Home price plunge is widespread

[mahatmakanejeeves]

Source: CNNMoney.com

Nation on edge of double-dip in home prices - Dec. 28, 2010

By Les Christie, staff writerDecember 28, 2010: 10:19 AM ET

NEW YORK (CNNMoney.com) -- Home prices took a shockingly steep plunge on a monthly basis, an indication that the housing market could be on the verge of -- if it's not already in -- a double-dip slump, according to an industry report released Tuesday.

Prices in 20 key cities fell 1.3% in October from a month earlier, an annualized decline of 15%, according to the S&P/Case-Shiller index. Prices were down 0.8% from 12 months earlier.

Month-over-month prices dropped in all 20 metro areas covered by the index. Six markets -- Atlanta; Charlotte, N.C.; Miami; Portland, Ore.; Seattle and Tampa, Fla. -- reached their lowest levels since the housing bust first began in 2006 and 2007.

"The double-dip is almost here," said David Blitzer, chairman of the Index Committee at Standard & Poor's. "There is no good news in October's report. Home prices across the country continue to fall."

Read more: http://money.cnn.com/2010/12/28/real_estate/home_prices_fall/

[somone]

1. Consumer confidence in the United States unexpectedly deteriorated in December

hurt by increasing worries about the jobs market
http://www.nytimes.com/2010/12/29/business/economy/29econ.html

[Riverman]

7. Irrational Exuberance! Housing over-loaded with Costs - Was Never

Sustainable! Over-priced land on the edges of expanding, sprawling suburbs; balkanized local government agencies (cities, counties, school districts, municipal services districts) charging development fees to carry their perceived fixed costs; many businesses with their hands in the housing cookie jar - developers building cookie-cutter homes over-priced and immoral profits; mortgage (morte="death")brokers pushing loans for fees; appraisers writing comp reports to match the loan amount - what a miracle; title insurance companies with big rates for policies that rarely pay out claims; docment processors fees;bankers adding more fees on top of interests and principal; banksters bundling mortgage selling to investors and betting with dirivatives against their products; and on and on.

And, now with so many households with reduced or no incomes - especially those who had been dependent on the housing industry money/ATM machine; and destroyed credit and FHA raising FICO scores to qualify, guess what - the homebuying market is rapidly shrinking and will continue to do so.

Simple - we cannot continue with the thinking and practices that got us into this depression. Need another model, don'tcha think? No easy answers, but no going back!

[katnapped]

8. Bah--BALONEY!

Need more tax cuts! Those solve everything! :sarcasm:

[bemildred]

2. Dang, what a stunner, you could knock me over with a feather.

:sarcasm:

[no_hypocrisy]

3. Kinda hard to take a 30-year mortgage when you're uncertain you'll

be working all thirty of those years, let alone the first five.

Without a reliable job position or a job market, prices can't increase, let alone stabilize. And no chance of recreating a real estate bubble as the credit is gone.

[closeupready]

22. That's the thing - if jobs are vanishing to offshore, who wants to give you a 30-year loan?

n/t

[xchrom]

4. recommend -- further erosion of wealth for working and middle class america. nt

[slackmaster]

9. To be followed by historic buying opportunities for them when the job situation improves

In every heartache, a dream home.

[Psephos]

13. It's true. n/t

[conspirator]

20. The "when the job situation improves" is where your theory fails n/t

[slackmaster]

21. That's exactly what has happened in every housing market cycle in the past

Why would this one be any different?

[conspirator]

24. For the same reason this depression is different from the others

Peak Oil, the extinction of manufacturing in the western countries and the outsourcing of high tech jobs.
Even with cheap property people won't be able to afford it on a Mcjob salary.

[Bragi]

25. Sums it up nicely

I am always amazed to encounter peole who contnue to believe religiously in market economics, and who think that eventually, America will return to 1950s-style bliss.

Actually, it is that hopeful ideology that makes it impossible for Americans to take collective action on just about every major problem facing the country. It's what makes Americans so docile, and makes it so easy for the fascists to take over.

[slackmaster]

27. This is not the first time that any of those things have happened, if you look at it in abstract

People have always found new ways to create wealth.

[madrchsod]

5. $1,356,253,000 from atlanta for the cost of the oil wars

http://www.costofwar.com/

[adnelson60087]

6. Most homes are still over-valued and with

unemployment numbers (fake as they are) near 10%, how can anyone rationally expect this trend to turn around? With outsourcing of our tech sector and off-shoring of our manufacturing base, what exactly are Americans supposed to DO in order to make a high enough salary to afford a 30 year mortgage on a property of 250K? The folks in washington need to get a clue, but they won't. Start by re-investing in our manufacturing sector before it's too late.

[slackmaster]

10. It will turn around when employment improves

:hi:

[Statistical]

11. Interest rates rising means housing prices will decline.

Most Americans don't look for houses based on purchase price when shopping for a home. They look for a house based on their budget (monthly payment).

As interest rates rise the same monthly payment buys less "house". To get sales houses have to decline in price. The worse thing is that although interest rates have risen in last 3 months they are still VEEEEEEEEEEEEEEERRRRRRRRRRRRRRRRRYYYYYYYYYYY low by historical standards. Rates really only have room to go in one direct; up.

The historical average for 30 year fixed is about 7.7%. We are at 5.5%. Another 2% rise in mortgage rates means the buying power (for same amount of mortgage payment) decreases by a staggering 23%.

Unless you see wage growth expect to see housing prices slip by up to 23% slowly as interest rates adjust back to more "normal" costs.

[customerserviceguy]

23. You are exactly correct

Rising interest rates will indeed choke off housing purchases. The only thing that will 'rescue' housing is when the general rate of inflation in the rest of the economy rises (without housing) so that real estate can catch up.

[SheilaT]

12. I bought a year and a half ago.

But I bought what I could afford, and since it appraised originally a little above what I offered, even if it's current value has dropped some, I'm still doing just fine because I also put 20% down. The most important thing is that I can afford the monthly payment. It's smaller than I might have liked. Maybe someday I'll be able to afford a larger place, but I feel pretty secure at this point.

I know a number of people who either bought three years ago, or refinanced then, and I am so glad that I bought when I did. And that my ex and I never refinanced our home that we were in together for 18 years, and paid off early.

[UpInArms]

14. watch out for the really smart guys!

The Subprime Crisis In Easily Understood Pictures





<snip>







see the link at top to view the entire story

[hollowdweller]

15. Housing is still overvalued here.

I bought my house in 1987. We had to finance the house and land separately one at 9% one at 11%.
We refinanced in 92 at 8%. We paid the place off in 2000.

The job I work, public servant, the starting salary is only about 4000 more now than it was in 87. I myself have not doubled my salary in 25 years of employment. Yet the cosf of housing around here, even after the slight correction is more than double what it was in 1987. I never hear of ANYONE financing for 15 years like my wife and I did back then.

Also all the new houses they are building that are not trailers or double wides are huge and expensive. Hard to find a new house that is a reasonable and more affordable size to buy and heat.

I can't judge for the country, but if they want the housing market not to fall farther they need to get people both working and those who are working they need to get their salaries up to where housing is a much smaller % age of their income. My wife and I set a goal that we wouldn't buy anything that we couldn't pay for with only one of us working at our jobs and the other making min wage. It would be hard to do that now. Min wage is less now in real terms than then I think and salaries just haven't kept pace with the cost of housing.

[eowyn_of_rohan]

16. but how can that be when property value taxes are increasing?

at least in the Madison WI area :eyes:

[roamer65]

17. Glad I stayed away from buying a house in 2005.

Best financial decision I have ever made!!!!

[defendandprotect]

18. kick

[boppers]

19. Still not low enough.

Renting is still cheaper in Portland than owning... I have a 3 bedroom, 3 floor, house (with front and back yards), in the city, for $895 a month. I can't get that on a mortgage here.

[TexasObserver]

26. They'll pass a new tax incentive program for house buying.

Probably by April.