/2006 the public schools in Indiana noted 7,547 students who were homeless as per a brief released by Indiana Youth Institute. The figures spiked to 8,249 in the subsequent year. In 2007/2008 it went up to 8,480 marking 12% increase covering the previous two years.

The numbers are not inclusive of the junior students who are not yet of school-going age or the “unaccompanied youth”. It is difficult to get these numbers because the latter are surviving on their own and frequently do not seek assistance from shelters.

It is estimated in general that about 29,000 children of Indiana covering all ages are thought to be homeless. This term covers a motley collection of living conditions – runaway teenagers holed up under bridges or those living on the edge in the homes of relatives or friends of their parents because of the economic downturn.

To say the least – this increase in the number of homeless youngsters has been disturbing. These children are placed at a distinctive disadvantageous position said Bill Stanczykiewicz who is the head of a non-profit body that encourages healthy development for children.

On an average the homeless children switch schools over 3 times and their performance in comparison to the other students from stable families are lower. The institute has released this report in an effort to make people more aware of the problem. Stanczykiewicz said, “This has a lifelong impact. Once those children fall behind, it’s so much more difficult for them. Homelessness can dig a hole academically that can last that child a lifetime.”

As per the McKinney-Vento Homeless Assistance Act (Federal) provision is there for giving funds to the states to assist in the education of the homeless. The beneficiaries would be students living in motels, shelters or even those who are doubling up with relations and friends because of the inability of their families to keep them. Those who have run away from their homes or have been thrown out and pregnant teens without shelter also qualify for the measure. Provision would be made for their transportation and textbooks. They would also be exempted from certain rules.

Thanks to Brad Pitt, New Orleans real estate has taken on a new colour. Al Andrew, a resident of Tennessee Street of New Orleans does not object to the touring buses cruising through his locality. His only wish is that the tourists “would give some of what they pay to the community.” Andrews resides in a bright coloured modern house, one of the many nestling in small patches that had come up 4 years after the devastation of Hurricane Katrina.
Hollywood actor Brad Pitt had been frustrated upon seeing the tardy pace of rebuilding in the Lower Ninth region. This caused him to created a foundation – Make it Right. The body then gave assignments to 13 firms to design houses that would be affordable as well as environment friendly. Make it Right plans to construct 150 houses that would be given to the residents of Lower Ninth. Till now 15 of these have been occupied but these are enough to create a stunning impression.

Driving from the main road into the Lower Ninth from the Claiborne Avenue Bridge it is not possible to miss the homes – Brad Pitt Houses. These are sprawling and angular constructions flashing bold unusual colours. These houses symbolize the resilience of the citizens as well as to the bigness of Hollywood. These have become the newest tourist attraction of New Orleans.
Touring buses drive by the homes but do not allow the tourists to alight and loiter around. One can take a cab to the Lower Ninth that is about five miles distant from the city centre. Make it Right is also thinking about introducing bus tours but right now the focus on building houses.
The residents like Andrews and others like Gertrude LeBlanc are happy to talk. Septuagenarian LeBlanc quipped, “If we don’t talk how will people know what happened to us?”

Four years previously one could only see devastation with wrecked houses dotting the landscape. Today much of the rubble has been cleared with Nature reclaiming acres and acres. The grass has shot up to be as high as the repaired levees. The eerie quietness was the most telling factor.

But the “Bard Pitt neighbourhood” is bustling with activity with construction workers being more than the residents. The most notable is Float House that rises with the floods on pylons thus preventing the waters from entering the residence.

Recession has officially come to a close with GDP having gone up by 3.5%. But it is being dogged by anxiety and fear. On 29th October 2009 the Commerce Department announced the growth of the economy and it was received with cheers in Wall Street. The Dow Jones surged ahead.

But in Main Street and in other places like central Ohio the reaction has not been encouraging. Local observers feel that the effect has been more psychological than anything else as the ordinary people continue to fight foreclosures and unemployment without any credit flow.

Richard Call of Consumer Credit Counseling Service in Columbus’ branch in Columbus said, “I don’t think we can get overly optimistic. We have to get people back to work. That’s what will really stimulate the economy.” He said that his office is continuing to see more people battling financial and foreclosure troubles.

Bill Faith of Coalition on Homelessness and Housing of Ohio said, “I want to be optimistic. But I don’t know if the fundamentals are there to say we’ll see any improvements in housing and employment soon.”

It is true that there has been a spike of 3.5% in GDP. GDP or gross-domestic-product measures the total production of goods and services. But lately this has largely been because of government infusing the economy with funds and schemes. In particular the cash-for-clunkers and tax credits for first time house buyers helped to give a boost but how much the tempo would be sustained is a moot question.

The push by the government helped to bring to an end four running quarters of decreases. The third quarter showed an increase over and above what had been predicted. Stephen Steinour of Huntington Bancshares said that this was indeed encouraging. But it was not strong enough to persuade his bank to change its policies. He notes, “We continue to be prudent and conservative in how we manage our business as we wait for more positive economic indicators in the Midwest, such as the decline in the unemployment rate.”
Bill LaFayette of Columbus Chamber said that the drop in unemployment will not happen overnight but will take place at a slow pace. He said, “The sequence is that when the economy starts to come back, businesses will work their current employees harder, adding overtime. Then, they’ll bring on temporary employees and then they hire new, permanent employees.”

The condominiums in Miami carry a hefty price tag of $1.3 million to $7 million. But they surely ooze opulence what with Italian style cabinets, pool decks and fridges stacked with wine. All the 200 of them offer a dramatic view of the ocean.

The condominiums have been developed by the high-profile consultants Jorge Perez and Donald Trump. The total cost of the project is $355 million. The developers say that they have been contacted by 140 buyers. The deals should be closed next week.

Donald Trump says that the building is like the topping on a cake. When the country is going through such a deep recession and crisis, it seems strange that such high-priced buildings are still being sold. Experts have doubts about the future of these buildings in Hollywood.

A housing consultant, Lewis Goodkin, says that Perez and Trump may palm off the sizable number of contracts. However, it may be difficult to sell all the condos because most buyers are looking for bargains. Goodkin says that he would be the last person in the world to open a condominium development centre.

South Florida is one of the regions replete with condominiums. Prices really soared when the country witnessed the housing boom between 2000 and 2005. Investors bought and sold units as if there was no tomorrow. However, there were no long-term investors that put the developers in deep financial trouble.

The duo had built a condominium complex in Sunny Isles Beach in 2008 but when the bubble burst, the duo lost a lot of money. Perez and Trump also agreed to open another condominium building. However, the project was postponed. Also another project known as the Trump International Hotel & Tower in Fort Lauderdale may not ultimately take off. Another condo-cum-hotel project did not happen and investors lost a lot of money because of this.

It may be noted that Perez’s company, The Related Group, based in Miami, has developed 58,000 houses in Florida since the late ‘70s. But the group is now reeling under the effects of recession. It is seeking to buy time from the lenders to pay debts. The company has also handed over the control of the West Palm Beach condominium complex to a group in what can be termed as “friendly foreclosure.” The housing downturn had taken a toll on the 39 units. The market is indeed very tough and bankers too are tightening standards.

Citigroup like all the other important banks in USA have lobbyists to keep their raft afloat in Washington. For bankers continuously dealing with numbers, Washington seems too complex to handle single handedly. There is a network of rules and regulations, of regulators and agencies all resting on the sold harsh reality of politics. Washington confuses and confounds.

Politicians are all set to redraw rules about regulations to avoid a rerun of the financial crisis.  At such a point a bank cannot survive and keep floating without an insider. Few banks are more adept at manipulating the federal government than Citigroup. The bank became so riddled with bullets from the crisis that it has to all practical purposes become a ward of Washington. It has been kept on life support – pouring in of dollars from the tax payer’s kitty through the goodness of Washington.

Even then, knowing this, many close to the bank from the outside and inside were shocked when the chairperson of Citigroup, Richard D. Parsons availed of the services of Richard F. Hohlt. Hohlt is an insider of Washington and has for long been an aggressive advocate of the banking group.

The name of Hohlt is connected with savings and loan crisis of the 1980’s when his activities cost the taxpayer $150 billion for cleaning up the mess. After the fading of the crisis he too slipped into anonymity but backstage he was not idle. He advised many clients, cemented his contacts with the media and then surfaced as one of the few insiders of Washington who had a hand in ousting of CIA agent Valerie Wilson.

Former regulators who had contact with Hohlt during the savings and loan mayhem were dismayed and surprised that he had been lured in by the chairperson of a bank that has the dubious distinction of having taken billions from the taxpayers in the form of assistance. Concerns were voiced as to what exactly Citigroup had hired him for.

William K. Black who had been a former regulator and one of the top investigators in the Savings and Loan crisis said, “Mr. Hohlt has a track record as a behind-the-scenes, Republican influence peddler who caused severe damage to U.S. citizens by helping to delay and weaken the crackdown on the S. & L. control frauds. It is singularly obscene that any recipient of taxpayer assistance through the TARP program during the current financial crisis would hire one of the most infamous lobbyists in the world to represent them.” Currently Black is a law professor at University of Missouri.