Why home values may take decades to recover

[4dsc]

Rick Wallick moved into a new, three-bedroom $200,000 home in Maricopa, Ariz., in October 2005. Today, the home is worth $80,000.
The disabled software engineer stopped making mortgage payments this month. His $70,000 down payment is now worthless. His dream house will be foreclosed on next year.

"We're so far underwater it's not funny," says Wallick, 57, who had to return to his original home in Oregon to care for a sick family member and tend to his own medical problems. Wallick, one of the hardest-hit victims in one of the states hit hardest by the housing crisis, lost 60% of his home's value in three years.

His story is an extreme example, but home values have fallen so sharply since hitting a historic peak in the spring of 2006 that many Americans are wondering how much more prices can sink.

As painful as the decline has been, history suggests home values still may have a long way to drop and may take decades to return to the heights of 2½ years ago.

"We will never see these prices again in our lifetime, when you adjust for inflation," says Peter Schiff, president of investment firm Euro Pacific Capital of Darien, Conn. "These were lifetime peaks."

http://www.usatoday.com/money/economy/housing/2008-12-12-homeprices_N.htm

They built an economy based upon housing and now that house of cards has come crashing down, never to return.. What this means for our economy is simply huge!!

[FreakinDJ]

1. Because they are killing the middle class?

destroying good paying manufacturing jobs, out-sourcing, and union busting

Just who is going to buy them - the Chinese?

[madrchsod]

2. which means we will have to earn what we buy.

there`s huge demand for goods and services but no money and jobs to buy them....

[4dsc]

3. Because the piggy banks is broke

For too long American's have used their equity like a piggy bank and now the piggy bank is broke.. That means TRILLION of $$$$$ will not be there for future growth in our economy..

[Liberal_in_LA]

4. storm clouds on the horizon

Delinquencies on loans not yet in the foreclosure process jumped to nearly seven percent in the third quarter, a record high, according to the Mortgage Bankers Association, Saccacio said.

"And more than half of the homeowners who received loan modifications to reduce monthly mortgage payments in the first half of 2008 are already delinquent on their loans again, according to the US Office of Thrift Supervision.

http://www.google.com/hostednews/afp/article/ALeqM5hyLuHqGczS0wRuRUgrKDSuTvG04w

[rucky]

5. If you look at the markets that didn't go up much during the bubble...

and see how they're being affected now, we can get a better idea of what the bottom looks like for most of the country. Here we've had a pretty slow and stable housing market. Foreclosures are dragging it down, though. Not like Phoenix and Vegas where developers went crazy with spec homes and entire communities are sitting mostly empty.

Prices will continue to drop until people can qualify for loans again - which is what the 700 billion was supposed to be for, but I see standards tightening instead of loosening. Wall Street doesn't feel comfortable investing in MBS because housing continues to spiral downward, but their unwillingness to invest is part of the reason.

[Neshanic]

6. Ah, Maricopa AZ. This area will be a study in classrooms in the future.

[Mari333]

7. how accurate do you think Zillow is?

I looked up my home value on there and it says its still worth (and a little more) what I paid for it. I wonder if it has to do with region. Nonetheless, of course, a home will only yield what someone is willing to pay. My winter property taxes, however, were obviously readjusted and I see that I paid HALF of what last yrs were. I wonder if that means my home is HALF worth what it was then.
www.zillow.com