Real Estate Market Plunges

[marmar]

from 24/7WallStreet:




Real Estate Market Plunges


Real estate sales have just plunged by a nearly unimaginable amount.

According to the the National Association of Realtors, existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 27.2 percent to a seasonally adjusted annual rate of 3.83 million units in July from a downwardly revised 5.26 million in June, and are 25.5 percent below the 5.14 million-unit level in July 2009.

It is important to remember that July 2009 was still near the trough of the recession.

The number confirms other data from the government and private firms like RealtyTrac and Zillow. Defaults are rising as are foreclosures and the buyers strike among homeowners continues despite the lowest mortgage rates on record.

The only part of the report that should be viewed with skepticism is the data that shows prices increasing.

The national median existing-home price for all housing types was $182,600 in July, up 0.7 percent from a year ago. Distressed home sales are unchanged from June, accounting for 32 percent of transactions in July; they were 31 percent in July 2009.

The report said that “sales are at the lowest level since the total existing-home sales series launched in 1999, and single family sales – accounting for the bulk of transactions – are at the lowest level since May of 1995.” That makes claims that prices are rising implausible

-- Douglas A. McIntyre


http://247wallst.com/2010/08/24/real-estate-market-plunges/#ixzz0xXA5vmjE

[flvegan]

1. I got my proposed property taxes in the mail yesterday. Prices increasing?

My home lost another 25% of its value since last year, per the "market value" assessed.

[SoCalDem]

14. A loss of faith in the "market" is driving it further downward

Young people are mostly afraid to buy for fear of losing their job
Middle aged people are staying put in houses they no longer "love" because they cannot afford to move


Unfortunately, empty houses do not pay taxes.. and if taxes are based on the value of a home when it is finally sold, there will be less money than ever coming in, so the people still in houses get stuck with rising taxes to pay for what's needed..

[Igel]

16. Nobody said prices were increasing.

Just that the median price had increased.

That can happen because prices overall are going up--something that the story disallows.

It can also happen because the houses that *do* sell are priced higher. Even if their prices are also declining.

In Houston in 2005-06 real estate was appreciating as the median price of new houses declined. They were building more houses in the $80-110k range and that pulled down the median. Of course, once built, those houses appreciated.

[Warpy]

2. Home ownership via a 30 year mortgage

is an astonishingly bad deal right now unless prices are at rock bottom and rents are starting to skyrocket, something rare in markets across the country.

Local business owners might feel their jobs are safe enough to take on a 30 year debt. No one else does.

Economists, as always, are absolutely astonished by the numbers none of them anticipated but which should have been obvious had they talked to anyone outside their theoretically limited bubble.

[cbdo2007]

5. A 30 year mortgage is a great deal right now....it was a bad deal 2-5 years ago.

I just bought a house in a neighborhood 30% lower than one of my neighbors paid for the same size/condition right across the street 4 years ago.

Housing prices will inevitably recover in the next 10+ years so this was a great deal for us at 4.75% and a plan to stay here a minimum of 10 years. Prices where we bought can't fall THAT much more but they can definitely recover much more than we paid.

[ixion]

7. There is nothing to "recover." Housing prices were WAY over-inflated

and by that I mean by 200% or better, depending on the market.

There is no recovery, as such. There is a return to real market value.

[cbdo2007]

10. but your assumption is that "real market value" will then remain constant.

In my area (Kansas City) we never saw prices over-inflated by 200%, and we're close to the bottom now.

I agree that prices were over-inflated, which makes my house at 30% off a great deal if it then grows slowly over the next decade like it is supposed to.

In some areas, you're correct that a lot of correction still needs to be made, but in many smaller market like mine THIS is the time to buy.

[Warpy]

11. When the real estate market crashed the last time, a process

that took over a decade from 1921-1933, it took them over two decades to rebound, and that was mostly due to the combination of favorable 30 year mortgage terms combined with a great deal of job stability at living wages.

Those 30 year mortgages are no longer reasonable for people who aren't sure that their jobs will be there in six months, let alone for their working lifetimes. While prices are falling, they haven't yet cratered and, barring a complete overhaul of this economy together with rebuilding the type of good union jobs that sustained home ownership for so long, there is going to be little to no recovery.

The only reason to buy right now is as a hedge against rapidly rising rent.

[county worker]

12. I am buying a house for $350k that sold for $510K in 2005. My interest rate is 4.675%

My house payment with property tax will be just $95 more then the rent amount I was paying if you include the tax deductions for interest and taxes.

It is a very good time for me to buy a house. I will pay less taxes then if I was renting. Overall my cash outflow will be better and I will be getting equity at some point.


I'm lucky to still have a job. Life can change in an instant but I'm never one to sit on my ass being afraid of life!

[DCBob]

3. How can prises continue to rise if sales are declining dramatically?

something weird about that data.

[ixion]

8. Yep, that's what happens when you cook the books

you get data that doesn't ring true.

[girl gone mad]

9. That data point should be ignored.

The shocking 12.5 month supply and a sales rate approaching 15 year lows are the key indicators.

[xchrom]

4. Do The People need more than they're getting

From their leaders yet?

Oh that's right - we've got the Catfood Commission coming.

[mmonk]

6. There are areas where prices aren't decreasing

and sales will drop off as we head into the fall anyway. The normal patterm is also following a tax incentive that expired.

[Greyhound]

13. This is exactly why it was so important to put lots of strings on those funds.

As it is, the banksters have no motivation to loan on or sell these "assets" which we've already paid for and continue to pay the banksters to hold. The end result of this idiotic policy is paying the criminals quarterly bonuses for continuing their crime-spree.
:kick: & R

[Uncle Joe]

15. I believe closings to qualify for the tax credit initially expired at the end of June

and this is part of the reason for that dramatic drop off from June to July.

I also disagree with their analysis that the slight uptick of 0.7% is suspect, the tax credit made some difference from the year before.

Thanks for the thread, marmar.