US Housing Market Disintegrates In First Quarter, Worst Since 2008 Lows

[marmar]

from 24/7WallStreet:




US Housing Market Disintegrates In First Quarter, Worse Since 2008 Lows
Posted: May 9, 2011 at 6:05 am


There is hardly any legitimate research that shows an improvement in the US housing market. That was confirmed again today as real estate website Zillow released its first quarter analysis.

The introduction to the report was unusually depressing even in this period of a calamity of real estate prices and foreclosure rates: “As much as we were hoping to have better news to share this quarter, homes continued to lose value. In fact, home values fell at a pace we haven’t seen since 2008 — the darkest days of the housing recession.”

Zillow reported that US housing prices dropped 3% in the first quarter. The company said it has cut back its forecasts for the balance of the year. “We now believe a bottom will come in 2012, at the earliest.” Zillow also reported that mortgages for 28.4% of single family homes were underwater. Its measurements also show home prices down to 2004 levels.

Home owners and economists have still not found anywhere to turn to solve the real estate problem. No single financial firm, or state, or home construction company can fix the trouble. ............(more)

The complete piece is at: http://247wallst.com/2011/05/09/us-housing-market-disintegrates-in-first-quarter-worse-since-2008-lows/#ixzz1LrO9ry7d

[FreakinDJ]

1. Thanks to FDIC covering the loses

makes it profitable to dump the price of the home

[orangeapple]

2. can you explain how?

How does Federal Deposit Insurance reimburse banks for money lost on real estate loans?


Prices are going down post-bubble + unemployment at 9%.

I bought a house in Feb. for $177.5K
In 2008 it sold for $222K
In 2005 it sold for $200K

It was built in 2000.
It will be interesting to see what the one across the street finally sells for.

[FreakinDJ]

4. When FDIC takes over failing banks and assigns them to

other banks like BofA they agree to guarantee a percentage of the looses on the toxic mortgages - like 75%

So the bank has a $200K mortgage on a home valued at $250K at the time the loan was made. They dump the house for $100K and the FDIC makes up 75% the difference or $107.5K

Didn't you wonder why the banks refused to deal with the homeowners whose homes went underwater ?

[orangeapple]

5. are you talking about the PPIP experiement?

So the bank has a $200K mortgage on a home valued at $250K at the time the loan was made. They dump the house for $100K and the FDIC makes up 75% the difference or $107.5K

Pardon me, I don't follow the math in your example. Are you suggesting that if a bank receives $100K in the distressed sale and holds a $200K mortgage on said house, that FDIC pays them in excess of the $100K 'loss'?

I'm not aware of any FDIC program that operates like that, so I'm seeking clarification (link to article(s)?). Thanks.

[golfguru]

6. This article might answer some of your excellent questions...

http://www.fdic.gov/bank/individual/failed/lossshare/

[NMDemDist2]

7. Phoenix gave us a similar story

house was built in 1991, value increased $10K a year, we bought in 1996 for $79K, sold in 2006 for $224K (thanks to this forum, I knew we were in a bubble ready to break) house is now bank owned and has sat on the market over a year at $75K with no movement per Zillow......

[golfguru]

3. Further 9% drop in 2011 predicted

That is on top of 3% house price drop already
in 1st quarter of 2011.

Foreclosures.......galore!
Short sales........galore!
Homes under water..galore!

And that is just in my neighborhood!!!


http://curiouscapitalist.blogs.time.com/2011/05/09/will-home-prices-continue-to-fall/