JACKI LYDEN, HOST:
JP Morgan Chase announced this past week that it's going to lay off 8,000 people this year, most of them in the company's residential home loan business. Home sales are slowing nationwide and are now at their lowest point in 18 months. So, does that mean we headed for another housing swoon? Well, NPR's Chris Arnold says that things might be better than they appear.
CHRIS ARNOLD, BYLINE: OK. Let's start with those layoffs. It's always a sad thing when thousands of people lose their jobs, of course. But a bit counter-intuitively, those people are actually getting laid off because the housing market and the economy have been recovering.
GUY CECALA: In the mortgage market, there was a lot more employment than you'd normally see in that market.
ARNOLD: That's Guy Cecala, who publishes Inside Mortgage Finance. He says a few years ago, mortgage rates were at record lows and so millions of people were refinancing their home loans to save money. But now with the economy and the housing market recovering, interest rates are naturally rising back up.
CECALA: Mortgage originations are dropping like a rock, so people who underwrite, who process mortgages, they just don't have as much business to keep them busy so they're being laid off.
ARNOLD: And there could be a silver lining here. Many economists think that lending standards are too tight right now. But now banks might have to compete more for business and make it easier for more people to qualify to buy houses.
CECALA: And I expect to start seeing that happen in 2014.
ARNOLD: As far as home sales slowing down, in five of the past six months, Americans bought fewer homes than the month before. And sales of existing homes are now at their lowest level in a year and a half. That doesn't sound very good. But those numbers might be getting thrown off, in part by that pesky polar vortex.
BILL POWERS: The unusually harsh weather with snowstorms in the eastern half of the United States.
ARNOLD: That's Bill Powers who runs Encore Housing. It's a real estate investment and development company. Powers has done very well in real estate. We spoke to him from his house in Aspen, Colorado, where he has his own Picasso hanging on the wall. And right now, Powers is bullish about the future of housing and the economy.
POWERS: Absolutely. And I would say there is below average supply and in some markets I would go so far as to say a chronic shortage of new homes available.
ARNOLD: Powers says millions of Americans have had to delay getting their own place to live. For example, young people have been living with their parents or a bunch of roommates. In fact, after the housing crash across the entire country, new household formations fell to about half their normal rate. And now that's changing.
POWERS: Inevitably these individuals will be purchasing more homes and renting more units.
ARNOLD: So, Powers says we need to build a lot more houses and apartments both for people to buy and rent. And right now he's in the process of raising money to build $1.5 billion worth of new rental housing - that's 7,000 units across five states. As far as where home prices are headed next, that has everything to do with where you live.
LOUISE KEELY: Housing has always been and will always be kind of a local phenomenon.
ARNOLD: Louise Keely is the chief research officer with the Demand Institute, which is a division of the Conference Board - it tracks the U.S. economy. She says in Jacksonville, Florida prices crashed and are expected to rise back up 20 percent in the next few years. Whereas in Washington, D.C., prices have stayed strong and will likely only rise 3 percent. Keely's group has just come out with a forecast of prices for the 50 biggest metro areas and profiles of more 2,000 other cities:
KEELY: That's 2,200 cities and towns. So, you know, if you live in Hoboken, New Jersey or you live in Spokane, Washington, you can go in and look up a profile for your city.
ARNOLD: We have put a link to the interactive report at npr.org. Chris Arnold, NPR News.
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