Home sales tumble as first-time buyers back off

[barb162]

Home sales tumble as first-time buyers back off
December's drop is largest in more than 40 years

WASHINGTON - Sales of previously occupied homes took their largest drop in more than 40 years last month yet managed to end 2009 with the first annual gain in four years.

Still, prices plunged by more than 12 percent last year — the sharpest fall since the Great Depression. The price drop for 2009 — to a median of $173,500 — showed the housing market remains too weak to help fuel a sustained economic recovery. Total sales for 2009 were nearly 5.2 million, up about 5 percent from 2008. snip
http://www.msnbc.msn.com/id/35058162/ns/business-real_estate/

[ixion]

1. yes, and just in time for the next wave of crappy loan defaults and/or resets

the silver lining is on the other side of this mess is fiscal sanity.

[barb162]

2. Anyone who said there would be a housing recovery

any time soon is nuts. What sales there are are mostly driven by foreclosure sales, government stimulus of various types, etc.

[madrchsod]

3. my son and his wife are trying to buy a house since august

they have excellent credit and income with more than enough cash for a down payment. since august several houses have gone to other buyers because of the delay of the fha.

there are people out there who want and can buy but no one wants to dance.

[barb162]

7. That's odd....

a friend of mine just bought, but she didn't use FHA and her loan went through in about two weeks or less. This friend did conventional/ fixed rate. Just a suggestion. My friend did have problems with the sellers though and finally she bought with a seller who had his act together. The first seller never did any of the fix-ups he was supposed to do under the sales contract and on the final walk-through, my friend cancelled the deal because of it.

[madrchsod]

15. they are running into some of those problems too....

mostly really crappy over priced homes that the owners refuse to fix.

[rgbecker]

4. Will there be a 12% drop in new auto sales prices?

Just wondering if I should wait til that kicks in.

[barb162]

9. Car sales dropped after cash for clunkers was over.

I don't know the current % drop.

[dgibby]

5. I want to move out of SC and back to Va,

but can't because of the housing situation. There are 12 houses for sale on my street, and most of them have been on the market at least 6mo.

[barb162]

8. As I was mentioning to a firend who didn't want to hear it

how do you know if it won't be worse two or three years from now? I see nothing indicating it will get better as joblessness increases. The situation is terrifying. If you price your house $5000 less than the others, can you sell?

[dgibby]

10. I doubt it.

Unemployment is 12.6 here, market appears to be stone, cold, dead. I'm hoping that it will change when the new Boeing plant gets up and running. Fortunately for me, I'm not underwater on the mortage and don't have to move, so am sitting tight for now. If push comes to shove, my niece and her husband own an auction co, and I'll let them sell it to the highest bidder (enough to cover the mortage and my moving expenses, hopefully).

[barb162]

12. Auctions

maybe that's the business to be in now! I hear through the grapevine they are doing awesome business these days.

[fasttense]

29. I looked up the average time a house is on the market in my county.

It's almost 400 days. I about spit out my coffee.

[Warpy]

6. The only thing driving sales was speculators

who were snapping up foreclosures at bargain basement prices. I've been hearing stories out of Florida of people buying 20 or more completed and unsold condos that were supposed to list for >$250,000 for under $60,000. It's been a great time for bulk buyers, not so great for people who want to own their own homes.

Prospective traditional homebuyers are pretty few and far between, anyway, as people simply don't see their jobs as being safe and are loath to take on a long term debt.

[barb162]

11. The only traditional sellers/buyers I know are downsizers.

And they are few and far between.

Not to go off-topic on my own thread, but I keep wondering where all the foreclosed homeowners are going. Are they just buying the 1/2 price houses two blocks away right before they got foreclosed or what? I have seen stories where people are walking away from their houses and buying the houses for sales down the block, literally for half of what their current mortgage is. They buy the house down the block and then let their own house get foreclosed. They don't seem to be going into rentals as people I talk to in that area say rentals are not going up.

[Warpy]

13. Could be, but I don't suppose that scam will last long

Banks can hound people for the difference between what they borrowed and what the bank got on the foreclosed property for a full 20 years. Unless the law gets changed, they could be in a world of hurt down the line when things begin to improve, the bank taking the new house to pay the difference on the abandonment of the old.

[barb162]

14. There was a realtor on some thread a few months ago

I don't know if it was in this forum or what, but he said it was illegal and as a realtor, illegal for even bringing it up, but he said the idea is you sell an already foreclosed home to a buyer who is in the same identical home and save them a ton of money. Then the buyer of that foreclosed home, usually a few blocks away, just leaves their house right before their own mortgage resets. Because their credit was still good, they were able to buy the foreclosure and when their credit got bad by dumping their original house, they didn't care as their new foreclosed house was costing them so much less. There was even a TV program on this practice a few months back. This was going on in Las Vegas, AZ, CA, and other markets that got very overheated where new homeowners were buying on ARMS at the height of the bubble.

I can see where the banks would go after the money lost.

[amandabeech]

23. Some states do not allow the lenders to go after the debt that was not

satisfied by the sale of the property. They are non-recourse states. Other state let lenders choose between a quick non-recourse foreclosure and a longer judicial foreclosure in which the lender reserves the right to collect the entire loan amount.

I don't know what the situation is in your state, unfortunately, but not everyone is as stuck as those in recourse states.

[fasttense]

30. No most banks wont come after you for the difference.

These are all the mortgage walkaway trustee sale states, meaning they are non-judicial foreclosure states.

In those states, generally, when they foreclose on you, they cannot pursue you for their financial losses.

Many, such as California, do in theory allow a lender to choose judicial foreclosure but in those cases the lenders only do so if a borrower has significant other assets. This is the "one action" rule that lets the lender either pursue non-judicial foreclosure, at lower cost and less time, or judicial foreclosure that costs more money and takes more time but lets them go after you for their financial losses.

Alaska
Arizona
Arkansas
California
Colorado
District of Columbia (Washington DC)
Georgia
Hawaii
Idaho
Mississippi
Missouri
Montana (as long as non-judicial foreclosure is used)
Nevada - note that the lender CAN get a deficiency judgment (See below)
New Hampshire
Oregon
Tennessee
Texas (but even in a non-judicial foreclosure, the lender can pursue a deficiency judgment)
Virginia
Washington
West Virginia

These are states that also allow non-judicial foreclosure, and/or where non-judicial foreclosure is more common and deficiency judgments can be obtained more easily:
Michigan
Minnesota
North Carolina
Rhode Island
South Dakota
Utah
Wyoming


http://www.mortgagereliefformula.com/recourse/

[pokercat999]

25. I saw an MLS listing for a condo in Key West. The last price

paid for this jewel was $350K current asking price $70K. Here in Central VA near Lake Anna four years ago there were about 50 lake front,view/access houses for sale. Today 450, no matter where you price your property it's not moving. My neighbors house has been on the market for 2 years with three or four different realtors, few lookers let alone not one offer. The house is only five years old and is perfect, he was a contractor and went all out on this home. My other neighbor has a lot he purchased for a little over $100K, a few weeks ago he told me he would sell it for $80K just to get out from under the loan, it's been listed for at least 18 months. I would like to sell my home and I could let it go for less than current market and be OK but I see no point in listing it as there are simply no buyers.I would love to become a renter in the Melbourne Beach, Fl area, my boat would love the Indian River and Sebastian Inlet.

[HillbillyBob]

16. We had to move, and for a change things worked in our favor

the house we were renting was sold , the new landlord was our old landord in another house , greedy sob. Said we fixed the place up so nice he was upping the rent from 950 (too high , but we needed fenced yard for my service dog) to 1275$.
WE had already been looking this was 3yrs ago and the market was bubbling away.
We found this house, the previous owners had divorced then rented it to some creatures that put in a marijuana grow..It was a mess, but it was for sale for 45 less than the appraised value, Green Tree finance just wanted shut of it.
For most folks would not like the location, but it was just what we wanted.
We needed several bedrooms since we have a few friends that come to visit on their vacations but cannot really afford a hotel/motel, and relatives M-I-L will be living here sometime.

We looked a bunch of places on-line, went out to see maybe 40, got the realtor out to see maybe 20 (there were some real scary ones..)
We used VA benefit , insisted on fixed rate and as little loan as we could. The house may or may not have increased in value much, but it has increased just because of the clean up we had to do.
I am now fully disabled.
We are living pretty close to the bone, lord if we had to rent we could not be in a house. I have been homeless and do not wish it on any decent person...those banksters and greed oil partiers..yea would serve em right, but they would just beat up on other homeless folks and steal what little they had.

I don't see the economy recovering jobless or not for at least several more years..in fact,and you who called me doom and gloom a few years ago can bite me I was right not because I m psychic I study the cause and effects and I saw repeats of what has happened before. I do have rice and beans on hand and heirloom seeds to plant a garden.

[barb162]

19. ...

Glad you got away from that jerk landlord and are in a house you like. And I agree with that last paragraph of yours. I've been saying the same thing for years.

[ArcticFox]

17. Anyone care to explain this?

How does it help the economy to have housing so expensive it eats up 60% of your income? Wouldn't it make more sense to have policies in place to keep housing affordable? This "housing market fuels the economy" crap is nothing but saying that people should take out big loans backed by their houses so they can spend a whole bunch of money on stuff they don't need. Then what? 30 years of paying it off and no contribution to the economy.

[barb162]

18. The housing should not be eating up that % of income

Try 1/4 of income.

http://www.interest.com/mortgage/how_much_house_can_you_afford_0818.html

snip "Rule 1. Housing costs should be 28% or less of your gross (pretax) income.

If you're a two-income family, it's OK to consider the income from both jobs. Money you make from part-time or seasonal work is acceptable, too.

But you've also got to count all recurring expenses -- principal and interest on the mortgage, property taxes, condo or association fees and insurance.

Economists usually define an affordable home as one that costs less than 30% of your pretax monthly income.

Yet nearly 38% of homeowners with a mortgage -- 19 million people -- now spend more than 30% of their income on housing. About 7.5 million homeowners -- nearly 15% of all those who have a mortgage -- spend half of their income or more on housing." snip

[girl gone mad]

20. The bubble never made sense for the majority of the middle class.

Many economists loved it due to the "wealth effect" caused by taking out loans against soaring equity. But from the point of view of first-time buyers, the young and most of the middle class, house price inflation was a disaster. We don't cheer when energy and commodities prices go up and we shouldn't have been cheering the housing bubble, either. It was a net drain on the economy and terrible policy on the part of Greenspan, Bernanke, Paulson, et. al.

[ParkieDem]

21. Amen to that.

I get so irritated with recent efforts to "prop up" the housing market. In many regions, it needs even more correction if we are going to have any sense of a long-term economic recovery.

It makes absolutely no sense for a middle-class neighborhood to have a median home price of $400k+. Yet we are still seeing that in several areas. These prices need to come down to a much more affordable range in order for sales to pick up again.

"But ... but ... what about people who owe more on their mortgage than their house is worth?" Well, if they're not looking to sell, it's really not that big of a deal. If they took out a 100%-financed loan, or worse yet, rolled their closing costs into the loan, of course they're going to owe more on the house than its worth for a while. I owe more on my car than it's worth now, but I don't need a bailout or a stimulus so I can get out from under it.

[Art_from_Ark]

24. There are big differences between cars and houses

The price of a car loan is almost always a mere fraction of a housing loan, and takes only a few years to pay off.

Most people buy cars with the expectation that the car's value will decline over the years.
Most people buy houses with the expectation that the value will rise, or at least remain steady.
There's a big difference between seeing the value of your car go from $20,000 to $10,000, and seeing your house go from $400,000 to $200,000.

[Statistical]

22. Normally (for first 70 years of last century) rising prices result in rising wages.

As cost of stuff goes up wages are forced higher.

It is why a Doctor today makes a lot more than a Doctor in 1912.

However in mid 80s wage growth slowed then stopped. It was replaced by "easy credit".

The easy credit bubble allowed people to pretend like wages were going up so like a train w/ lot of momentum it took a while to slow down.

Long run prices can NOT rise without wages rising also. It is simply impossible.

Until we see real wage growth the economy won't get better.

It doesn't have to be anything amazing. Just 1% to 2% OVER INFLATION (so 3.5% inflation = 4.5% to 5.5% wage growth) but it has to happen.

[pokercat999]

26. Won't happen until we change our trade policies and bring

manufacturing jobs to America.

[damyank913]

28. Many economists believe that 3.5% ...

...is the "natural" inflation rate. They would consider 1 or 2% above inflation to be inflationary. Unfortunately, they don't include numbers from oil and, I believe, health care in the inflation tallies so the working man gets screwed. Don't forget the value of the dollar as a contributor to todays earnings vs 50 or 100 yrs ago. In my opinion, the replacement of pensions with the 401K deeply cut into the discretionary income of most ppl. The numbers are stacked against labor.

[damyank913]

27. For years money was so cheap and readily available ...

That ppl borrowed against their homes equity. Because the equity was based on a value that was ultimately false these ppl got screwed (or screwed themselves) when the market decided to correct. Now there are millions of ppl who are upside down; that doesn't include the millions of others that bought disgustingly overpriced homes that cannot afford them today (same reason-easy money).

To make matters worst; the banks don't want to lend. Especially in areas like SC (where many were based). Interestingly enough, I read somewhere that SC's main problem was that so many ppl there were employed by the banking industry. When the banks took a hit the indians were the 1st to go not the chiefs.