National Home Prices Double Dip

CNBC ^ | 05/05/2011 | Diana Olick

[Rational Thought]

It's official.

Home prices have double dipped nationwide, now lower than their March 2009 trough, according to a new report from Clear Capital.

It was inevitable, and it was predicted (by me for sure) that a surge in sales of foreclosed properties and a big push by banks to facilitate short sales would force home prices down dramatically.

Sales of bank-owned (REO) properties hit 34.5 percent of the market, according to the survey, resulting in a national price drop of 4.9 percent quarterly and 5 percent year-over-year. National home prices have fallen 11.5 percent in the past nine months, a rate not seen since 2008. Add short sales, where the bank allows the borrower to sell for less than the value of the mortgage, and prices have nowhere to go but down.

[lodi90]

The truly scary thing is that even before a double dip recently built housing is already way below new construction cost. A further decline with low interest rate loans available shows just how fubared we really are.

[Raycpa]

We also purchased one and we were only allowed limited access. For example the heating system had the water removed as well as the regular pipes. We had to take the chance that there was no damage to the pipes and the furnace or the sewer system. If there was we could have incurred 10’s of thousands of dollars. The bank sold as-is and felt they priced it low enough that such things should be covered.

Also, the purchase process was difficult. We never knew until the closing that we actually had a deal.

It also took as 4-5 months and thousands of dollars to make the necessary repairs and upgrades for it to be usable.

[Freedom_Is_Not_Free]

Here in Yuba City CA we have foreclosures that are trashed and many in good shape. I can’t say with certainty but there seems to be a trend.

Many of the foreclosed homes that were badly damaged during the repossession were owned by Hispanics. Many of the homes owned by eastern Indians (Sikhs mainly) were turned over in good shape, with maybe some kitchen appliances removed.

I know this sounds racist or something but that is what I noticed during my home search in 2008. Many of the foreclosed damaged homes had been owned by people with Spanish surnames. Many of the foreclosed homes that weren’t damaged often had the paint shemes that seem to be popular with the Sikhs like painting one wall in the living room brick red, etc.

Anyway, 2 very different cultures it appears. Lots of vindictive damage from previous hispanic occupants vs just peaceful surrender of homes by the Sikhs. So investors looking for homes here in Yuba City really get a deal on the previous Sikh-owned homes as they are not generally damaged.

As far as home prices, they seem to be still creeping down here in Yuba City but not very fast. I bought my home at the end of 2008 after average prices in Yuba City fell 28% in one year. I got lucky and was careful, so I’ve only lost about 15% on my home so far, and so far it is still better than renting between my 5% mortgage rate and home tax deduction. I could never own my very cool German Shepherd in an apartment or have a garage for my sports car.

My house is a HOME, and an inflation hedge, but is meant to give me a beautiful place to live in a wonderful neighborhood, not meant to be an investment first and foremost. I think it is foolish to buy your house primarily as an investment.

[Freedom_Is_Not_Free]

The link below goes to a site that shows very interesting home price trends for the past 20 years by city. Neat information.

http://forecastchart.com/home-price-index.html

There is a lot of other interesting information at the site beyond just the historic house price trend in the link above.

The link for the main site is below:

http://forecastchart.com/

Obviously use at your own risk as I can’t vouch for any of the information but it is fun to play with.