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American Morning

America's New War: Homeowners Taking a Hit Too

Aired September 28, 2001 - 11:53   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: The terror attacks of September 11th hit home in more ways than one.

Here is CNN's Brooks Jackson.

(BEGIN VIDEOTAPE)

BROOKS JACKSON, CNN CORRESPONDENT (voice-over): Most families, most of their wealth is here, the home, and homeowners are taking a hit too. Home prices are predicted to decline. Buyers are not as eager since September 11th.

DAVID LEREAH, NATL. ASSOCIATION OF REALTORS: Real estate activity virtually came it a halt. It was -- activity was down 60 to 80 percent in most regions of the country. Thereafter, activity started to rebound, and now, we are seeing that across the nation, we are down about 10 percent in terms of listings, and home sales and volume.

JACKSON: The realtors reported this week that sales of existing homes were at a record in August, but that's ancient history now.

Dallas real estate agent Darren Orr says some laid-off workers already have put homes up for sale, while buyers may be turning cautious.

DARREN ORR, REAL ESTATE AGENT: They realize that people that are -- were in the home buying process may be stepping back a little bit to see where we're going with the economy.

JACKSON: Before September 11th, prices were rising fast. But no more. The typical home that sold for $143,200 a year ago is going for $154,700 last month. But according new projections, by next spring, that medium-priced existing home may only bring $145,700.

And declines are expected to be even worse in places like Seattle, hit by massive layoffs of Boeing workers, or Las Vegas, its casinos practically emptied by travel fears.

There are still buyers. The lowest mortgage rates in nearly three years make it cheap to borrow purchase money.

JAY BRINKMANN, MORTGAGE BANKERS ASSN.: People who wanted to get into the market now are looking at interest of 6 3/4, and saying for the first time, maybe I can now afford it.

JACKSON: So homes are still selling, but the way this Atlanta buyer sees it, it's now a buyer's market.

UNIDENTIFIED MALE: I mean, people seem to be a little bit more willing to bargain than they were before.

JACKSON: Housing economist expect home prices to start rising again by the middle of next year, when an economic recovery is predicted to kick in. But not like before. In the 12 months that just ended, home prices rose a full 8 percent, but by roughly this time next year, the realtors predict the median sales price will be only 2.4 percent higher than at present.

(on camera): So home owners who have become accustomed to seeing the value of their homes rise faster than inflation, effortlessly creating wealth, may now find that's no longer true.

Brooks Jackson, CNN, Washington.

(END VIDEOTAPE)

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