By JUSTIN LAHART

Home sales plunged in December, raising fresh concerns over the housing market's ability to recover when government support winds down.

Existing-home sales plunge in December, dropping lower than expected after three straight increases that were fed by a fat government tax credit. Dow Jones Newswires' Dawn Wotapka and Kathleen Madigan discuss what the latest figures say about the state of the U.S. housing market.

Sales of previously owned homes fell 16.7% from November to a 5.45 million annual rate, the National Association of Realtors said Monday, after a looming tax-credit deadline pushed buying decisions into previous months. The drop brought the pace of sales down to the lowest level since August.

The government's first-time home-buyer tax credit was initially scheduled to end Nov. 30, and there was a race to finish deals before it expired. But the tax credit was eventually extended until spring, complemented by an additional tax break for repeat buyers.

For all of 2009, there were 5.16 million home sales, up 4.9% from 4.91 million in 2008. It was the first annual sales gain since 2005.

Although economists expected Monday's report to show declining December home sales, few thought they would fall so sharply. The decline called into question the sector's ability to bounce back.

"We have a very fragile housing system," said Michael Carey, an economist with Calyon Securities in New York. He worried that as the government withdraws support from the housing market, prices could begin slipping again. That would put more homeowners into the position of owing more on their mortgage than their home is worth and could lead to another wave of foreclosures.

Related

• Housing: Hardly a 'Shock'
• EconTracker: Home Sales

 

Home Prices Not Rising Anytime Soon

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Expiring tax credit for home buyers pressured home sales in December and then the credit was extended, so we're in uncharted territory in terms of volatility, according to Trulia CEO Peter Flint, who says prices aren't going up over the next six to 12 months. Stacey Delo reports.

It will be difficult to gauge how dependent on government support the housing market has become until the second half of the year. The current round of tax credits are for sales signed by the end of April and completed by the end of June. The looming expiration of those programs will likely create another sales surge in the spring.

The median price for a home sold in December was $178,300, up 4.9% from $170,000 in November and the largest monthly percentage price increase since 2005.

But the jump likely occurred because higher-end homes made up a larger share of total sales with the drop in first-time home buyers.

Regionally, December sales fell 19.5% in the Northeast, 25.8% in the Midwest, 16.3% in the South and 4.8% in the West.

Write to Justin Lahart at justin.lahart@wsj.com

Important article (click link below the video). P.S. Find a true expert in short sales, not a self-proclaimed expert.

By STEPHANIE SIMON

BUDA, Texas -- The state constitution doesn't say, in so many words, that Carl Mitz has the absolute right to pry open a horse's mouth, grab hold of the tongue, and commence sawing away at the back molars with a power tool.

But Mr. Mitz and his attorneys are pretty sure that's implied.

For a quarter-century, Mr. Mitz has practiced the obscure art of horse-teeth floating. Using instruments roughened with diamond grit, he has filed down hundreds of thousands of equine teeth so that they don't grow into sharp points that can cut the horses' cheeks or throw off their chewing rhythms.

It's a fairly mechanical job: Open equine mouth, insert hand, feel for trouble, file rough spots. Not glamorous, but potentially lucrative. Veteran floaters say they can make $300,000 a year. And it suits the laconic Mr. Mitz.

"This is what I know," he says. "This is what I do."

View Slideshow

 

Eli Meir Kaplan for The Wall Street Journal

Carl Mitz, who has practiced the obscure art of horse-teeth floating for a quarter-century, held Little America Feather's Evenstar's tongue while he inspected the horse's teeth.

But not, perhaps, for long.

Veterinary oversight boards in Texas and several other states have moved aggressively in recent years to rein in unlicensed floaters, ordering them to stop practicing or to work only under supervision of a licensed vet.

Read the rest of the article here.

Write to Stephanie Simon at stephanie.simon@wsj.com

Printed in The Wall Street Journal, page A29

By Jeffrey A. Trachtenberg

Gary Vaynerchuk’s new self-help book “Crush It!” is a national best-seller, with 95,000 copies in print after seven printings.

HarperStudio

Gary Vaynerchuk

The book, which explains how to transform personal passion into a successful business using the free tools of the Internet, is No. 5 on the Wall Street Journal business best-seller list.

And yes, he practices what he preaches. Mr. Vaynerchuk has 851,000 followers on Twitter and 33,000 fans on Facebook. “Crush It!” is published by HarperStudio, an imprint of News Corp.’s HarperCollins Publishers. News Corp. also publishes The Wall Street Journal.

Gary V’s Five Commandments of Social Networking

1. Treat it like a cocktail party.

You have to get involved in different conversations. We don’t start selling the minute we meet people. It’s not a coupon outlet. It’s a real opportunity to connect with consumers.

HarperCollins

2. Don’t draw lines in the sand.

Way too many business people say Twitter is stupid. Any product like Facebook is something you need to pay attention to in the business world. Some people don’t like to change. Instead, they feel they’re right, and say something is silly. Also, there are people who have vested interests in having these platforms fail because their understudies understand it so much better than they do. They are afraid they’ll be pushed out the door.

3. Humanize yourself or your brand.

It is OK to say, going to a soccer game. Or, having a hot dog. Humanization is quite powerful in this space. To be successful, this is the kind of thing you say 2% of the time.

4. Understand the authenticity.

Each consumer’s voice is dramatically more powerful today. This is word of mouth on steroids. The individual consumer has much more weight with corporate America. Most corporate brands will be wrapping their heads around the power of the individual consumer next year.

5. Interacting with potential clients and becoming part of the community is a real job.

You can’t spend ten minutes a day on this and think the social genie will save you. Most of all, you have to care. And you have to listen. That’s my overall arching thesis on this entire space. People think it’s about talking. What you say is irrelevant. The friend that listens is better than the friend who talks.

By NICK TIMIRAOS

New data suggest that foreclosures are rising in more expensive housing markets.

About 30% of foreclosures in June involved homes in the top third of local housing values, up from 16% when the foreclosure crisis began three years ago, according to new data from real-estate Web site Zillow.com. The bottom one-third of housing markets, by home value, now account for 35% of foreclosures, down from 55% in 2006.

The report shows that foreclosures, after declining earlier this year, began to accelerate in the late spring and that more expensive homes have more recently accounted for a growing share of all foreclosures. "The slope of that curve in recent months is much sharper than it was recently," said Stan Humphries, chief economist for Zillow. Rising foreclosures among more-expensive homes could create added pressure for a housing market that has shown signs of stabilizing in recent months as sales of lower-priced homes pick up.

The Zillow research compared homes against the median values for their local market and broke each market into three tiers by value. Zillow then looked at the share of monthly foreclosures in each tier over the past decade.

Foreclosures are rising in more expensive markets as home values in those areas fall, leaving more homeowners with mortgages that exceed the value of their properties. Prime loans accounted for 58% of foreclosure starts in the second quarter, up from 44% last year, according to the Mortgage Bankers Association. Subprime mortgages accounted for one-third of foreclosure starts, down from one-half last year.

The prime category includes so-called exotic mortgages that were increasingly used to buy more expensive homes, including interest-only mortgages that allowed borrowers to defer principal payments during an initial period. Borrowers often aren't able to refinance out of these products because the drop in home values has left them with little equity in their homes.

Default rates are particularly high and expected to rise on option adjustable-rate mortgages, which allow borrowers to make minimum payments that may not cover the interest due. Monthly payments can increase to sharply higher levels after five years or when the outstanding balance reaches a certain level. A study by Fitch Ratings found that 46% of option ARMs were 30 days past due last month, even though just 12% of such loans have reset to higher monthly payments.

Zillow estimated that nearly one in four homes with mortgages was worth less than the value of the property at the end of June. Mr. Humphries said he didn't expect to see foreclosure volumes level off until later in 2010.

Write to Nick Timiraos at nick.timiraos@wsj.com

Printed in The Wall Street Journal, page A2

By PHIL IZZO

The worst recession since the Great Depression has left a scorched landscape that will weigh on the labor market and the broader economy for years to come, according to economists in the latest Wall Street Journal forecasting survey.

The 48 surveyed economists expect the economy to bounce back from four quarters of contraction with 3.1% growth in gross domestic product at a seasonally adjusted annual rate in the just-ended third quarter.

Charts and Full Results

• See forecasts for growth, unemployment, housing and more. Plus, views on the auto industry, ranking Fed chairmen, grading policymakers and more. Survey conducted Oct. 2-6. (Or download all data as .xls)
• Econ: Gap Between Available-Desired Job Skills
• Complete Coverage: Forecasting Survey

Economists expect a full jobs recovery may take years. Phil Izzo talks with Kelsey Hubbard and Simon Constable in the News Hub.

Expansion is seen continuing through the first half of 2010, though at a slower rate. But the massive downturn means the labor market will take years to heal. On average, the economists don't expect unemployment to fall below 6% until 2013; unemployment hit 9.8% in September.

"Never before has business shed so many workers so fast, so many people failed to find work who are looking for work, and so many dropped out of the labor force as in the current circumstance," said Allen Sinai at Decision Economics.

The labor market's tough road was underscored by Thursday's report on weekly applications for unemployment insurance. The Labor Department reported that initial claims fell 33,000 to 521,000 in the week ended Oct. 3. The number of people collecting unemployment insurance also fell, but remained above six million.

About the Survey

The Wall Street Journal surveys a group of 52 economists throughout the year. Broad surveys on more than 10 major economic indicators are conducted every month. Once a year, economists are ranked on how well their forecasts have fared. For prior installments of the surveys, see: WSJ.com/Economist .

Some economists worry the economy will turn down again over the next 12 months, leading to a so-called double-dip recession.

—Conor Dougherty contributed to this article.

Read entire article here.

Write to Phil Izzo at philip.izzo@wsj.com

Printed in The Wall Street Journal, page A3