A12 Economy & Business
A resilient D.C. area housing market
weathered storm, is ready for turnaround
by Dina ElBoghdady While the nation’s housing
market struggles amid a sudden downdraft that has once again battered sales, the Washington region appears relatively insulat- ed and poised for a turnaround. Home-buying activity in the second quarter was well above where it was in the comparable period a year ago, and homes sold more quickly and at higher prices, according to a study com- piled by the Delta Associates con- sulting firm and Metropolitan Regional Information Systems, the local multiple listing service. “We feel quite comfortable in
saying that the bottom has passed in this region,” said Sandy Paul, Delta’s national research di- rector. “But if the national and global economies take a turn for the worse, all bets are off.” The local market owes its
strength in part to its relatively low unemployment rates and plentiful supply of high-paying jobs, the study concluded. Its performance contrasts sharply with the national trend, which shows home sales plummeting in recent months and the supply of homes swelling because of re- newed fears about job security and a tightening lending envi- ronment.
Adding to the gloom Monday was a government report show- ing that even though new-home sales climbed almost 24 percent in June from May to a seasonally adjusted annual pace of 330,000, that rate ranks as the second low- est since 1963, when the Com- merce Department started com- piling such data. “May’s [new-home sales] were the worst ever and June’s were
Report says region
S
KLMNO Ahead of the housing curve
Te Washington area housing market performed better than many areas of the country last quarter, as the region continues to add high-paying jobs that increase demand for homes.
Home sales
Percentage change from the same quarter the preceding year
Q2 2010: +15.9% 20% 10
-40 -30 -20 -10 0
’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 *Seasonally adjusted purchase-only index through March 2010 SOURCES: FHFA, Delta Associates, Metropolitan Regional Information Systems
“We feel quite comfortable in saying that the bottom has passed in this
region.” — Sandy Paul, Delta Associates
the second worst,” said Michael Larson, a housing analyst at Weiss Research. “You’re seeing a housing market that’s still strug- gling to find its footing.” But the Washington market stands out as a bright spot in part because it continues to add high- salary jobs that fuel housing de- mand, the MRIS/Delta report said. Second-quarter home sales in the region shot up nearly 61 percent from the first quarter and about 16 percent from the same quarter a year ago, the re- port said.
Impact of tax credit
Much of the activity took place in the lower price ranges — from $120,000 to $299,000 — as bar- gain hunters chased after aggres- sively priced foreclosures and took advantage of record-low in- terest rates. A recently expired home-buyer tax credit — $8,000 for some
first-time buyers and $6,500 for certain repeat buyers — also helped boost area sales in the early part of the quarter, but not as much as it did in other re- gions, said Gregory Leisch, chief executive of Delta Associates. For starters, the earnings of
many local buyers probably ex- ceeded the income limits im- posed by the tax-credit program, Leisch said. Also, homes in this region tend to be relatively ex- pensive, which diminishes the impact of the tax credit, he said. “If you’re buying a home for $100,000, the tax credit means a lot more than if you’re buying a home for $400,000, which is not uncommon in the close-in sub- urbs of Washington,” Leisch said. For all those reasons, sales in this area are not expected to drop in the second half of the year as much as they might in other mar- kets that had a larger volume of tax-credit-driven sales, Delta ex- ecutives said. The area’s robust sales activity helped clear out the glut of homes. The region has an aver- age of 4.5 months of homes for sale, meaning it would take that long to sell all the homes on the market if sales continued at the current pace. Falls Church had 2.4 months’ worth of homes on the market as of June, the lowest figure in the region. Typically, average home prices rise quickly when the supply of homes dips below the six-month
THE WASHINGTON POST
range. That rapid climb is un- likely to happen this time around because people are more disci- plined about their buying deci- sions, Leisch said. Also, home prices had sunk so low that it’s going to take longer for them to rebound.
Some home prices up
Still, the area’s average home price rose in the second quarter to $398,445, up 11.3 percent from the previous quarter and 4.2 per- cent from a year ago. Prices were highest in what the report de- scribes as the “core” jurisdiction — the District, Arlington County and Alexandria, where the aver- age sales price rose 2.4 percent from a year ago, to $509,156. The strongest year-over-year gain was made in outer suburbs that were devastated by foreclo- sures and steep price declines. Collectively, prices surged 14.2 percent, to $320,514, in Loudoun and Prince William counties and Maryland’s Frederick County. Those areas were the first hit when the housing market unrav- eled and, therefore, the first to re- cover. Closer-in suburbs fared less
well. The average price fell 1.1 percent, to $392,958, in Mont- gomery and Prince George’s counties and Fairfax County. The report predicts price gains in this closer-in region later this year or early next year.
dina@washpost.com
120 100 80 60 40 20 0
’02 ’04 ’06 ’08 ’10
Average number of days Days on market
Q2 2010: 56 days on average
Percentage change in home prices* Prices
Washington metro area
25%
10 15 20
-20 -15 -10 -5 0 5
United States 2010:
+11.7% from last year
With powerful senators watch- ing closely, federal investigators search high and low for evidence of insider trading in shares of Mi- crosoft. One of Wall Street’s best- known hedge fund managers is targeted, but the feds can’t find proof. Years pass, and they close the case without filing charges. Then a nasty, and apparently
-3.1% ’00 ’02 ’04 ’06 ’08 ’10
unrelated, divorce and child-cus- tody battle ensues in Connecticut. A woman discovers on a family hard drive evidence that poten- tially implicates her ex-husband and the hedge fund in the insider trading scandal. She turns it over to investigators, who use it to shut down the fund and assess tens of millions of dollars in penalties. And then they pay $1 million to the woman for ratting on her ex. It sounds like a tale spun in
Hollywood, but it’s the real-life story behind a recent Securities and Exchange Commission case, which could hint at the course of future investigations as the agen- cy capitalizes on brand-new pow- ers to financially reward whistle- blowers. On Friday, the SEC said it would pay $1 million to Karen and Glen Kaiser of Southbury, Conn., who provided information and documents that helped the SEC build its case against Arthur J. Samberg, founder of the hedge fund Pequot Capital Manage- ment, and David E. Zilkha, a for- mer Microsoft employee. Karen Kaiser was once married to Zilk- ha. It is the largest amount ever
awarded by the SEC under a for- mer authority to reward whistle- blowers in insider-trading cases. But the size of the award under- scores how the SEC plans to use an expanded power to reward people who provide help that can stop securities fraud. The financial regulatory law signed by President Obama last week grants the SEC the authority to pay up to 30 percent of any monetary sanction to a whistle- blower. Although the previous law limited payments to insider- trading cases, money can now be doled out for information on any securities law violation.
TUESDAY, JULY 27, 2010
SEC now freer to hike whistleblower awards
by Zachary A. Goldfarb
The SEC’s whistleblower sys- tem, until recently, had been con- sidered ineffective. Only five peo- ple received whistleblower pay- ments before the Kaisers. The biggest payment was $55,220, the lowest $3,500. “We believe that the minimal use of the SEC bounty program can be attributed primarily to the fact that the program has not been widely publicized,” SEC In- spector General H. David Kotz wrote in a report this year. In the recent case, the SEC
charged that Pequot, Samberg and Zilkha engaged in insider trading in shares of Microsoft. The agency alleged that, in 2001, Samberg reached out to Zilkha for information on whether the com- pany would meet its earnings es- timates. Zilkha, then working for Microsoft, checked by e-mail with fellow employees to find out whether Microsoft would meet or beat its estimates. Zilkha then gave Samberg the information, the SEC said, and Samberg traded, earning Pequot more than $14 million. Zilkha lat- er joined Pequot, earning millions of dollars. The e-mail from Zilkha to a col- league at Microsoft was the cru- cial document Kaiser turned over to the SEC. “We initially got in- volved to figure out why David Zilkha seemed so reluctant to tell Karen about this $2.1 million pay- ment from Pequot,” said Mark Sherman, the Kaisers’ attorney. “Once we analyzed the family hard drive, we were able to help the SEC connect the dots in their investigation.” In May, Pequot and Samberg agreed to settle the charge for $28 million, including a $10 million penalty, the basis for the whistle- blower payment. The case against Zilkha continues in administra- tive court. “Mr. Zilkha engaged in no
wrongdoing and intends to take this matter to a hearing at which he will demonstrate he is in- nocent of any improper conduct,” said Henry Putzel III, Zilkha’s at- torney. Pequot and Samberg didn’t ad- mit or deny wrongdoing in the settlement. A spokesman de- clined to comment.
goldfarbz@washpost.com
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