The housing bubble bursts! Where's the bottom?

[phillyTIM]

http://www.msnbc.msn.com/id/42230083/ns/business-eye_on_the_economy/

http://consumerist.com/2011/03/house-prices-sink-to-lowest-level-since-2002.html

I say, GOOD - it's about time this fake Housing bubble bursts! For those of us who have been renting through this over-inflated/over-loaned decade, there may be hope yet for something decent for us someday before long.

 

[Vette73]

"The housing bubble bursts!"

I think you are a little late to the game.

In fact many places the prices have settled or even gone up. If you live in DC or inside the Metro line the prices have gone flat or gone up. There are flippers again in DC flipping places for profit.

 

[phillyTIM]

Oh I believe they have been saying recently that it looks like the bottom won't be hit until next year. Where we need to go is to the price point back in the late 1990s, to what most people consider to be more reasonable levels.

http://www.totalmortgage.com/blog/m...ices-bottom-in-2012-1-4-decline-in-2011/11147

"This morning Nick Timiraos of the Wall Street Journal has an article about housing prices. The prospects for recovery do not look good for 2011, if you believe a survey of 111 economists and housing experts by data provider MacroMarkets LLC (MacroMarkets was co-founded by Robert Schiller, who also helped establish the S&P/Case-Shiller Home Price Index). According to the article, most economists do not expect to see a recovery this year. National home prices are expected to fall 1.4% percent on average through 2011."

 

[JTsyo]

The burst is long over, now it's just a question of how low it will go. Like mentioned some areas have already flattened out.

 

[EagleKeeper]

1.4% nationwide indicates taht most area will be flat or start to rise (see post above).

Some areas that are weak will contnue the slide which will make it seem like a drop overall.

If Nevada and Florida drop 10%, that leaves plenty of breathiing room for other places to just dip and some to rise 2-3 %.

Loan costs are rising - that is the best barometer that the slide is over.

 

[Vette73]

1.4% nationwide indicates taht most area will be flat or start to rise (see post above).

Some areas that are weak will contnue the slide which will make it seem like a drop overall.

If Nevada and Florida drop 10%, that leaves plenty of breathiing room for other places to just dip and some to rise 2-3 %.

Loan costs are rising - that is the best barometer that the slide is over.

Yea I should have added look at numbers and exclude CA, NV (LasVegas), and FL and things are not as bad as they seem. Could add Detroit but they have been a s__t hole for a while now.

 

[Saint Nick]

Never saw the correlation between housing market and the US economy. Its not the only place we spend money.

 

[Vette73]

Never saw the correlation between housing market and the US economy. Its not the only place we spend money.

Houses went up in value. People took money out against them and went wild. Banks were rolling in cash from fees and re-selling the loans. etc..................................

The houseing market was HUGH!!! It was the largest thing holding the economy up during the Bush years and when the ballon finally could hold no more air it popped.

 

[MotF Bane]

"The housing bubble bursts!"

I think you are a little late to the game.

This. I thought it was going to be a necro thread.

 

[JeffreyLebowski]

Houses went up in value. People took money out against them and went wild. Banks were rolling in cash from fees and re-selling the loans. etc..................................

The houseing market was HUGH!!! It was the largest thing holding the economy up during the Bush years and when the ballon finally could hold no more air it popped.

But, I thought it was all Bush's fault??? Was he secretly buying up flipper houses and waiting for the opportune time to dump them on the market to cause the prices to crash?

 

[Vette73]

But, I thought it was all Bush's fault??? Was he secretly buying up flipper houses and waiting for the opportune time to dump them on the market to cause the prices to crash?

Its was the banks and MANY politicans, not just 1, fault for getting rid of the regulation and oversights.

 

[blackangst1]

Well, it seems we're still declining in most markets:

http://blogs.wsj.com/developments/2011/03/23/housing-inventory-increases-listing-prices-fall/

Unsurprisingly, the increase in inventory means that more homes are staying on the market longer. The median number of days that homes were listed for sale in February, at 164 days, represents a 2.5% increase from January and a 29% increase from one year ago.

Meanwhile, average listing prices continue to fall, a sign that home prices are still falling across the country. Those listing prices were essentially unchanged from year ago but they were down 0.5% from the previous month, with big declines in Fort Lauderdale, Fla. (-8.6%), Honolulu (-5%), and Sacramento, Calif. (-2.5%).

 

[PingSpike]

Never saw the correlation between housing market and the US economy. Its not the only place we spend money.

It was where we created money from nothing though.

 

[bfdd]

i went down down down and the flames went higher.

 

[drebo]

Central California is still too high by atleast 10%.

Needs to keep coming down. I'd agree that some other places might have stabalized at reasonable levels. But definitely not Central California.

 

[JockoJohnson]

Well, it seems we're still declining in most markets:

http://blogs.wsj.com/developments/2011/03/23/housing-inventory-increases-listing-prices-fall/

Yes, but Marlin is right. Take out the NV and FL numbers and how much does the percentage go down (or does it go to zero or even rise)?

edit: I should clarify that I am talking about avg. prices, not inventory. Clearly, there is a lot of inventory still on the market and it will continue to rise now that the school year is almost over.

 

[Lanyap]

i went down down down and the flames went higher.

http://www.youtube.com/watch?v=0lhf9U5Wf3Q

 

[WhipperSnapper]

There's still plenty of room for home prices to drop. Since average Americans are becoming poorer and poorer and our nation's economy isn't recovering, the market just won't be able to support current housing prices. According to one article, 11% of all homes are currently vacant and new home construction is down. In the meantime our nation has lost 10% of its middle class jobs. Here's an interesting blog post about it:

18 Reasons Why You Can Stick a Fork in the New Home Construction Industry

 

[Craig234]

But, I thought it was all Bush's fault???

Idiocy.

Point me to ONE published/broadcast liberal who said "it's all Bush's fault".

 

[Jhhnn]

Inventories, both actually available and hidden, are huge in many parts of the country. Foreclosures will likely exceed sales for some while, which will tend to increase inventories even more.

Prices have a ways to go down in many markets, and have been held up by contrivance. First time homebuyers' credit, now gone. Stimulus spending, under threat. Low interest rates, under pressure. Extended unemployment benefits, soon to disappear. The only reason unemployment numbers look as good as they do is because lots of people have recused themselves from the labor market, electing to become stay at home moms or dads. They'd be actively seeking work, if they thought they had a prayer of finding it.

Historically, America has sustained median house prices at 4X median income in a regional sort of way, and we're still well above that.

The only reason prices are as high as they are is because the FRB gave cash for crap MBS, which were backed by crap mortgages. The FRB can get away with taking losses. Banks are under little cashflow pressures to foreclose & sell properties where they never securitized the note. The bailout also took off the pressure. As servicers, stretching out foreclosure & sale allows them to divert monies due investors to themselves as fees, and to hold up prices thru reduced inventory.

Whatever measures necessary to hold prices flat or allow for a slow decline will likely be taken by the govt. Their objective is to get strapped underwater homeowners to hold on, achieve equity via payments over longer timeframes than in the past. If prices decline too far too fast, homeowners will opt for strategic default in droves, blowing the bottom out of the market in a death spiral sort of way, as in the early years of the Depression...

 

[bfdd]

I sure hope we don't spend any more tax dollars to prop up this failing part of our economy. Let it die and reboot.

 

[spidey07]

40% of all sales are short sales or foreclosures. It's buy, buy, buy time. The people that can afford the houses they are buying will lift prices up while poor financial decisions of others will be our gain. Supply and demand, live it, learn it, love it.

We will never see a time like this to buy in our lifetimes.

 

[Slew Foot]

All our problems will inflate themselves away!

 

[LegendKiller]

There's still plenty of room for home prices to drop. Since average Americans are becoming poorer and poorer and our nation's economy isn't recovering, the market just won't be able to support current housing prices. According to one article, 11% of all homes are currently vacant and new home construction is down. In the meantime our nation has lost 10% of its middle class jobs. Here's an interesting blog post about it:

18 Reasons Why You Can Stick a Fork in the New Home Construction Industry

I do agree that there is room for houses to go down but I would think it's probably only ~10%. At this point we're largely back at 2002-3 prices. How have we "lost" 10% of its middle class jobs in an irretrievable way? The 11% number is questionable without knowing what the historical rate was.

 

[LegendKiller]

Inventories, both actually available and hidden, are huge in many parts of the country. Foreclosures will likely exceed sales for some while, which will tend to increase inventories even more.

Prices have a ways to go down in many markets, and have been held up by contrivance. First time homebuyers' credit, now gone. Stimulus spending, under threat. Low interest rates, under pressure. Extended unemployment benefits, soon to disappear. The only reason unemployment numbers look as good as they do is because lots of people have recused themselves from the labor market, electing to become stay at home moms or dads. They'd be actively seeking work, if they thought they had a prayer of finding it.

Historically, America has sustained median house prices at 4X median income in a regional sort of way, and we're still well above that.

The only reason prices are as high as they are is because the FRB gave cash for crap MBS, which were backed by crap mortgages. The FRB can get away with taking losses. Banks are under little cashflow pressures to foreclose & sell properties where they never securitized the note. The bailout also took off the pressure. As servicers, stretching out foreclosure & sale allows them to divert monies due investors to themselves as fees, and to hold up prices thru reduced inventory.

Whatever measures necessary to hold prices flat or allow for a slow decline will likely be taken by the govt. Their objective is to get strapped underwater homeowners to hold on, achieve equity via payments over longer timeframes than in the past. If prices decline too far too fast, homeowners will opt for strategic default in droves, blowing the bottom out of the market in a death spiral sort of way, as in the early years of the Depression...

What are the default rates for the RMBS the FRB bought during the more recent activity?

I would also like some backup on the servicer fees. In most cases servicers aren't making bank on servicer fees, which are usually ~1% of the principal balance per annum. Reasonable liquidation fees can be paid out of the waterfall or from the net selling price of the house.