Housing Giants - January 1, 2009 - (Page 11) FeatUre PersPective and insight are in short supply these days, especially in relation to the economy. Not only is most everything going to hell in a hand basket, but nobody seems to know exactly why. And so far, no one has had much luck trying to fix it. That’s why I enjoy reading everything Nic Retsinas writes: he cuts right through the fog. He can actually explain how we got into this mess. If you’re trying to make a living building houses, and you don’t know Retsinas, it’s time to change that circumstance: Nicolas P. Retsinas is a Harvard scholar, but I sure wouldn’t call him an ivory tower kind of guy. For the housing industry, he’s more like a prophet crying in the wilderness. For example, in an op-ed piece he wrote for the Boston Globe last October, Retsinas pointed out that before the subprime mortgage market crashed, it operated “outside the corral” of federal banking regulations, to the detriment of all. Some observers charged that federal government policies aimed at increasing the home ownership rate created what Retsinas called this 11 1.1.09 HOUSING GIANTS www.HousingGiants.com “Wild West market.” But that’s wrong, he contended. In 2004, the U.S. home ownership rate in the rose to an all-time high of 69 percent, Retsinas noted, but the subprime market did not even blossom until 2005. Retsinas credited a robust economy, low unemployment, low interest rates, credit scoring and banks complying with the Community Reinvestment Act Of 1977 for the bump in home ownership — while only 9 percent of subprime borrowers used such loans to finance first-time home ownership. The subprime market actually was used mostly by investors flipping houses, and move-ups riding a bull market to live beyond their means, Retsinas charged. Ironically, as subprime lending soared — and fueled housing bubbles in many markets — home ownership actually fell, as low income and minority households were priced out of the market. urban planning and design, Retsinas’ central mission is tracking housing industry performance. Since 1998, he’s been director of Harvard University’s Joint Center For Housing Studies, the think tank charged with every June for the last 20 years. This past year, Retsinas’ researchers concluded that “until the inventory of vacant homes is worked off, the pressure on prices will persist. Further price declines will Photography by Tsar Fedorsky there is a role for government in housing financing, retsinas says. Intellect at Work Although he still teaches in Harvard’s Business School and lectures in keeping track of how well this country’s housing markets are working. For the last four years, Retsinas has carefully dissected the mountain of dysfunction that eventually led the whole economy into recession. For more evidence of this prophesy, check out the Joint Center’s seminal “State of the Nation’s Housing” report, published not only increase the probability that mortgage defaults end in foreclosure, but also put a tighter squeeze on consumer spending.” Retsinas long ago identified the source of the financial crisis and our current recession as a broken housing finance system. “When you talk about the problems in housing, you are — de facto — talking about http://www.jchs.harvard.edu/ http://www.jchs.harvard.edu/ http://www.jchs.harvard.edu/ http://www.federalreserve.gov/dcca/cra/ http://www.federalreserve.gov/dcca/cra/ http://www.jchs.harvard.edu/son/index.htm http://www.jchs.harvard.edu/son/index.htm http://www.HousingGiants.com
Table of Contents Feed for the Digital Edition of Housing Giants - January 5, 2009 Housing Giants - January 5, 2009 Contents Viewpoint News & Moves Tech People to Know Housing Giants - January 5, 2009 Housing Giants - January 5, 2009 - Housing Giants - January 5, 2009 (Page Cover1) Housing Giants - January 5, 2009 - Contents (Page 2) Housing Giants - January 5, 2009 - Viewpoint (Page 3) Housing Giants - January 5, 2009 - Viewpoint (Page 4) Housing Giants - January 5, 2009 - News & Moves (Page 5) Housing Giants - January 5, 2009 - News & Moves (Page 6) Housing Giants - January 5, 2009 - Tech (Page 7) Housing Giants - January 5, 2009 - Tech (Page 8) Housing Giants - January 5, 2009 - Tech (Page 9) Housing Giants - January 5, 2009 - People to Know (Page 10) Housing Giants - January 5, 2009 - People to Know (Page 11) Housing Giants - January 5, 2009 - People to Know (Page 12) Housing Giants - January 5, 2009 - People to Know (Page 13) Housing Giants - January 5, 2009 - People to Know (Page 14)
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