Housing called peaking

condo falloff is forecast

October 09, 2005|By BLOOMBERG NEWS

The housing market may have peaked and regions such as southern Florida and Las Vegas may see a "substantial reduction" in condominium values, Countrywide Financial Corp. Chief Executive Officer Angelo R. Mozilo said yesterday.

"I have been doing this for 53 years, and it seems we are topping out," Mozilo, whose Calabasas, Calif., company is the No. 1 U.S. mortgage lender, said in an interview at a Business Council meeting in Kiawah, S.C.

But a strong economy and low unemployment mean single-family housing prices probably won't drop, he said.

New-home sales in August fell by the most since November, a sign that rising mortgage rates and higher energy costs may be cooling demand. Still, sales of previously owned homes surged in August and prices reached an all-time high.

"I don't see a substantial discount" in single-family home prices, although the gains in recent years will likely level off in areas where inflation has been climbing, Mozilo said.

The same can't be said for condominium prices.

"You could see substantial reduction in values in the condo market" in areas of "high speculation," such as Broward and Dade counties in Florida, and Las Vegas, he said. "You could have a 20 percent reduction."

Mozilo's comments echoed those from Global Insight Inc.'s chief economist, Nariman Behravesh.

"We're at or close to a peak in housing," Behravesh said Wednesday. "I have to believe that housing will slow as inflation edges up and the Fed keeps tightening monetary policy and long bond yields increase."

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