Posted on 09/25/2007 6:28:19 AM PDT by Hydroshock
WASHINGTON (MarketWatch) -- Home prices in major U.S. cities declined for the 13th straight month in July, Standard & Poor's reported Tuesday. The Case-Shiller home price index for 20 major cities fell 0.4% in July and is now down 3.9% in the past year. The 10-city index fell 0.6% in July and is down 4.5% in the past year, the worst performance since July 1991. Prices fell in 16 of the 20 cities compared with a year earlier. Prices have dropped 9.8% in Detroit. Prices have risen 6.9% in Seattle.
(Excerpt) Read more at marketwatch.com ...
NOOOooooooooooo!!!!!!
Well, I wish prices would fall in our area. We want to pick up another piece of real estate. But nobody seems to be lowering prices, and now that interest rates are lower, I don’t know what will happen. A realtor friend did tell me that we may see a dip in prices come the first quarter of 2008.
Can’t wait for my property taxes to go down! What? What do you mean they aren’t going to?
Listed prices may not be falling, but realized sales have been for more than a year in many markets. Most are down around 5% with the worst being down 15% or so. Still, some markets have grown in the past year, but are few and far between.
See http://online.wsj.com/public/resources/documents/retro-MORTGAGE0807.html for quarter by quarter median pricing and indexes.
Did the prices drop because the value is less or did they drop because the price was artificially high?
Little of both.
Or did the mean drop because people pull their high end homes off the market and this gives a false impression that prices have fallen.
Same. I need to buy some additional acreage and the price has increased over the last year. I’m hoping for reduced prices soon because I’d like to buy, and because I’d like to keep developers from buying additional acreage close by.
Actually, I never even thought of that scenario.
If it matters to you if your house price falls 5% in one particular year, you are doing it wrong.
This is why I posted the article I posted here...
http://www.freerepublic.com/focus/f-news/1900507/posts
If you are looking to own in a bubble area, it is NOT a good time to buy. Rent another couple of years, let homes continue to come down in price, and pick one up for less than today’s still-too-high asking prices.
There is NO HURRY to purchase a home. Yes, buying now means you will have saved money compared to buying at the top of the bubble market, if you live in a bubble city. But prices are still falling and it makes way more sense to wait a couple of years and wait until prices bottom out and start rising again.
At least you will know you won’t lose money on your new home purchase, and you will know we are past the bottom. It can’t be any fun to pay $280,000 for a home you could have gotten for $220,000.
I read it, the money changers and RE shrills were not happy, but I think you are right.
Did you read the article? Home prices dropped 9.8% last year in Detroit. I’m going to go out on a limb and guess that this is not, “because people pull their high end homes off the market.”
This is not due to “a false impression that prices have fallen.” Prices HAVE FALLEN in the past year in the 20 major cities referred to in the article. They stated that Seattle went UP 6.9%. But taken together, these 20 major cities have experienced a price drop of 3.9% last year.
Why is that so hard for you to believe?
Is there a difference to this? I would call it “artificially high” but when prices fall, all it means is demand used to be higher relative to supply and now demand is lower relative to supply. Any time home prices drop from the prevoius year, over a large region, it is because the homes actually have less value than they had a year ago due to less demand for homes.
Maybe homes were “artificially” high because speculators drove up demand and reduced supply.
But I think the real reason is that homes are just worth less than before. The market changed. When the prime rate was 1%, when 30 year fixed mortgages were cheaper, and when credit was much more free and easy to obtain, demand skyrocketed, and supply was reduced, pushing up prices.
Now all of those financial advantages have turned upside down, PLUS you have a saturated housing market PLUS you have foreclosures, defaults and REOs all soaring.
Not only did demand catch up with supply, but demand fell off a cliff.
That is why homes have less value today than they had a year ago or even two or three years ago in many markets. Home selling prices around Sacramento where I plan to buy in a few years have fallen back to 2003/04 prices and are STILL falling.
I’m not sure what you mean. IMHO, a 5% drop can matter very very much.
I realize that if you intend to own your home for 10 years or 30 years, then a 5% drop really doesn’t matter much in the long run. It sure as hell matters in the short run.
Think about that young couple just starting out who are looking for a new home together. Prices are going down.
One couple is impatient and jumps into the market in one of these big cities, because they want a home for their children. They buy a $300,000 home for $60,000 down and a $240,000 loan.
A year later, a more patient couple buys right next door. Prices have fallen 5%, so this couple buys the exact same model home for $285,000 with $57,000 down and a $228,000 loan.
Meanwhile, the first couple’s home is worth $15,000 less, so they lost $15,000 in equity in their depreciated home.
The second couple now has $3,000 more to start a college education fund and they have $12,000 more in equity in their home than the first couple.
Their net worth is $15,000 more than the couple who just lost 5% in their home.
How much does a couple have to earn to save $15,000 at a combined state, federal, fica tax rate of say, 40%?
So buying a home a year later, it is like the second couple earned an extra $21,000 in one year.
The point is simple... If house prices are falling, it is not time to buy a house, but to be patient and to let home prices bottom out so you get a better deal.
Why would you intentionally buy a home you KNEW would fall in price? Doesn’t make sense.
A little accusatory aren’t we?
Prices may or may not have fallen I simple am putting another theory out there.
It is rare that prices actually fall. It is more likely they are adjusted to real values and high end house do get pulled off the market.
Unless these people are figuring differently the “fallen” figure is based on mean prices not real prices.
Thats all I am saying.
If you read my statement, it would be clearer to you.
I was talking about a house owned. You are talking about people who do not own a house. Very different circumstances.
Apologies. I’m sorry that I leaped to conclusions. I read your sentence as a declarative statement, not as a food for thought. Written communication over the internet is a bit difficult when you can’t hear the person or hear the context. Sorry.
I read your statement, hence my opening line “I don’t know what you mean.” I think I should have just left it at that and let you clarify before I speculated on what you meant.
Thanks for clarifying.
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