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 we’re 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 Depression’s real estate downturn, and, with encouraging signs fading, will easily eclipse it in the coming months."
(Excerpt) Read more at businessinsider.com ...
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.
wait
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 Don’t Know about “Mortgagegate” Could Crush the U.S. Banking System
http://moneymorning.com/2010/10/15/mortgagegate/
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 doesn’t 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.
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