A man above reproach
Sadly, I don’t have a column in this week’s South End News. Next week, they promise me, and I think it will be worth the wait!
Last week, the newspaper printed a column I wrote about the state of the South End real estate market.
Basically, it’s good. If you’re a seller, that is.
Inventory is flat, prices have stayed strong (may have continued to increase, in fact), but volume is down.
Not everyone agreed with my analysis of the numbers. And, of course, my integrity was questioned, as well.
For your reading pleasure, here’s a letter / rebuttal from a local “housing researcher”. (Is that a paying position, somewhere?)
I disagree with his disagreements, and I think the data that is available backs me up. Perhaps this man could start a blog to refute what I’ve written?
To the editor:
While John Keith’s article on the South End real estate market (”Don’t Panic,” March 20) provides useful perspective about how the South End fits into the current housing crisis, I disagree with: 1) that current foreclosures are not due to predatory lending, and 2) that the South End is somehow immune from undercurrents in the wider housing market.
While Mr. Keith’s assertion that many subprime borrowers were borrowing more than they could afford is true, predatory lending was a major factor. While clear-cut data on fraud is unavailable, my examination of specific loans, as well as the stories coming from foreclosure prevention counselors are undeniable - fraud was rampant. Many borrowers were looking for their piece of the American dream, but were afraid of hearing “no” from a bank. Unscrupulous mortgage brokers stepped into this void, doing everything they could to get these people into a house.
Borrowers were uneducated about the mortgage process, too trusting of mortgage brokers, and unaware of the fine print and risks of their loans. Those of us working on the ground knew about these problems, but regulators and legislators fiddled while more borrowers got sucked into the subprime trap. Mr. Keith suggests we wait “six more months” to react. We are already too late to head off the crisis, and six months will only add to the pain of the clean up.
The long-term supply shortage and the relative low level of subprime lending in the South End are fundamental strengths. This does not mean we can fall into the trap of thinking everything is ok, either.
Mr. Keith points to the rapid absorption of new units during the 2001-2002 recession. That recession recovered on the back of a healthy housing market. The current problems were caused by the collapse of the housing market, so the comparison is not realistic.
More importantly, no neighborhood is an island. The South End cannot avoid the effects of the wider economy. Credit is less available across the spectrum, from the homebuyer, to the developer, to the economy in general. In addition, results of a Chicago Fed index announced this week indicated that a national recession probably has begun, and the employment picture is weakening locally.
Also, the South End depends on the health of the entire city. Though foreclosures are rare in the South End, this crisis is far from over. There were 703 foreclosures in Boston in 2007, but given current foreclosure rates, the city is on track for 1200 foreclosures in 2008. Some of these will be in the South End, and each one has the potential to lower values of adjacent properties. Foreclosures and abandonment in other neighborhoods likely will lead to more crime, affecting the reputation of all the city’s neighborhoods.
I appreciate Mr. Keith’s efforts as a realtor to hold up hope for the market, but let us not do it with a sense of irrational exuberance.
Tim Davis
Housing researcher
West Concord Street
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