Foreclosure Spike As ARMs reset to higher payments, approximately 1.1 million additional home foreclosures are expected over the next six years or so, according to a study by research firm First American CoreLogic, based in Santa Ana, Calif. Those foreclosures would represent about 13 percent of the ARMs originated through purchases or refinancings between 2004 and 2006, with a total value of $326 billion in debt, the study says. The foreclosure sales, the study estimates, would result in a total of $112 billion in default losses. Christopher Cagan, director of research and analytics for First American Core-Logic and the author of the study, says the “losses spread over several years will not break the national economy.”—E. Butterfield
Price Hike Though prices for construction materials have increased more moderately and even decreased in some areas in recent months, that trend is likely to reverse itself, says Ken Simonson, chief economist for The Associated General Contractors of America. The runaway price increases for construction materials that marked 2004 through mid-2006 are likely to return, Simonson noted in a March 2007 report. “The current calm is only a lull between storms and not a return to the inflation-free period of 2001–2003,” he says. By the end of 2007, materials costs could again be rising at a rate of 6 percent to 8 percent, Simonson says.—E.B.
The Green in Gray Builders should ready themselves to cash in on the graying of America. The NAHB's 50+ Housing Council projects the population of adults 55 years of age or older to grow 2 percent each year for the next seven years, from 67 million in 2005 to 85 million in 2014. The good news for builders: One-third of the nation's 55-plus adults plan to move into older-adult communities.—S. Zurier
SOURCE: WESTCHESTER COUNTY BUSINESS JOURNAL
“Invisible” Labor One-fifth of the 82,000 workers who build housing in New York City are working off the books, according to a study conducted by the Fiscal Policy Institute, a nonprofit organization that is partly funded by unions. The New York Times reports that the study found that while residential construction in New York doubled between 2000 and 2005, “official” employment in the residential construction sector rose only 16 percent. On average, the non-payroll workers made $10 per hour, compared with $24.70 an hour for union workers and $14 an hour for non-union laborers.—J. Caulfield
Village Value While most of the cost of foreclosures is borne by the borrower and the lender, communities suffer as well, according to research from the Georgia Institute of Technology's City and Regional Planning Program. Testifying before a congressional subcommittee this spring, associate professor Dan Immergluck said his research on housing and mortgage markets found that every foreclosure within an eighth of a mile of a single-family house cuts property value by about 1 percent.—P. Curry
The New Guy After vetting more than 1,500 applicants, Benton Harbor, Mich.–based Whirlpool Corp.'s Maytag brand announced that Clay Jackson of Richmond, Va., will portray the next Maytag Repairman in the company's ad campaign. As the new face of Maytag, Jackson will play a major role in revitalizing the 100-year-old brand. He is the fourth person to portray the repairman in the campaign's 40-year existence. The first (and perhaps most popular) repairman was Jesse White, who for 21 years, beginning in 1967, played the part of the lonely repairman whose phone never rang.—N.F. Maynard
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