WASHINGTON – Sales of new homes plunged to a record low in January, underscoring the formidable challenges facing the housing industry as it tries to recover from the worst slump in decades.

The Commerce Department reported Wednesday that new home sales dropped 11.2 percent last month to a seasonally adjusted annual sales pace of 309,000 units, the lowest level on records going back nearly a half century. The big drop was a surprise to economists who were expecting a 5 percent increase over December’s pace.
While winter storms were partly to blame, home sales have fallen for three straight months despite sweeping government support. Economists were already worried that an improvement in sales in the second half of last year could falter as various government support programs are withdrawn.
“There is no doubt that January and February are going to be messy months for housing, given the severe weather conditions, but that doesn’t take away from the fact that the housing sector has taken another big step back, even with the government aid,” Jennifer Lee, a senior economist at BMO Capital Markets, said in a research note.
A rebound in housing in the second half of last year helped to boost overall economic growth back into positive territory. Each new home built, for example, creates about three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders.
However, economists are worried that if housing falters in coming months, that will be one more headwind the recovery will have to overcome. The decline to an annual purchase rate of 309,000 in January was 6 percent below the previous record low set in January last year.
“I don’t think we are going to have a double-dip recession in housing, but it is going to take us longer to recover from a very deep hole,” said Patrick Newport, an economist at IHS Global Insight.
January’s weakness was evident in all regions except the Midwest, where sales posted a 2.1 percent increase. Sales were down 35 percent in the Northeast, 12 percent in the West and almost 10 percent in the South.
The drop in sales pushed the median sales price down to $203,500. That was down 5.6 percent from December’s median sales price of $215,600, and off 2.4 percent from year-ago prices.
New home sales for all of 2009 had fallen by almost 23 percent to 374,000, the worst year on record. The National Association of Home Builders is forecasting that sales will rise to more than 500,000 sales this year, an improvement from 2009 but still far below the boom years of 2003 through 2006 when builders clocked more than 1 million new home sales per year.
January’s data increased concerns that the housing rebound could falter in coming months as the government withdraws the support it has used to try to bolster the housing market. The real estate crisis was the epicenter of the country’s overall recession, the worst downturn since the 1930s.
The Federal Reserve has been holding down mortgage rates by buying $1.25 trillion in mortgage-backed securities, but that program is set to end March 31. And temporary tax credits to bolster home buying are scheduled to expire at the end of April.
Federal Reserve Chairman Ben Bernanke told Congress Wednesday that by holding the securities on its books the central bank would continue to help keep mortgage rates low. Economists believe that as long as the Fed owns the securities it will reduce the overall supply and thus help support the price.
Bernanke, delivering the Fed’s twice-a-year economic report to Congress, said that the Fed’s record low interest rates were still needed to attack high unemployment levels and help the overall economy recover.

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WASHINGTON — Housing construction posted a better-than-expected increase in January which pushed activity to the highest level in six months. The solid gain raised hopes that the construction industry is beginning to mount a sustained rebound from its worst slump in decades.

The Commerce Department said Wednesday that construction of new homes and apartments rose 2.8 percent last month to a seasonally adjusted annual rate of 591,000 units. That was better than the 580,000 annual pace that economists were forecasting.

Applications for building permits, considered a good barometer of future activity, fell 4.9 percent to a rate of 621,000, but that was after two months of large increases.

In another sign of strength, Wednesday’s report revised up activity in December to show builders were starting construction at an annual pace of 575,000 units during that month, much stronger than the 557,000 originally reported. Even with the upward revision, activity fell a slight 0.7 percent in December, a dip that was blamed on severe weather in many parts of the country that depressed construction activity.

Economists are hoping that housing is beginning to recover and a rebound in this area will help support the economy as it struggles to mount a sustained recovery from the deepest recession since the 1930s.

In a separate report suggesting strength, the Federal Reserve said industrial production rose 0.9 percent in January, the seventh consecutive monthly increase.

January’s numbers rose in all three major categories: manufacturing, mining and energy utilities. That is the first such show of strength since August 2009.

Manufacturing rose 1.0 percent, while mining and utilities each gained 0.7 percent, the report said.

In the housing report, the strength last month was led by a 10 percent jump in activity in the Northeast and an 8.9 percent increase in the West. Construction was up a smaller 1 percent in the South and 3.2 percent in the Midwest.

The strength in January pushed construction activity up by 21.1 percent from the pace in January 2009. Last month’s building rate the fastest pace since July.

Construction of single-family homes rose by 1.5 percent to a seasonally adjusted annual rate of 484,000 units while construction of multi-family units increased 9.2 percent to an annual rate of 107,000 units.

The National Association of Home Builders said Tuesday that its housing market index rose by two points to 17 in February after having fallen for two consecutive months.

That increase in sentiment was likely influenced by a number of favorable developments including a report earlier this month that the nation’s unemployment rate fell in January to 9.7 percent, still high, but lower than the 10 percent of the previous month.

In other favorable developments, mortgage rates are hovering around 5 percent, pushed down by a Federal Reserve program to buy mortgage-backed securities. And builders say they are also seeing a boost in the demand for homes coming from a government stimulus program. That program provides tax credits of up to $8,000 for first-time home buyers and up to $6,500 for current homeowners who decide to move.

Bob Jones, chairman of the home builders, said builders were “slightly more optimistic that the housing recovery is finally beginning to take root.”

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The percentage of borrowers at least 60 days past due on their mortgage increased for the 12th straight quarter, hitting 6.89 percent by the end of 2009, according to new data released by TransUnion Tuesday. That’s an all-time high in the credit bureau’s study, dating back to 1992.

This statistic, which is traditionally seen as a precursor to foreclosure, increased 10.24 percent from the previous quarter’s 6.25 percent average. Compared to the year-ago delinquency rate of 4.58 percent, past due mortgages are up a staggering 50 percent, TransUnion said.

The Chicago-based company called the recent slowing in the pace delinquency increases “short-lived.” What was starting to become a trend came to an abrupt end in the fourth quarter, when the mortgage delinquency rate accelerated instead of decelerated as it had done since the beginning of 2009.

Based on TransUnion’s analysis, borrower delinquency rates last quarter continued to be highest in Nevada (16.19 percent) and Florida (14.93 percent). North Dakota (1.84 percent), South Dakota (2.46 percent), and Alaska (2.84 percent) continued to produce the nation’s lowest mortgage delinquency rates.

Areas showing the greatest percentage growth in delinquency from the previous quarter were the District of Columbia (+20.2 percent), Louisiana (+17.7 percent), and Delaware (+14.8 percent). Unlike last quarter, no state showed a decrease in mortgage delinquency rates from the previous period.

The news was not altogether bad, though, as bright spots appeared at the metropolitan level. Thirty-eight metro areas showed a decrease in their mortgage loan delinquency rates since third quarter, with Corvallis, Oregon heading the pack. This compares to only 27 metros that showed a quarterly decrease in delinquency last year between the third and fourth quarters.

“Variations in delinquency highlight the fact that the recession and the eventual recovery are both regional phenomena tied for the most part to localized house price conditions and unemployment levels,” said FJ Guarrera, VP of TransUnion’s financial services business unit.

“We’re not out of the woods yet,” Guarrera added. “The continuing rise in foreclosures, in conjunction with low consumer confidence in the housing market, continues to hinder housing value appreciation and impede recovery in the mortgage industry. Furthermore, there is wave of adjustable rate mortgages (ARMs) that have yet to reset.”

For these reasons, Guarrera explained that TransUnion’s forecasts for 2010 are slightly more pessimistic than they have been in the past. The credit bureau is expecting the 60-day mortgage delinquency rate to peak between 7.5 and 8 percent over the course of this year.

With regard to regional forecasts, Nevada is still anticipated to experience the highest mortgage delinquency rate by mid-2010, reaching as high as one in five mortgage borrowers.

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Moody’s Investors Service is forecasting another 8 percent decline in home prices over the course of 2010 before a bottom in residential property values is reached, largely because of the “underwhelming” success of the administration’s Home Affordable Modification Program (HAMP).

When all is said and done, the ratings agency predicts a peak-to-trough drop of 34 percent in national home prices. That’s actually an improvement over Moody’s estimates last month, when the agency was expecting a total peak-to-trough decline of 37 percent. However, it’s the duration of depreciation that’s the headline grabber. Previously, Moody’s analysts were predicting the price floor to be reached in the third quarter of this year. Now they say it won’t be hit until the end of the fourth quarter.

The reason for the extended freefall, Moody’s says, is the timing of foreclosure sales hitting the market. Market barometers such as the S&P/Case Shiller index and the National Association of Realtors’ existing-home median price have, in fact, shown improvements in recent months, but Moody’s says the progress is short-lived.

“We believe that the recent improvement in house prices is a temporary reprieve,” Moody’s said in its latest ResiLandscape report. “A decline in distress sales-including foreclosure, deed in lieu, and short sales-as a share of total home sales is a driving contributor to the gain in house prices.”

HAMP, as well as other servicer-initiated mortgage modification programs, have kept hundreds of thousands of distressed homes out of foreclosure and off the market – for now, the ratings agency said.

However, “Many of the loans in the [HAMP] program will fail to convert to a permanent modification and will eventually end up on the market as heavily discounted distress sales,” Moody’s wrote. “It is looking likely that foreclosures will hit the market more slowly than we had anticipated, mitigating but prolonging the price decline.”

Despite the administration’s efforts to stem the tide of foreclosures, Moody’s said in a January report that its analysis shows that only 400,000 to one million homes will be saved through HAMP. The agency’s projections fall significantly short of the federal government’s promise to keep three to four million homeowners out of foreclosure.

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NEW YORK, Feb 10 (Reuters) – Freddie Mac (FRE.N)(FRE.P) and Fannie Mae (FNM.N)(FNM.P), the largest buyers of U.S. home loans, said on Wednesday they were ramping up purchases of delinquent loans from mortgage securities pools to bolster their financial positions.

Both companies, seized by the government in September 2008, said this action would help cut funding costs and preserve capital, limiting the amount of added taxpayer funds they need.

The cost of buying most of the delinquent loans backing mortgage securities and holding them in their own portfolios will be less than the cost of advancing payments on the non-performing loans to investors, both companies said.

Freddie Mac has tapped the government for more than $51 billion in taxpayer funds as of the third quarter of last year, roughly $10 billion less than has its sibling, Fannie Mae.

Freddie Mac said it would buy “substantially all” mortgage loans that are at least 120 days delinquent from its fixed-rate and adjustable-rate securities.

There were 331,394 loans in this category as of the end of December, with an unpaid principal balance just shy of $69 billion, Mark Hanson, vice president of mortgage funding at Freddie Mac, told Reuters in an interview.

Those numbers will be adjusted for January. After adjustments, “whatever is remaining of the investor balances for that population will be passed through as prepayments,” Hanson said.

The buyouts “will help Freddie Mac preserve capital and reduce the amount of any additional draws from the U.S. Department of the Treasury,” the company said. Fannie Mae made a similar statement.

Under new accounting standards, all loans that Freddie Mac and Fannie Mae guarantee went back on their balance sheets as of the start of January.

Fannie Mae said it has the option to buy out loans that are late by four or more straight months, estimating that to be about $127 billion of single-family loans as of Dec. 31.

The company expects to start the purchases in March and complete a significant portion within a few months, subject to market conditions and servicer capacity.

On Christmas Eve, the Treasury opened the credit access spigot to the two companies for three years.

The government is seeking to overhaul the structure of the two largest U.S. home funding companies after the housing crisis decimated their capital levels. But in the meantime, it relies on them to help lift the housing market out of its worst crash since the Great Depression.

The White House said on Feb. 1 that Fannie Mae and Freddie Mac would draw a total of $188 billion in government funds by October 2011. For details, see [ID:nN01191335]

The stepped-up buyouts of delinquent loans from their securities pools were widely expected, but market participants were concerned about the uncertain timing and pace.

“We announced it today trying to minimize market disruption and we elected to do it all at once so that future trading would have this uncertainty resolved,” Hanson said.

Freddie Mac said it will continue to review the economics of future purchases of loans that are 120 days or more delinquent.

Mortgage bond prepayment speeds “will be materially faster for the February report, but this will allow for a more even approach to buying out newly delinquent loans going forward,” FTN Financial analysts Walter Schmidt and Kevin Cavin wrote.

Predicting the pace of early mortgage bond repayment is critical for investors in gauging cash flow and planning for reinvestment.

Freddie Mac said it expects by April to disclose in its monthly volume summaries the number of loans at least 90 days delinquent in related fixed-rate 30-year, 15-year and ARM securities.

Fannie Mae said it would provide additional information on the impacted mortgage securities within two weeks.

Attention in the market has started to shift to how the companies will fund these purchases.

Earlier on Wednesday, Freddie Mac opted to skip its lone window for selling its so-called reference notes in February. That is one form of funding used by the company to finance mortgage bond purchases.

Yield premiums on bonds issued by the two companies were steady to narrower on Wednesday versus Treasuries.

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Atlanta-based Regent Partners LLC and TriGate Capital have joined forces to form a $400 million fund to invest in commercial real estate. It’s just one more sign that the downturn in the sector has created a buyer’s market of incredible bargains.

According to the firms, the Regent-TriGate Property Fund I will focus on the recapitalization of real estate assets primarily in Atlanta, as well as other markets in the Southeast, that require both capital and management expertise.

As DSNews.com reported last week, a congressional oversight panel recently headed to Atlanta to hold a field hearing on the potential reach of commercial real estate troubles. Atlanta was chosen as the destination because that market has been hit particularly hard and many experts believe Atlanta’s experience could eventually stretch to other parts of the country.

A report by the local Atlanta Business Chronicle the investors will acquire primarily distressed office buildings, hotels, and high-rise residential towers over the next two years.

“We believe that Regent-TriGate will offer management and capital solutions to lenders and owners of large, complicated real estate assets that are in need of recapitalization,” said David Allman, chairman of Regent Partners. “It is our belief that market participants will be looking to firms that have capital, but also have the ability to add value to real estate through intensive management and redevelopment.”

According to a statement from the firms, the Regent-TriGate fund is currently looking for opportunities to combine its operating, marketing, and repositioning expertise with financial restructuring. Potential transactions might include joint ventures with financial institutions that own or are secured lenders on properties, acquisitions of loans, and equity investment in properties that require recapitalization.

The fund will look to combine its capital with third party institutional partners to further augment its capital base for specific opportunities. In particular, Regent-TriGate believes it can add value to large developments that need new sponsorship in order to maximize the value of the assets.

“We believe that Regent’s redevelopment capability, management expertise, and knowledge of Southeastern real estate together with TriGate’s investment and financial structuring expertise will provide unique solutions to the real estate challenges that exist today,” said Jay Henry, managing member of TriGate Capital.

Since its inception in 1998, Regent Partners has acquired and developed more than 15 million square feet of office, residential, retail, and hotel space valued in excess of $2 billion. Regent’s signature project is the 50 story Sovereign building, a vertical mixed use tower on Peachtree Road in the Buckhead district of Atlanta.

TriGate Capital, headquartered in Dallas, Texas, says it is focused on investing in real estate properties, real estate secured loans and securities, and real estate companies through transactions that emanate from the need of financial institutions and property owners to restructure. TriGate’s principals have invested in more than $10 billion of real estate assets, and the company says it has raised its inaugural fund to take advantage of the current lack of capital in the commercial real estate market.

Peter Fish of Sterling Real Estate Capital helped to arrange the new property fund. Sterling is an Atlanta-based real estate private equity advisory firm.

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WASHINGTON – Sales of previously occupied homes took the largest monthly drop in more than 40 years last month, sinking more dramatically than expected after lawmakers gave buyers additional time to use a tax credit.

The report reflects a sharp drop in demand after buyers stopped scrambling to qualify for a tax credit of up to $8,000 for first-time homeowners. It had been due to expire on Nov. 30. But Congress extended the deadline until April 30 and expanded it with a new $6,500 credit for existing homeowners who move.

“It’s ‘exit stage left’ for first-time homebuyers,” wrote Guy LeBas, an analyst with Janney Montgomery Scott.

December’s sales fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million, from an unchanged pace of 6.54 million in November, the National Association of Realtors said Monday. Sales had been expected to fall by about 10 percent, according to economists surveyed by Thomson Reuters.

The report “places a large question mark over whether the recovery can be sustained when the extended tax credit expires,” wrote Paul Dales, U.S. economist with Capital Economics.

The median sales price was $178,300, up 1.5 percent from a year earlier and the first yearly gain since August 2007. However, some of that increase could be due to a drop-off in purchases from first-time buyers who tend to buy less expensive homes.

Sales are now up 21 percent from the bottom a year ago, but down 25 percent from the peak more than four years ago.

The big question hanging over the housing market this spring is whether a tentative recovery will stumble after the government pulls back support. The Federal Reserve’s $1.25 trillion program to push down mortgage rates is scheduled to expire at the end of March — a month before the newly extended tax credit runs out.

Last year, first-time buyers were the main driver of the housing market, but their presence is on the decline. They accounted for 43 percent of purchases in December, down from about half in November, the Realtors group said.

The inventory of unsold homes on the market fell about 7 percent to 3.3 million. That’s a 7.2 month supply at the current sales pace, close to a healthy level of about 6 months.

Total sales for 2009 closed out the year at 5.16 million, up about 5 percent from a year earlier. That was the first annual sales gain since 2005. But prices fell dramatically last year, declining 12.4 percent to a median of $173,500, the largest decline since the Great Depression.

Though the results missed Wall Street’s expectations, the Realtors’ group says there are signs the market is finally stabilizing.

“There is some sustainable momentum building in the housing market right now,” said Lawrence Yun, the group’s chief economist. However, he cautioned that the recovery will depend on whether the economy starts adding jobs in the second half of the year.

Many experts project home prices, which started to rise last summer, will fall again over the winter. That’s because foreclosures make up a larger proportion of sales during the winter months, when fewer sellers choose to put their homes on the market.

Despite fears that home prices are starting to fall again, some analysts still believe the worst is over.

“We do not believe it is fair to consider this a double dip in the housing market,” Michelle Meyer, an economist with Barclays Capital, wrote last week. “The recovery is still under way, but hitting some bumps in the road.”

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There are more positive signals and developments for housing and related industries than at any time in the past three years, Fitch Ratings analysts wrote in a quarterly outlook report, but despite having fewer competitors, public builders will continue to be challenged and need to maintain tight controls over costs and expenses in 2010.

Read the rest at HousingWire.com

WASHINGTON – In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure. Just yesterday, Secretary Donovan announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes.

“As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers,” said Donovan. “FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization.”

With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.

“This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed,” Donovan said.

In today’s market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.

The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” said FHA Commissioner David H. Stevens. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”

The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:

* All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
* In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
* The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD’s website.

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After a dour year where housing prices fell more than 12% nationwide, will 2010 bring sunnier tidings? The short answer: only a tad in a select few places but overall not really.

Yes, there have been pieces of good news over the past few months that have indicated a quiet, slow bottoming of real?estate prices. For instance, sales of existing homes rose 7.4% in November from the previous month, the highest rate since February 2007, according to data from the National?Association?of?Realtors released last week. The tax incentives for home buyers passed earlier this year along with historically low interest rates have no doubt nudged many buyers into the market.

Yet a recovery depends on several factors. At the top of the list is a turnaround in the labor market. More people going back to work will have a beneficial effect on household income and consumer confidence and would stabilize the housing market, says Stuart Gabriel, director of UCLA’s Ziman Center for Real Estate. As of November, one of out every 10 American workers is unemployed, according to the Bureau of Labor Statistics. And while that’s down slightly from October, Moody’s expects the jobless rate to peak in the third quarter next year at 10.6%.

Another factor is the backlog in foreclosures, which are dragging down values and adding to the housing supply. “By all accounts, that backlog is at a historic high,” says Gabriel. “It suggests that many more homes will be sold on a distressed basis either via foreclosure or short sale.”

RealtyTrac, an online marketplace of foreclosure listings, estimates 3.2 million households will have received a foreclosure notice in 2009, up from 2.3 million in 2008. The firm projects that number could approach four million in 2010. “We do think 2010 will probably represent the peak, and in 2011 [foreclosures] will start to go down at least marginally,” says Rick?Sharga, senior vice president at RealtyTrac. Why the acceleration next year? First, says Sharga, there have been enormous delays in processing this year. Many homes that would have gone into foreclosure in 2009 won’t actually enter and complete the process until 2010.

Second, a big wave of option adjustable-rate mortgages (ARMs) will reset next year. (These are a somewhat obscure category of ARMs that were popular during the real?estate?boom, which allowed borrowers to make a range of monthly payments. The options include a partial-interest payment that adds the unpaid interest to the loan’s balance. On many of the loans, balances have risen while values of the underlying properties have plummeted.) “The number of loans that will adjust starts to go up significantly in the middle of next year. A lot of those loans are underwater…and owners will be really hard-pressed to avoid going into foreclosure,” Sharga says.

Home prices, of course, are variable and depend on many factors, each of which are difficult to predict. Still, average home prices will drop by 7.9% nationwide in 2010, according to Moody’s Economy.com. In the few areas where there could be positive price growth, the projected increase is modest. “These areas will essentially be flat next year,” says Steve Cochrane, managing director at Moody’s Economy.com.

The five areas that Moody’s foresees home prices performing best in 2010 are: Tacoma, Wash., (an increase of 2.44%); Memphis, Tenn., (up 0.99%); Pittsburgh (up 0.89%); Charleston, S.C. (up 0.18%); and Seattle (decline of 0.50%). (These five markets are culled from data on Moody’s Economy.com and based on the largest 100 metro areas.)

These pockets of the country share a few important characteristics. One is that they are starting with a limited supply of housing stock. Another is that throughout most of the decade, prices basically stayed in synch with household income, says Cochrane.

There are other factors, too. Pittsburgh , for example, along with western Pennsylvania, is late in the traditional business cycle, and “our variations tend to be smaller,” says Robert Strauss, a professor of economics and public policy at Carnegie Mellon University in Pittsburgh. The economy has managed to stay fairly stable mostly because over the past several decades it transformed from a center of manufacturing to one of education and health care with a bit of financial services and technology.

Smaller areas across the Southeast are expected to fare well in 2010 primarily because they fared relatively decently during the housing crisis, says Jeannine Cataldi, a senior economist at IHS Global Insight. “They didn’t have such a big run-up, and they have a diverse economic base that enabled them to stay stable,” she says. Home prices in Charleston didn’t get out of line with household incomes; also, Boeing is investing in a fairly large manufacturing plant there, which could create some potential for income and job growth, says Cochrane.

As for Memphis, the city’s largest employer is FedEx. Transportation services is one of the early industries to turn around as the economy recovers, says Cochrane, and that should support the area’s housing market.

The economies of Tacoma and Seattle – which are neighboring cities – were “much stronger for much longer than much of the rest of the country,” says Cochrane. Software giant Microsoft, based in Redmond, Wash., a Seattle suburb, was one reason the area remained stable. Another was Boeing, which builds its commercial airplanes in Seattle.

Going forward, Seattle’s position as a key hub of trans-Pacific trade should be a plus for the economy. Orders are increasing for commercial aircraft and it should see some rising demand for tech products, Cochrane says. The outlook for 2010 for the two Washington cities “is for fairly stable, moderate economic growth,” he says.

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