Home values continuing to fall in next year

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Home values are predicted to drop in 342 out of 381 markets during the next year, according to a new forecast of real estate prices.

Overall, the national median home price is predicted to drop 11.3% by June 30, 2010, according to Fiserv, a financial information and analysis firm. For the following year, the firm anticipates some stabilization with prices rising 3.6%.

at odds with...

The latest forecast is at odds with the past few months of the S&P/Case-Shiller Home Price index. That report has given hope that most housing markets may have already stabilized because the composite index of 20 cities rose in May, June and July. Nationally, it found that home prices have gained 3.6%.

Brad Hunter, chief economist for Metrostudy, which provides housing market information to the industry, however, expects a change in fortunes, however.

"I'm afraid Case-Shiller may be just a temporary reprieve," he said.

Anyway, here is a nasty picture (albeit 10 months old now):
Link This was newer (august), saying 48% of homes are underwater. Given that these are disproportionately represented in the bubble markets of California et al. it's not unreasonable to think that this fact combined with increasing unemployment will continue to sour home values, despite any temporary trend to the contrary powered in part by artificially low mortgage rates and tax credits.

 

[amdhunter]

Good. I hope it keeps dropping further and further so that I could jump into a home I know is worth what I am paying.

 

[boomerang]

Originally posted by: amdhunter
Good. I hope it keeps dropping further and further so that I could jump into a home I know is worth what I am paying.

When will that magical moment occur?

 

[her209]

Originally posted by: boomerang

Originally posted by: amdhunter
Good. I hope it keeps dropping further and further so that I could jump into a home I know is worth what I am paying.

When will that magical moment occur?

When home prices are x times salary?

 

[Cuda1447]

Anybody think the $8,000 for first time buyers artificially inflated the prices of the homes? I do I do! Hell, I took advantage of it, but I have no doubt house prices are going to go down further once that 8,000 is gone. It was a stupid waste of money idea, in my opinion. We need to stop interfering with these markets, make sure the practices are fair and let the markets correct themselves. We are just delaying the inevitable.

 

[MotF Bane]

It had to happen.

 

[BlahBlahYouToo]

Originally posted by: amdhunter
Good. I hope it keeps dropping further and further so that I could jump into a home I know is worth what I am paying.

prices haven't dropped much in nyc metro areas. at least not in desirable areas to affordable levels.
i dunno about the bronx.

 

[amdhunter]

Originally posted by: boomerang

Originally posted by: amdhunter
Good. I hope it keeps dropping further and further so that I could jump into a home I know is worth what I am paying.

When will that magical moment occur?

When they evict all the deadbeats out of their homes and I can purchase it for 75% less than the evicted person paid.

 

[amdhunter]

Originally posted by: BlahBlahYouToo

Originally posted by: amdhunter
Good. I hope it keeps dropping further and further so that I could jump into a home I know is worth what I am paying.

prices haven't dropped much in nyc metro areas. at least not in desirable areas to affordable levels.
i dunno about the bronx.

Certain parts of the Bronx have dropped a little bit, but not nearly as much as the rest of the USA. Some properties have even gone up.

I'll consider buying a place when I know I can afford it even if I lost my job, which is probably not going to happen anytime soon.

 

[ivan2]

Originally posted by: amdhunter


Certain parts of the Bronx have dropped a little bit, but not nearly as much as the rest of the USA. Some properties have even gone up.

I'll consider buying a place when I know I can afford it even if I lost my job, which is probably not going to happen anytime soon.

Detroit, yo.

 

[LegendKiller]

I also believe the S&P-CS, while showing an increase in prices, should not be extrapolated to say that the downturn is over. Once you strip out seasonal adjustments the picture isn't as rosy as some believe

I do think there will be more pain to come. However, I do not think that it'll be as bad as many have stated.

 

[piasabird]

If the government would stop propping up the real estate industry, then maybe the prices would fall to the price that the market will bear. Same thing goes for the motor vehicle industry. Let the prices fall. It is not deflation it is a market correction.

I think we need to start hunting down people and managers that were and are making loans for people without verifying employment or even the basic qualifications of the loans and start throwing them in jail. The premise for some of these loans is they wrote down whatever the people said and believed them. Basically they didnt even bother to verify anything about the people receiving the loans. This mostly occurred in California, and certain areas where I guess they teach people to cheat and steal. They just deserve whatever they receive. There is no reason to help out states that did not enforce basic lending principles. They deserve a deep depression in those states.

 

[exar333]

Good news; hopefully housing falls another 50% across the board.

 

[Jadow]

throw out the outliers (beverly hills, etc..)

And in this country you should be able to get:

A bachelor pad for: $75,000

A nice house for a family of 4 for: $175,000

A really luxorious big house for: $275,000

I believe in the free market and government should in no way interfere with it, but when I was seeing some of these insane housing prices, I did a mental comparision of that to my own standards (above) and thought people were CRAZY for paying 400k for a BACHELOR PAD!

 

[EagleKeeper]

Originally posted by: Jadow
throw out the outliers (beverly hills, etc..)

And in this country you should be able to get:

A bachelor pad for: $75,000

A nice house for a family of 4 for: $175,000

A really luxurious big house for: $275,000

I believe in the free market and government should in no way interfere with it, but when I was seeing some of these insane housing prices, I did a mental comparison of that to my own standards (above) and thought people were CRAZY for paying 400k for a BACHELOR PAD!

Housing prices are usually based on what people desire, not what they can afford.

Then the income levels are so disparate in different parts of the country or the high income transplants to overshadow the lower incomes - driving up prices.

 

[OCGuy]

Good. The only reason they havent fallen faster is because of an artificial brace by the federal government.

Gee, we can say that about a lot of things these days, cant we? Thanks GWB and BHO!

 

[Jhhnn]

I'm of the studied opinion that prices will continue to decline in what were the hot markets. They have to, in part to satisfy the basic rules of speculative markets.

I'm also of the opinion that the govt and the FRB have little choice but to do what they are doing. Without it, we'd enter a severe debt/deflation scenario, basically driving the economy into the dirt a la 1930. They're spreading out the pain over time, probably a decade or more. I'm also sure that the rule of unintended consequences will come into play- quite how, I don't know, but we've entered the realm of no free lunch...

 

[OCGuy]

Originally posted by: Jhhnn
I'm of the studied opinion that prices will continue to decline in what were the hot markets. They have to, in part to satisfy the basic rules of speculative markets.

I'm also of the opinion that the govt and the FRB have little choice but to do what they are doing. Without it, we'd enter a severe debt/deflation scenario, basically driving the economy into the dirt a la 1930. They're spreading out the pain over time, probably a decade or more. I'm also sure that the rule of unintended consequences will come into play- quite how, I don't know, but we've entered the realm of no free lunch...

You mean printing/borrowing money to cover up the bad loans that gave people money they couldnt afford could at some point come home to roost?

Sir, if you run for office, you have my vote.

 

[LegendKiller]

Originally posted by: Jhhnn
I'm of the studied opinion that prices will continue to decline in what were the hot markets. They have to, in part to satisfy the basic rules of speculative markets.

I'm also of the opinion that the govt and the FRB have little choice but to do what they are doing. Without it, we'd enter a severe debt/deflation scenario, basically driving the economy into the dirt a la 1930. They're spreading out the pain over time, probably a decade or more. I'm also sure that the rule of unintended consequences will come into play- quite how, I don't know, but we've entered the realm of no free lunch...

You keep parroting this "rule of speculative markets" yet, I have not seen any logic to back it up. There is no codified "rule" nor is there any solid logic dictating.

Prices will go down this winter, mainly because the seasonal affects will be magnified by the downturn. However, they won't fall another 25%.

I will put money on it right now, will you?

 

[Vic]

While I do think there is some more pain to come, I don't think home values can fall much further in Florida, Nevada, and the hardest hit parts of California and Arizona. At least, not without homes there becoming cheaper than your average new car.

 

[OCGuy]

Originally posted by: LegendKiller

You keep parroting this "rule of speculative markets" yet, I have not seen any logic to back it up. There is no codified "rule" nor is there any solid logic dictating.

Prices will go down this winter, mainly because the seasonal affects will be magnified by the downturn. However, they won't fall another 25%.

I will put money on it right now, will you?

Originally posted by: Vic
While I do think there is some more pain to come, I don't think home values can fall much further in Florida, Nevada, and the hardest hit parts of California and Arizona. At least, not without homes there becoming cheaper than your average new car.

I dont think anyone can say. I dont know about the "rule of speculative markets" but I do know that outside forces have artifically softened and are probably delaying the bottom.

At least in this area, banks are holding on to forclosed properties in order to start bidding wars and keep supply down.

The $8K tax credit has stimulated the purchase market. Remember what happened to the inflated car sales after Cash for Clunkers ended?

Job Losses are still a major concern. A 720 FICO and 10K/month job dont really mean much if you get laid off and cant find a job in your field for 6 months if you didnt save much and have a $500K mortgage. You are going to lose your house.


Basically it is too soon to say.

 

[Vic]

I don't see how a noteholder preventing foreclosure through loss mitigation or holding on to REO properties to keep supply up in a down market is an outside force.

The tax credit is propping up the market to an extent though, arguably by more than $8k, but I would still say that employment security is probably the biggest issue. Financing is still very tight, and likely to get tighter in the near future with the calls for stricter guidelines from FHA, and the expectation coming from the public that lenders somehow be able to predict that a borrower could lose his job in 6 months.

If there is any possible govt action in the housing markets that worries me, it's legislation working its way through various statehouses (and already law in California and Arizona) requiring that defaulted borrowers receive full release and settlement from their mortgage debts upon short sale or foreclosure sale. Letting all the underwater homeowners walk away from their mortgage debt without any recourse (not even a hit of their credit in many cases) will put the final nail in the coffin of homeownership in America. We may as well all be renters if that happens.

 

[OCGuy]

Originally posted by: Vic
I don't see how a noteholder preventing foreclosure through loss mitigation or holding on to REO properties to keep supply up in a down market is an outside force.

The tax credit is propping up the market to an extent though, arguably by more than $8k, but I would still say that employment security is probably the biggest issue. Financing is still very tight, and likely to get tighter in the near future with the calls for stricter guidelines from FHA, and the expectation coming from the public that lenders somehow be able to predict that a borrower could lose his job in 6 months.

If there is any possible govt action in the housing markets that worries me, it's legislation working its way through various statehouses (and already law in California and Arizona) requiring that defaulted borrowers receive full release and settlement from their mortgage debts upon short sale or foreclosure sale. Letting all the underwater homeowners walk away from their mortgage debt without any recourse (not even a hit of their credit in many cases) will put the final nail in the coffin of homeownership in America. We may as well all be renters if that happens.

CA is already like this, where they dont come after you for a deficiency balance on a short sale, and you are released in a forclosure.

It is part of the reason the US is seeing a big jump in strategic forclosures.