Skip to comments.New Zillow Report Warns Of "Unprecedented Decline" In Home Values And No Stabilization In Q3
Posted on 11/10/2010 7:22:34 AM PST by WebFocus
Zillow just released a devastating third quarter housing report. Basically every major indicator is crashing:
* The decline in home values accelerated in September, dropping 0.4% month-over-month
* Foreclosures reached an all-time high
* A record 23.2% of mortgages are now underwater
The double dip -- already a rare phenomenon -- is now entering an unprecedented free-fall. Zillow economist Stan Humphries says prices won't hit bottom until next summer at the earliest, as foreclosure activity grows.
Humphries warns: While not unexpected, the unceasing declines in home values signal that were in for a long, bleak winter of continued troubles for the housing market. The length and depth of the current housing recession is rivaling the Great Depressions real estate downturn, and, with encouraging signs fading, will easily eclipse it in the coming months."
(Excerpt) Read more at businessinsider.com ...
More good news?
If you look up your neighborhood pricing that zillow uses you will see how useless this site is. Making wild projectiions to make news is hardly a new thing.
destroying American one home at a time. Thanks Dems.
If this keeps up, it will cost more to buy a vehicle than a house. That doesn’t make sense.
>> every major indicator is crashing... The decline in home values accelerated in September, dropping 0.4% month-over-month
Housing prices are still at least 20% too high. An 0.4% m-o-m decline is NOT crashing. That compounds out to about 4.7% decrease over one year.
We need an asset devaluation of considerably more than that to put this country back on a sound fiscal footing.
RE: If this keeps up, it will cost more to buy a vehicle than a house. That doesnt make sense.
Been to certain spots in Detroit lately? Some houses cost less than a new Toyota Camry.
Yes, DETROIT, what used to be the automobile capital of the USA, the land of Motown....
What double dip?
We are seeing the same dip as before.
Stupid dems threw money at housing to subsidize first time
home buyers. Now that is over.
Stupid Ben is devaluing the dollar. Higher gas prices kill the housing market three ways:
1) Outlying houses drop in value as it cost more to commute.
2) Less money for homeowner each month, must spend on gas to get to work, at end of month may not have money for mortgage.
3) As gas goes up, other energy cost go up, so big houses have utility bills larger than the mortgage payment.
It’s easier to move if you live in a vehicle, assuming it has wheels, an engine and/or sails!
I can see trying it someday
It has always been about 10-15K+ less appraisal value than ours until about 2 months ago and now all of a sudden it's worth (according to Zillow) 1K more than ours. The only thing we can think is that some how their Realtor was able to go into Zillow and fiddle with the numbers.
For almost five years I had to listen to my neighbor going on and on about how much the value of our homes had increased. My reply was always, that’s nice, but we bought our home to live in, not as an investment.
For the past two years I’ve had to listen to my neighbor going on and on about how much the value of our homes had decreased. My reply is always, that’s nice, but we bought our home to live in, not as an investment.
I’m certain that sometime in the future I’ll be listening to my neighbor going on and on about how much the value of our homes has increased. And my answer will be.......
The banks have profit margins so high that they don’t know what to do with the money. I’m not going to gnash my teeth over affordable housing. Sucks if you’re one of the home-owners who bought high, but I don’t see this crashing the economy again.
My neighbor’s home was for sale this last summer. City assessment which was inflated was $295,600.00. He was asking $290,000.00. Sold for 285,000.00. Hardly a unprecedented free-fall.
“What we need is legislation that stops all foreclosures and taxes responsible homeowners to pay for other people’s mortgages. In addition, all IRAs and other retirement savings must be transferred into a government pool and redistributed fairly so government employee union pension funds remain solvent. Finally, responsible working taxpayers need to accept health care rationing and be willing to pay much higher premiums so that illegals and deadbeats may participate in America’s health care system, and retired government employees will continue to get their lifetime health care benefits paid for. Oh wait... that third thing has already been passed. Well, then those first two items must be priorities.” - Typical Democrat
It could easily take out the banks since they have written paper that is no longer worth its face value.
I have money saved to buy a home and cannot bring myself to do it. I SO want to move out of apartment living but I am also terrified of making a mistake and buying too high. Ughhh....
Econ 101. There is no free lunch. All costs are carried, somewhere. In free markets costs and prices are close to the product or service. In less, non free market, cost and prices are transferred, temporarily, to other places in the larger economy, causing distortion, unclearness in prices. In short, know one knows true prices, but acts on what distorted price information anyways because you have to.
Anyways, eventually, costs, prices revile themselves. Right now, Fedgov,others are trying to finger the delusion dyke and prevent the sweeping flood of price collapse to what willing buyers and unsupported sellers will trade at.
but I do worry about those young people who bought their first homes when the market was booming...Bush years before the crash.....and now are stuck with a too small home as their families start to grow...
In a free market, I don’t see why prices of housing wouldn’t always decay. No one worries about used cars decaying in prices over time. What is so special about a brand new house, ten years later, with all the beatings, older furnace, bathrooms, roof all decaying, declining in price.
A house is just a material object. A think. Decaying from day one.
“I have money saved to buy a home and cannot bring myself to do it. I SO want to move out of apartment living but I am also terrified of making a mistake and buying too high.”
Look, it’s very simple. All that matters is how LONG you intend to live there. Home prices have ALWAYS been like a cork on the ocean - they go up and down. It’s just right now the ups and downs are higher. But if you intend to live there are at least 10 years, it is highly unlikely you could “buy too high.”
If you only intend to live there for 5 years or less, I’d probably stay in the apartment with the way things are now.
The Eureka Ca homes of 2 of our church members sold in the past 3 months. One was left to a local foundation and was appraised at $270K for the estate and $330K at the peak. It sold last month for #130K CASH. The other was a small home listed at $160K and sold for #105K CASH in Sept. The only thing keeping many banks “solvent” is the current inflated prices.
Last ones in to a Ponzi scheme, a bubble, always take a beating. Best bet for them is to walk away, rent and save, and then buy the house back at a more true, natural lower price. Financing a decaying, depreciating thing is a killer.
The Federal Reserve bought that paper at face value, transferring the loss from private banks, to you and me and anyone saving in dollars. Congratulations.
I agree with that idea totally, and add an additional thought.
When I was a kid, my Dad did everything around the house - and I was the unpaid help. Between that and 60 years on this earth, I can look at a house pretty closely. Even so, I always hire a guy I know to look it over as well. I also do MY OWN research on the price of the house, regardless of what the Realtor says.
Some of the young folks that work for us just scare the hell out of me the way they buy houses. They didn't grow up adding patios, repairing walls, rewiring rooms, etc. and as a consequence know very little about judging the condition of a house. They take the Realtor's word TOTALLY for everything.
An educated and informed buyer is the best way to insure that the amount paid equals the value received. Unfortunately I'm afraid the buyers have a lot of responsibility for the current housing mess.
there are a lot of “option ARM” mortgages that are going to “reset” in 2011 and 2012. these mortgages typically were taken in t 2005 and 2006 with 5 year fixed and then a bump of some kind at year 6. this bump is either an increase in interest rate, or the conversion from “interest-only” to a fully amortized but shortened (ie 20-year) lifetime.
in either case, the monthy payment goes up by 20 or 30% and that will cause a new wave of forclosures.
this second wave of foreclosures will depress prices for all housing inventory.
this process should be finished by about 2013, and we will have a new President and Senate with an eye toward growth.
buy in winter 2012 or winter 2013.
What You Dont Know about Mortgagegate Could Crush the U.S. Banking System
Someone with sense! Houses are vastly overpriced.
Prices of homes will fall until the average family can afford the average home. and since the average family is getting less able to afford a home, home prices are still way too high.
If you are not in Florida, Nevada, Arizona or California, this may be the best time ever to buy a house. 4% on a 30 year fixed mortgage is damn near robbery.
I recently bought a house that was a foreclosure for $.40 on the dollar what is was listed for when it foreclosed.
Sometimes check my old neighborhood in Cincinnati out to see where home prices have gone since selling our home there in July 2009. The prices according to Zillow have plummeted, $600,000 homes are $425,000 ... $500,000 homes in the $350,000 (or lower) range. However, homes that sold in recent months are selling close to there valuations a year ago. Zillow data, to say the very least, is flawed.
Not all the mortgage debt....
I follow real estate very close. For the most part expect a sideways market for the next 3-5 years. However if you do find your dream house BUY IT NOW! In ten years you will be thanking your lucky stars. Prices WILL increase and INTEREST RATES too.
The housing market is not as unstable where I am,(Wisconsin) but I do know people who bought during the rebate program that are already underwater on their mortgages. I was in the market at that time and got cold feet. Sure glad I did. Prices are down 15-20% since then.
RE: If you are not in Florida, Nevada, Arizona or California this may be the best time ever to buy a house.
I don’t know about the other states you mentioned, but I can speak about at least 2 cities I’ve visited in California...
In the greater Los Angeles area, it depends on what suburb you are looking at....
The price of houses near the coast ( the west side of LA ) and some desirable good like Alhambra or Monterey Park have not really dropped. They’re FLAT but still way too pricey.
Same is true in San Francisco. The price of housing in the SF area have not dropped by any significant amount at all. In fact I wonder if anyone but multi-millionaires can afford to live there.
Being a New Yorker, don’t even let me get started in Manhattan or even suburbs not far from it (e.g. Forest Hills in Queens ) ... PRICES HAVE NOT DROPPED AT ALL !!
As I said in one my early posts, being able to accurately access the condition and value of the house is everything. We actually bought a house this year because it was clearly a steal. I spend time working on it (my hobby house as my wife calls it). My first intention was to sell it for a profit, but as it has progressed I'm liking it so much that we are thinking about moving into it and selling ours.
Unfortunately no matter what the overall market is doing, individual transactions always favor the savvy buyer and punish the uninformed buyer.
True, but with the added effect of Fred, Fan, Gin and the ‘support’ of other parts of the government. Ballpark, I’d say that the finance of homes now, like college loans, is 80-90% government supported/stimulated/distorted.
I don’t know if that clearing up of price between buyer and seller will politically be allowed to happen. The gooberment will borrow to keep prices high, and borrow more to finance priced out buyers into the over priced houses. Just like farm supports for high crop prices and food stamps for poor people priced out of high farm crop prices.
If this keeps up, it will cost more to buy a vehicle than a house. That doesnt make sense.
It does if Cloward Piven is being used.
An unprecedented bubble must of necessity be followed by an unprecedented POP.
An unprecedented run-up is being followed by an unprecedented decline.
Surprise. Prices are still too high.
Been there, done that in a small camper (Toyota Chinook) when I was a contract programmer. Landlords wouldn't go for a six month lease (the usual contract) so I got this little gem and stayed at KOAs or other RV parks throughout the country. Since I could move at the drop of a hat, and was willing to relocate, I was always employed. Not something for a guy with kids, but it was an alternative that worked well for me.
Wrong. The Republicans are in this up to their necks. Phil Gramm and Jim Leach, Republicans both, were the ones who created the monster and sent Clinton the repeal of Glass-Steagal, without which the banks could never have securities the CDOs in the first place and the boom could never have gotten so out of control.
All of the pigmen are to blame at every level - not one party. This was avarice writ large across the board.
It is all about maintenance and upkeep.
Homes keep their values the same way that Mercedes do - owners pump huge dollars into maintenance and upkeep. Homeowners do not allow paint to fail, wood to rot, roofs to leak, foundations to crack, electrical fires to break out. It is only the massive reinvestment for maintenance and repair, that makes houses keep their value.
This is why houses always go up with the rate of inflation. A well-kept old home that has been maintained in good condition will always cost about the same as a similarly sized and featured new home. There is nothing magic about either home that makes it more valuable. It is walls and roofs and carpet and appliances, etc. When it comes to finding a "home", you can choose a new or old dwelling. If the old dwelling has wood that is dry and strong, has a newer roof, was built with a strong foundation, etc - who cares if the building is old or new.
That is why homes keep their value. You pour money in to them. You don't pour money into your Toyota Camry. That is why Toyota Camry's depreciate.
Can you document the claim that a lot of Option ARMS will reset the next 2 years.
Option ARMS adjust 2 ways. One way is by duration - 5 years and it automatically resets. The other way is by loan amount - people who constantly pay the minimu have an increasing loan balance. If the loan balance goes too high, the Option ARM automatically resets.
In this way, many of the Option ARMs scheduled to reset at 5 years were reset much earlier because the home owner let the loan balance get too high. This is why there was a flood of Option ARM resets over the past 4 years.
If there is still a huge pool of Option ARMs ready to reset, I would appreciate some current documentation on that, and not famous bar chart of resets that is now about 3 years out of date.
You may be right that there are a huge number of Option ARMs ready to reset soon. My understanding is that the lions share already blew up because almost all of those owners paid only the Optional minimums, and ran their loan balances up to the trigger that caused rates to reset.
I’m not aware, in general, of any aircraft, boats, cars that even with vast maintenance, often well excess of their new purchase price that increase in value. ( Icons excepted ).
I work on a lot of old houses. Deep in them, their structure, frame, masonry are often just standing.
There are a near hundred city, with near a million houses from New Jersey, up to Maine, sweeping that same distance wide to Chicago where houses are near worthless, with hundreds of thousands abandoned. In fact, I’d say there are ten times more abandoned houses then cars. Cars have a ready cash value, houses don’t.
Aprez moi, le deluge!
In a way, you ‘shorted’ your own house, and made out.
The thing about all this is the bailouts. It’s one thing for buyers and sellers, borrowers and lenders to take their lumps. It’s another to drag others into it with the force of government taxation.
‘In a way, you shorted your own house, and made out.’
I guess I am a financial genius, but I have to say it wasn’t intentional.
you know more about this than me.
mine was taken in 06, has 5 year fixed, and then converts to 20 yr fixed fully amortized.
this happens in Sept 2011.
i have recollections of reading about the option ARM wave of foreclosures and i have not read any contrary opinion
i sincerely hope you are right. that a lot of the option ARM’s have already been converted or refinanced or foreclosed and the balance remaining will not cause another depression in the housing market
i hope you are right.
According to Zillow, my house is worth 5k less than when I bought it in 1998. Pfft.