Housing market stall tops year’s stories

first_img AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREWhicker: John Jackson greets a Christmas that he wasn’t sure he’d see160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! Much like the local housing market, the nation’s house party ended with a thud in 2006, leaving everyone from condo flippers to Federal Reserve Chairman Ben Bernanke waiting to see what would happen next. The sudden stall in home sales, home construction and home prices – and what that will mean for the economy – was voted the top business story of the year by U.S. newspaper and broadcast editors surveyed by The Associated Press. At the housing market’s peak, buyers rushed to open houses, blank checks in hand. Lenders gave big-money mortgages to people who could barely afford their monthly payments. That ended in 2006, when home builders scuttled projects, walked away from land they’d hoped to develop and would-be buyers canceled orders. 1.Housing slips: Moody’s Economy.com, a private research firm, projected that the median sales price for an existing home will decline in 2007 by 3.6 percent – the first decline for an entire year in U.S. home prices since the Great Depression. One reason: Speculators fled the market. Not only did they stop buying, they put properties they owned up for sale. “Investors were a bigger part of the market than many thought, including ourselves,” Ara K. Hovnanian, the president and chief executive officer of home builder Hovnanian Enterprises Inc. said in June. 2. Enron’s final act: Convictions of former CEOs Jeff Skilling and Ken Lay looked like the final act of the Enron drama, but Lay died in Aspen before he was sentenced and a federal judge vacated his conviction, halting a federal effort seeking millions from Lay’s estate. Skilling, 53, reported to a federal prison in Minnesota on Dec. 13 to begin a sentence of 24 years and four months. 3. Backdating scandal: News that executives and directors manipulated their option grants to inflate their gains rocked the executive suite. At least 195 companies disclosed federal or internal investigations and at least 59 senior executives or directors have left their companies as of Dec. 19. Among the highest profile to fall were UnitedHealth Group Inc.’s William McGuire, who was pushed out as the company’s chairman and CEO, and Jacob “Kobi” Alexander, the former CEO of Comverse Technology Inc., who fled to Namibia, where he is fighting extradition. 4. Auto woes: Demand for U.S. automakers’ vehicles, especially sport utility vehicles, shrunk and their market share eroded. About 38,000 unionized Ford Motor Co. workers, more than half the company’s U.S. hourly work force, said they would take buyouts. Through buyouts and early retirement, General Motors Corp. cut 35,000 jobs, nearly one-third of its hourly U.S. workers. Company bonds sunk into “junk” ratings and they were reduced to using plants or inventories as loan collateral. 5. Oil prices: War in the Middle East and soaring demand sent oil prices above $78 a barrel, an all-time record. The big winner from the sky-high prices were oil companies, whose profits hovered near their 2005 records. Oil prices have since fallen, but the summer’s run has renewed rumblings about conservation and oil dependency. 6. Gas prices: Summer gas prices hit highs of $3.04 a gallon thanks to soaring crude oil prices, tight refining capacity and fears of another disastrous hurricane season. Increased prices began to sour the U.S. romance with gas-guzzling SUVs, hitting U.S. automakers with another blow. Gas prices have since dropped, too, but drivers remain nervous. 7. Fed halts: The Federal Reserve halted the rate hikes that had lifted its target short-term interest rate from 1 percent in early June 2004 to 5.25 percent in June 2006. While stock traders saw a slowing economy and looked forward to rate cuts, the Fed’s Bernanke said the central bank was keeping a sharp eye on inflation, which could take rates higher. 8. HP spying: HP’s boardroom infighting ended in humiliation. Chairwoman Patricia Dunn was hauled before Congress, ousted from her office and indicted for her role in a boardroom spying scandal in which private investigators lied and schemed to obtain the phone records of directors and reporters. Now the company’s CEO is being asked to tell Congress about the $1.37 million worth of options he exercised just before the scandal became public. 9. China tiger: China’s economy continues to grow more than 10 percent a year and its trade surplus with the U.S. is the largest ever. While officials are trying to slow growth and questions linger about whether Chinese banks are too loose with loans, the economy has showed only modest signs of slowing. 10. Record Dow: The Dow Jones industrial average climbed above 12,000 for the first time ever, outpacing broader indexes. The Standard & Poor’s 500 edged closer to its 2000 high and the Nasdaq composite index was miles behind its own record. last_img

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