Bussiness News

Welcome to the bottom: Housing begins slow rebound

By ADRIAN SAINZ, DAVID TWIDDY, DANIEL WAGNER, ALEX VEIGA, Associated Press Writers Adrian Sainz, David Twiddy, Daniel Wagner, Alex Veiga, Associated Press Writers – Sun Aug 2, 5:26 am ET

It was — note the past tense — the worst housing recession anyone but survivors of the Great Depression can remember.

From the frenzied peak of the real estate boom in 2005-2006 to the recession's trough earlier this year, home resales fell 38 percent and sales of new homes tumbled 76 percent. Construction of homes and apartments skidded 79 percent. And for the first time in more than four decades of record keeping, home prices posted consecutive annual declines.

A staggering $4 trillion in home equity was wiped out, and millions of Americans lost their homes through foreclosure.

Now take a deep breath and exhale. The worst is over.

By every measure, except foreclosures, the housing market has stabilized and many areas are recovering, according to a spate of data released in the past two weeks. Nationwide, home resales in June are up 9 percent from January, on a seasonally adjusted basis. Sales of new homes have climbed 17 percent during the same period. And construction, while still anemic, has risen almost 20 percent since the beginning of the year.

Even home prices, down one third from the top, edged up in May, the first monthly increase since June 2006.

"The freefall is over," says Dean Baker of the Center for Economic and Policy Research.

The problem is that, Baker, like many economists, expects the housing market will "be bouncing around the bottom" for the second half of the year.

There are also real threats that could poison this budding recovery. The unemployment rate, which is 9.5 percent, is expected to surpass 10 percent, leaving even more homeowners unable to pay their mortgages. Mortgage rates could rise, making homeownership less affordable. And the federal tax credit for first-time homebuyers, which as lured many into the market, is set to expire on Nov. 30.

"As long as jobs are being lost, regardless of all the federal programs out there to help the borrowers, you're still going to have problems in the housing market," says Steve Cumbie, executive director of the Center for Real Estate Development at the University of North Carolina's Kenan-Flagler Business School.

True, but when you've got bidding wars for foreclosures in places like Las Vegas, Phoenix and Los Angeles, it's time to call the bottom.

Nissan rolls out electric car at new headquarters

YOKOHAMA, Japan – Nissan Chief Executive Carlos Ghosn drove quietly out of the Japanese automaker's soon-to-open headquarters Sunday in the first public viewing of its new zero-emission vehicle.

It was the first time the external design was shown of Nissan Motor Co.'s environmentally friendly electric automobile, set to go on sale in Japan, the U.S. and Europe next year. The blue hatchback had a sporty design and a recharging opening in the front.

Designer Shiro Nakamura said the vehicle was designed to avoid a stereotypical futuristic design.

"This is not a niche car," he said. "We didn't make it unusual looking. It had to be a real car."

Nissan has promised that the Leaf, which goes into mass-production as a global model in 2012, will be about the same price as a gas-engine car such as the 1.5 million yen ($15,000) Tiida, which sells abroad as the Versa, starting at about $10,000.

Ghosn drove out on stage with former Prime Minister Junichiro Koizumi sitting next to him, and with a Yokohama governor and mayor in the rear seats.

"This car represents a real breakthrough," Ghosn told reporters and guests at a showroom in the new headquarters.

He said the new car and new office building in Yokohama, southwest of Tokyo, marked two fresh starts for Nissan, which hopes to take the lead in zero-emission vehicles.

Nissan, which has an alliance with Renault SA of France, has fallen behind Japanese rivals Toyota Motor Corp. and Honda Motor Co. in gas-electric hybrids that have become increasingly popular recently.

Nissan said the new 22-story headquarters was designed to be sufficiantly energy efficient to qualify as one of the most ecological buildings in Japan. The company, which is losing money amid the global downturn, is selling its old Tokyo headquarters as part of efforts to cut costs.

Koizumi said environmentally friendly auto technology is key to Japan's economic growth.

"It was so unexpectedly smooth and quiet," he said after getting out of the car. "I am sure this car is going to be popular."

Housing could take another turn downward: Greenspan

WASHINGTON (Reuters) – Former Fed Chairman Alan Greenspan said on Sunday that signs of stabilization and increased confidence in the economy could be dashed if home prices were to take another turn downward.

Greenspan told ABC's "This Week With George Stephanopoulos" that he didn't believe that a steep drop was in store, but home prices had stabilized only temporarily.

"It is possible that could get a second wave down," Greenspan said. "Under those conditions, we would get a very significant change in the underlying confidence in the consumer area," as foreclosures rise and more home values fall below their mortgage levels.

KKR 'plans to list Toys R Us' on stock market

LONDON (AFP) – US private equity firm Kohlberg Kravis Roberts (KKR) plans initial public offerings (IPOs) worth billions of dollars for up to six of its companies, including Toys R Us, the Financial Times said Saturday.

The FT said KKR was looking to list companies it bought in the financial boom years before the start of the credit crunch in 2007 because the global economy was showing signs of improvement and stock markets were rising.

A person familiar with KKR, cited by the business daily, said the New York-based private-equity firm was also looking to float US hospital operator HCA, credit-card processor First Credit, Danish Telecoms group TDC and discount retailer Dollar General.

KKR had already filed for an IPO of Avago Technologies, the Singapore-based semiconductor company, the FT said.

"We think there are five to six companies in the portfolio that can be taken public in the next 12 months," said a person familiar with KKR's plans and quoted by the paper. KKR did not comment on the report.

Aquino mourned at wake by thousands of Filipinos

MANILA, Philippines – Mourners wept as they paid their respects at the wake of former President Corazon Aquino on Sunday, with some pledging to carry on her legacy by protecting the democracy she helped install 23 years ago.

Filipinos have been sensitive to any slide back toward autocratic rule since Aquino and Roman Catholic leader Cardinal Jaime Sin led the 1986 "people power" revolt that ousted longtime dictator Ferdinand Marcos.

Jose Olazo brought his 1-year-old grandson to Aquino's wake with a yellow band tied around the child's head. The color was a symbol of the nonviolent mass uprising that forced Marcos from power and into exile in the United States.

Olazo, a 53-year-old laborer and democracy activist, cried before the flag-draped casket of Aquino, who was in a yellow dress, with a rosary in her hands. He quietly vowed to continue safeguarding the democracy she helped implant after decades of brutal dictatorship. "He's the next-generation protester," Olazo said, pointing to his grandson James.

Olazo was among thousands of people who lined up for hours to pay their last respects to Aquino at a suburban Manila university stadium, where her coffin was displayed on a platform teeming with yellow roses and orchids.

Some mourners wept. Some held protest mementoes such as yellow ribbons and an old poster of Marcos.

Aquino, 76, died early Saturday in a Manila hospital after a yearlong battle with colon cancer, reminding many Filipinos of her role in bringing democracy to the country — and of the effort needed to keep it intact.

Months before she was diagnosed with cancer, Aquino joined street protests organized amid opposition fears that President Gloria Macapagal Arroyo may amend the country's 1987 Constitution to lift term limits or impose martial law to stay in power when her term ends next year. Arroyo said she has no desire to extend her term.

Ismita Maliakel, a nun from Kerala, India, who lined up to attend the wake, said Aquino's death was "a blow to democracy" but added she will continue to be a democratic symbol.

"Like Gandhi, she will be remembered in the Philippines," Maliakel said.

Arroyo declared a 10-day national mourning period starting Saturday, and her aides said she will cut short a U.S. trip. The Aquino family has opted for a private instead of a state funeral to be held Wednesday.

Pope Benedict XVI expressed his condolences to Aquino's family and the Philippine government, recalling her "courageous commitment to the freedom of the Filipino people, her firm rejection of violence and intolerance," according to Manila Archbishop Cardinal Gaudencio Rosales.

President Barack Obama was deeply saddened by Aquino's death, White House press secretary Robert Gibbs said Saturday.

South African President Jacob Zuma called Aquino "a great leader who set a shining example of peaceful transition to democracy in her country."

Marcos' widow, Imelda, and former leader Joseph Estrada also expressed sadness at Aquino's passing. Aquino helped depose Estrada over alleged corruption in the second nonviolent "People Power" revolt in 2001, but the two reconciled in recent years. He went to Aquino's wake with his family.

"Let us now unite in prayers for Cory, the Filipino people and for our country," the 80-year-old Marcos told reporters in a church in Manila's Tondo slum district.

Marcos publicly sought prayers for Aquino when she was ill. Weeks earlier, however, Marcos called Aquino a "usurper" and a "dictator."

Aquino rose to prominence after the assassination in 1983 of her husband, opposition leader Benigno "Ninoy" Aquino Jr.

A housewife who was reluctantly thrust into power, Aquino struggled in office to meet high public expectations. Her land redistribution program fell short of ending economic domination by the landed elite. Her leadership, especially in social and economic reform, was often indecisive, leaving many of her closest allies disillusioned by the end of her term.

Still, the bespectacled, smiling woman in her trademark yellow dress remained beloved in the Philippines, where she was affectionately referred to as "Tita (Auntie) Cory."

"Our lives have not improved that much," said Olazo, the laborer. "But if Tita Cory did not restore democracy, I will not even be free to talk this much today."