Posted on 11/18/2009 3:33:48 AM PST by expat_panama
We've seen this over and over again.
While Americans seem to recognize that there's been this thing called the housing crash, they don't believe it's happened to them, or at least a lot don't.
[snip]
Nationwide, when asked about their own home’s value over the past year:
• 25% think their home’s value has increased
• 26% think their home’s value has stayed the same
• 49% think their home’s value has decreased
In reality, 72 percent of U.S. homes lost value over the past year, and 22 percent of homes increased in value. That’s fewer homes declining versus Q2(83%), and a smaller Misperception Index of 10 (vs. 13 in Q2 and 17 in Q3 2008). A Misperception Index of zero would mean homeowners’ perceptions were in line with actual values.
(Excerpt) Read more at businessinsider.com ...
Well if you aren’t selling or buying what difference does it really make?
But my property taxes have increased while my home value has decreased.
That's one way of looking at it, like right after the stock crash hearing some traders say that they didn't loose any money because they didn't sell anything. Yet.
If the unemployment numbers had even started to steady after the first bailouts, then it might be realistic that home prices were within reach.
But after the second bailout... China’s gonna end up buying the US on the cheap.
Even if someone is selling their old house and buying a similar one somewhere else, the loss on the sale is offset by savings on the purchase, so house wealth as far as number of rooms and features hasn’t changed. The problem comes only when converting house wealth into something else. Then market value between different assets classes comes into play. If someone says they lost money on their house, they are usually meaning they lost money on a borrowing bet.
Resale prices held pretty well here in NC, through a very scary and quick rise in unemployment. We never had the wild run-up, just slow and steady. But, this year, things are starting to fall back. My own house appraised recently for $17k less than ‘07. How much of that is due to hypercautious appraisers and the pendulum swinging too far, I can’t say. Only selling would confirm it, and this is not the best environment in which to sell.
Basically everyone that bought a house from 2004 forward, or refinanced 2004 forward is underwater.
Do 52% still believe Obama will pay their mortgage?
Not exaactly.
The problem comes when you owe more than your house is worth and you decide to quit making payments.
You live in and enjoy a house. Where you live has a lot to do with your quality of life. That quality of life doesn’t change much if the “value” goes up or down while you live there. Can’t say the same about stock.
If you going to live somewhere for a long period of time the current housing crash doesn’t really have that much meaning.
Well if you were actually planning on living in the house and thought you could afford it when you moved in having the value of the house go down doesn’t change that equation. It only changes it if you weren’t planning on living there very long and instead were trying to flip it. Losing your job and not being able to make the payment is a wholly different issue.
There's a whole cottage industry dependent upon its ability to enable that delusion.
And these governments and that industry is so completely devoted to self-continuity over its original "reason for being" that they will gladly see their communities owned by foreign money rather than give up these delusions.
The broker (in Michigan) says our home is worth about the same as it was last year.
My house is slowly increasing in value.
Of course, it was only 100 grand when we bought it. Silly me, I thought we had to buy a house within our means. I should have bought the Biggest Mansion in Mansionland.
You are forgetting about adjustable rate mortgages. Lots of people were unable to afford their house even though they kept their job.
Lots of people simply gave up when their home values dropped below their mortgage balance...regardless of their income.
Lots of people lost income from investments that tanked in the market. When your investments are gone, your 401k is gone, and your home value plummets, you are not going to feel like throwing money at a sinkhole of a home mortgage. You just walk away and start over from scratch...no matter what your employment situation is.
then the bank would have it, and you’d have collection agencies hounding you.
Not underwater, not likely to be underwater. Fifty percent down and fixed six percent loan done last month. And this will probably be the last house forever.
House wealth is different than house value. Value relates to what the house could fetch when converting to a different asset class. If someone has no equity in their house, it's not their house. I don't begrudge someone turning in the keys and ruining their borrowing reputation in that case. Someone that got themselves into that pickle probably has no business borrowing more money for the next 10 years.
Many Americans were advised by DELUSIONAL BANKERS to make financial decisions which no one would have advised anyone to make even a mere generation ago; and if one asked pointed questions about their "professional advice" -- it could invoke haughty, nose-stuck-up, Aren't-You-Silly-Not-To-Join-The- Flip-This-House-Investment-Party
YMMV, but after what I've observed this past decade, I will never trust any banker, nor anyone who graduated from a professional business school, nor anyone high tech in Silicon Valley, nor anyone "High Money" on Wall Street.
IMO, mainstream America is held in contempt & derision by all these hyper-educated, hyper-nouveau riche "elites." But my opinion of them is infinitely worse than theirs of me. LOL
Here in Florida I hear realtors complain all the time that they can't get sellers to face the reality of the market. Maybe that's another reason for the lack of sales in this area.
Something else is that our less competent friends generally rate themselves as being far more above average than our competent neighbors do.
Ironic b/c realtors were convincing sellers to put property on the market with inflated prices in ‘02-’05.
A home is a purchase, like if I purchase a nice meal at a good restaurant then I don't care if the resale value of the meal goes down 24 hours after I've bought it.
"Can’t say the same about stock."
Stocks are investments; most people who say their stock is worth more than what they paid for it are referring to actual transaction prices. Most people who say that they're home is worth more than what they paid for it haven't found a buyer.
"...realtors complain all the time that they can't get sellers to face the reality of the market..."
Isn’t that the truth. We got lots of people down here, who are way upside down in their homes, that delude themselves into believing all sorts of things. Making it even more unfortunate is the fact that they don’t have the income to make the payments while riding this out. Lots of desperation out there. It’s a good time to have cash and access to credit.
In the search engine, don't put your own normal requirements, were you shopping for a new home.
Instead, where it says price range, insert $40,000 to $80,000.
I do know that those are infintesimal prices; however, you may well be shocked to find out what returns for a search for houses under a hundred thousand in your areas. The 40-80 category contains "fixer uppers," but still, they are standing houses.
So I have to agree with you that generally speaking home owners have NO idea of what the actual market conditions truly are in their home town. And like expat panama pointed out, it is human nature to believe that LOW selling prices only apply to Other People, LOL, and not to one's own superior home.
But seriously, looking at realtor ads in the Sunday papers is very deceptive and those ads with the thumb print pics and "normal" prices makes the market look much better than it possibly could be. You'll see what I mean if you visit a few realtors' websites for a few different cities and check the search results for low end houses. Now -- of course it's not as bad as Detroit, where most of us have seen televised reports of infinite number of vacant houses priced under 5 grand, block after block of unsellable houses, but you'd be shocked to see "How Much Home" one could purchase in many cities for how very few thousand. And this might apply in your own city, even in neighborhoods very close to where you, yourself or close friends & family, live.
Frankly, some times it's downright scary.
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