A Possible Future for Housing

The housing market's massive downturn several years ago took a significant toll on homeowners nationwide, and some are only now finally recovering from it. However, that number grew significantly in the fourth quarter of last year.

Donald R. Mullen Jr., who helped Goldman Sachs Group Inc. profit from the U.S. housing crash, is giving the firm and its clients a way to gain from the recovery.

Sherry Sheng, a 29-year-old Shanghai policewoman, bought herself a 4,000 yuan (US$642) black fur jacket, splurging for the last time before she starts paying off the mortgage on her first home. Sheng is part of a generation of middle class that Chinese media has dubbed “fang nu,” or housing slaves, a reference to the lifetime of work needed to pay off their debts. They’re taking on mortgages even as the government maintains property curbs to damp prices that have almost tripled since China embarked in 1998 on a drive to increase private home ownership.

In a short sale, banks forgive the difference between what is owed and the sale price of the house. Recently, however, banks have started giving cash back to the sellers. So far, the programs are a drop in the bucket. There are millions of pent-up foreclosures and JP Morgan is doing 5,000 short sales a month, hardly enough to make a dent. Still, "short sales represented 9 percent of all U.S. residential transactions in November, the most recent month for which data is available, up from 2 percent in January 2008, according to Corelogic."

Robert Loftus submits:Although the popular media have been bemoaning recent housing start numbers - which indicate a strong increase in multi-unit property construction and anemic single family home construction - the shift towards multi-unit rental properties in the U.S. represents an especially positive shift in providing shelter for most Americans.