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Friday, March 21, 2003

By Joyce Gannon, Post-Gazette Staff Writer

Howard "Hoddy" Hanna III, chairman of the Pittsburgh region's largest residential brokerage, was among seven real estate executives invited to meet with Federal Reserve Chairman Alan Greenspan this week to discuss the state of the nation's housing markets.

The brokers -- who represented regions of the United States -- met with Greenspan and five members of the Fed's board of governors for about 90 minutes on Wednesday in Washington, D.C.

Greenspan questioned the brokers about whether strong housing sales -- a bright spot in an otherwise sluggish economy -- were being driven mainly by record-low interest rates or other factors. But the Fed Chairman remained tight-lipped on where interest rates were headed in coming weeks. The Fed on Tuesday decided to leave interest rates unchanged but left open the possibility it would cut rates further if the country fell into another recession.

Mortgage rates crept up this week after reaching record lows last week, Freddie Mac reported yesterday.

Mortgage rates are tied to bond market yields, which rose this week on uncertainty surrounding the war in Iraq.

A 30-year, fixed rate was 5.79 this week with an average 0.6 point payable to the lender, up from an average rate of 5.61 percent a week ago.

A year ago, the average 30-year rate was 7.14 percent.

The group made clear to Greenspan their concerns that if mortgage rates rise anytime soon, "it could be detrimental to the market," said Hanna.

Besides low rates, the brokers agreed that home sales were benefiting from consumers who have shifted more of their assets into real estate because of the depressed stock market of recent months.

"Especially among move-up buyers, we're seeing healthier down payments from people who are taking excess money from other investments and putting an extra 5 or 10 percent down," said Hanna.

Hanna told Greenspan the strongest segment of the Pittsburgh market remains homes under $200,000 -- the price range that attracts first-time buyers and first-time, move-up buyers.