Home Prices Falling Fast, Eroding American Wealth And Threatening Recovery

[laughingliberal]

Plunging home prices hammered household finances in the third quarter, eroding homeowners' wealth and making them more vulnerable to foreclosure. As prices are expected to continue falling, the economic recovery could face a major stall.

Millions of homeowners saw their most valuable asset decay between July and September, according to recently released data from the Federal Reserve, as they lost a portion of the stake they can claim in their homes. A series of new reports reflects home prices are continuing to decline, increasing the pressure on America's tepid housing market. Until the market finds a bottom, the foreclosure epidemic will feed upon itself, analysts say, as foreclosed properties drive home values down. With the unemployment rate hovering near 10 percent, and with companies showing historic reluctance to hire, the housing drag poses a significant impediment to an economic recovery.

By the end of this year home prices will have dropped $1.7 trillion, or about 7 percent, according to Zillow.com, a real estate data provider. This decline has accelerated: Since August, home prices have fallen 7.9 percent, data from Clear Capital, a Truckee, Calif.-based real estate research firm, show. It is the steepest decline in home values since the height of the financial crisis in 2008, said Clear Capital senior statistician Alex Villacorta.

Worse, home prices are forecast to drop an additional 10 percent next year, according to a recent report from Fitch Ratings, a major credit ratings agency.

http://www.huffingtonpost.com/2010/12/10/home-price-fall_n_794414.html

[xchrom]

1. Recommend

[GSLevel9]

2. good... when prices drop enough the people with jobs

can get into the housing market.

[laughingliberal]

7. I don't think that's helpful. nt

[GSLevel9]

9. I know...

I was just thinking it'd be nice to get people buying houses, buying new carpeting, hiring landscapers and roofers...

[laughingliberal]

10. There's a glut on the market that's going to take a long, long time to clear.

The trades are dead for some time to come. I know. My husband's business has tanked out completely over the past 3 years. This has been the worst year, yet.

[GSLevel9]

18. I'm sorry... I hope things rebound for you soon. nt

[we can do it]

40. I Agree. People Need Jobs That Pay.

[pnwmom]

21. bad because there will be more foreclosures when more people

find their mortgages underwater.

Do you really think it would be a good thing to buy a house knowing the previous family was now living in someone's garage or basement?

[GSLevel9]

25. any house, more than 10-20 years old...

has seen SOME tragedy. I don't believe in the "energy" in inanimate objects.

[pnwmom]

31. I'm not talking about the house energy. I'm talking about the people.

You seem to be celebrating some people getting into trouble so you and others can benefit.

[bobbolink]

41. Rich people are feeding off the tragedy of others, and you think that is laudable?

:grr:

[defendandprotect]

3. Isn't this also what happened in the Depression .. and then....

eventually elites picked them up for little --

How many cars have been repossessed and sold off for little?

I'm sure other assets are also going now --

And how many more homeless and impoverished before we catch hold of this

corruption -- corruption of government, btw!!

[girl gone mad]

26. A lot of them were bought and converted into duplexes..

or other multi-family dwellings and rented out. I always thought that would happen with McMansions, evantually.

[Mojorabbit]

4. I will throw up this old chart again

[former9thward]

13. That chart is invalid when prime interest rates are near zero.

[Mojorabbit]

15. Have the banks started lending again then?

I have several friends with great credit ratings that have not been able to refinance because the banks are not lending. I live in Florida where the real estate mess is bad so may be regional.The chart shows loans ready to reset that were less than optimal. I can't see where the chart is invalid esp when the value of the homes have diminished. I can't see the banks refinancing these loans ready to reset. I could be totally wrong as I do not have an education in economics.

[dmallind]

34. Never stopped for good credit

I even carried two mortgages for a while just a few months ago until my old house sold. Standards are tighter sure but anything approaching great credit ratings can easily find a lender

[Mojorabbit]

38. So you think banks will re finance these resets

on homes that are underwater? Has that been your experience? I am truly asking. I know mine is underwater but I have a fixed and plan to stay here. If they are refinancing these reset loans on these homes it will save us from a pretty nasty second housing collapse!

[customerserviceguy]

17. How long do you expect interest rates to remain this low?

The pumping of money into the economy by the Fed guarantees that we are seeing the low point for decades to come.

[former9thward]

37. I think they will be low until real wages begin to rise.

Real wage levels have been stagnant for at least a decade, maybe more. Home prices can't rise unless real wages do. I expect home prices to continue to fall, in some areas up to 50% of what they are now.

[customerserviceguy]

42. Look up 'stagflation'

It happened during the mid-70's, and even when wages were stagnant, prices and interest rates rose markedly. Yes, eventually wages caught up, but the unemployment numbers are far worse now than what we had during the Nixon-Ford recession.

What I see happening is that everything but real estate will rise in price, until real estate is 'properly' priced. But I don't see the same thing for wages, as long as there are loads of people who will be willing to work for very little. The baby boomers are just starting to go for their Social Security, they'll always be a source of cheap labor for part time work with no benefits, at least for the next thirty years.

[TheKentuckian]

5. Rents are going up too. The shakedown is in full effect.

They are going for every nickle, nailed down or not.

[customerserviceguy]

6. We don't get out of this recession

until we hit rock bottom in real estate prices, and that won't happen as long as foreclosures are going on. Legal steps to delay foreclosure proceedings simply prolong the recession.

I'm not talking about examining the haphazard way that some banks are foreclosing on people who have actually made their payments, but those who simply borrowed more than they could afford to pay for something that was inflated beyond reason shouldn't be encouraged to pursue frivolous suits to gain something back that they never really should have had in the first place.

[laughingliberal]

8. Yeah, that's a little behind the curve.

Whatever number of foreclosures were those who 'bought more house than they could afford,' are pretty much a done deal. People going into default now are the one who have lost jobs and seen incomes decline. They have also seen equity evaporate.

Due process is a bitch, I guess. Won't be seeing the bottom for a long, long time. Too bad we didn't have a program to offer real help to homeowners instead of banks. We'd be in much better shape by now.

[customerserviceguy]

16. If it were only so

Every month, more and more people go underwater, as home prices decline. People who had more equity than they owed a year ago and might have seemed 'safe' are getting precariously close to the line where they will have no equity, and no means of refinancing or selling without digging into their pockets.

I'm all for due process, but I'm sure there are ambulance chasers out there who are encouraging people who got in way over their heads to clog up the courts with fruitless lawsuits, for which they're collecting up-front fees.

The only real cure for overinflation in real estate prices is to have them come back to earth, and for properties to sell for what they are really worth, rather than what the "Flip This House" speculators were willing to bid them up to.

[laughingliberal]

22. You may just have to wait for us to give up our homes.

Those of us who were not in way over our heads but whose lives have been ruined by the fun and games of the banksters and WS cartels will not be easily giving our homes up.

Sorry to disppoint you. Listening to the meme from WS and the MSM that all of us who have fallen behind were a bunch of welfare queens who never should have had the house to begin with has made us all a little testy, too. :hi:

FYI, people who are in the shape most of us are have no 'upfront fees' to pay an attorney. But working people and attorneys do seem to be the favorite targets of one side of our political spectrum in this country.

[customerserviceguy]

43. I don't want to see anyone lose a home

But it's crystal clear that the housing inflation that took place from about 1997-2005 was simply unsustainable. If housing had risen a modest 5 percent per year, the rest of the economy would have kept up with it. But drastic price increases clearly meant that a bubble was forming, and would eventually pop.

Until that bubble fully deflates, we're screwed. All I advocate is that we get to that bottom sooner rather than later.

[laughingliberal]

45. I advocate having a place to live longer rather than shorter.

Who's this 'we,' kemosabe? The 'we' I belong to was screwed a while back and will, likely, be that way the rest of our lives. Your desire to see the bottom sooner rather than later...Sorry 'bout that.

[customerserviceguy]

47. You are right

We will drag this whole thing out for years, and many will suffer because of it.

[laughingliberal]

48. I see no reason why the suffering of those waiting for the bottom is, somehow, more important...

than the suffering of people who worked their entire lives in order to buy a home and are now being thrown out into the streets.

No one seemed to think using the HAMP money to help the homeowners rather than the banks (who were really the culprits here) was of much significance.

[customerserviceguy]

49. Look, I'm sorry you lost your home

But having others suffer on top of your suffering is not going to make your situation any better. We need to get to the bottom before we can push back up again. Maybe next time, things will work out better for you.

[laughingliberal]

51. You know, at 63 and 55, it's quite doubtful there's any 'next time' for us.

And I've seen little sympathy here on this ostensibly Democratic website for homeowners. I've seen the RW 'people who bought more home than they could afford,'propaganda repeated endlessly with little call for any accountability from the banks and WS who were far more culpable than people who were trying to buy a home and have a place to live.

Using a fraction of the money we handed to the banksters to help homeowners would have gone a lot further to stabilize the market but the Calvinistic attitudes of average Americans coupled with the insane belief in free markets and supply side economics dictate that we'd rather see the whole damned country fall than help one person who might not be 'derserving.' Americans would rather see 20,000 in the streets who did everything right and got screwed by the system than to think 1 scammer might have been helped. The irony of that is the same people see bailing out the banks and WS cartels who really didn't deserve it as 'necessary.'

After the attitudes I've seen from people towards homeowners who have lost everything they spent their whole life working for, would anyone expect us to give a damn if trying to hang on to our homes a little longer prolongs the suffering of others? What I see you defining as 'the suffering of others' is they aren't seeing their 401k's bounce back like they want. Good. Maybe they'll figure out they need to get their money out of that damned casino before WS steals it again.

[defendandprotect]

32. Government should step in and stop them all .... readjust the mortages ...

the nation doesn't need more homeless -- or more impoverished citizens --

[RaleighNCDUer]

35. Exactly. Falling home prices - IOW, a realistic adjustment of the actual

value to a significantly overpriced commodity - would be no problem at all if there was a mechanism of reducing the mortgages to match that actual value as well. When a $110,000 house that sold for $224,000 four years ago CANNOT sell for more then the real value of $110,000, yet the homeowner still owes $200,000 on the mortgage, that's when there's a problem.

[JVS]

11. At some point these homes have to be made affordable for the diminished wages of the work force.

[jillan]

12. One of my neighbors just took his home off of the market after not being able to sell it for almost

1 year. He was telling me what homes in my neighborhood are selling for now, I almost became physically ill. We bought our home in the beginning of 2002, right before home prices skyrocketed. These homes are selling for LESS than that now. I just want to scream. For personal reasons I want to sell, but I can't afford to lose any money right now.

I wonder if it will ever turn around. :(

[PSPS]

14. This is a problem with, really, no palatable solution

Housing prices were way too high and still need to come down. In many markets, they will continue to go down considerably.

The reason housing prices got so high was two fold:

1. Easy credit. When the banks began giving out "no-doc, no down, pick-a-pay" loans (liar's loans) and people thought they could get away with buying more than they could afford (flipping, kick the can with a re-fi, etc.,) this flooded the market with money that otherwise wouldn't be there. Hence, prices went up (supply/demand.)

2. Departure from lending fundamentals. Traditionally, median housing prices in an area are between two and three times the average annual household income in the same area. Because of #1 above, some markets had housing selling for as much as ten times the annual income in the same area.

The solution isn't to find some scheme to artificially prop up housing prices. Instead, real estate needs to return to the basic fundamental from #2 above. In other words, if the median household income in a given area is, say, $50K (which is the approximate median nationwide,) the median price for a house in the same area would be between $100K and $150K. If it's any higher than that, the person buying the house is more likely to be unable to afford the payments. It's simple math and inescapable.

If you want to see higher housing prices, the only real solution is to increase the median income. If the median income in an area goes up to, say, $75K, the median price for a house will naturally rise to $150K - $225K. That's the way it has always worked and gaming the system with tax giveaways or a return to NINJA loans won't work.

In other words, the answer isn't to artificially inflate housing prices, it's to increase wages which have been flat for 30 years.

[laughingliberal]

19. "Traditionally, median housing prices in an area are between two and three times the average ...

...annual household income"

Looks like we hit that around these parts a while back...still dropping.

Deflation, anyone?

[Amerigo Vespucci]

20. "Eroding House Flippers' Wealth And Threatening Recovery Of House Flippers"

Sorry, I know some decent people are getting hurt by this, but I also know that some unlucky house flippers are getting GANKED, because they helped drive the prices up in the FIRST place, so I'm not shedding any tears for them,

I posted a similar thread yesterday...homes in Santa Clara, CA that were listed at $650K and up three years ago are going on the market for the low $400s these days. When the price comes down to around $250K, reality will have settled back in. These are tiny little houses in bad neighborhoods and anything approaching half a million is LUDICROUS.

[laughingliberal]

23. Some decent people? Try just about everyone in my state who has lost a home.

In a state with the highest unemployment and highest foreclosure rate in the country, you'll have to go a ways to convince me that the problem isn't mostly decent people whose lives were destroyed by the fun and games of banksters and WS cartels.

Keep on cheering for people to get GANKED. It's not helping anyone.

[Amerigo Vespucci]

24. If the house flippers no longer have a free ride, it helps everyone

I just happen to live in the middle of one of their primary playgrounds. I will cheer their downfall. That doesn't mean I'm cheering the fall of anyone else.

[laughingliberal]

28. Sorry. It's people's whose jobs have been lost who are losing their homes here.

Guess what? Jobs are never going to come back without the housing market picking up. Your cheering is obnoxious and borders on cruelty. I assume you're doing OK since you find this amusing.

[defendandprotect]

33. +1000% ---

The other one that drives me nuts is people saying about the

unemployed that they have to "find a job" --

Rather, we should be saying that we need government to start creating jobs

for all the unemployed!


This kinda sounds like Easter Egg Hunt with some stupid job seeker just somehow

not being able to find that job!!

:evilgrin:

:hi:

[nashville_brook]

27. Yes, we know - mr brook is no longer allowed to Zillow

[laughingliberal]

29. Yeah. That's a depressing activity. I had to quit. nt

[dreamnightwind]

30. Same here...

We bought our northern California home (a very humble home, not a McMansion) in 2001. It is now worth about 67% of what we paid for it, that's how far down we've gone. We used to have 2 incomes when we bought the house, now we have 1, lost over half of our income. So we're basically screwed, just sitting here watching our savings disappear while we can't afford to move without walking away. I think our story is pretty typical around here, just another foreclosure waiting to happen.

[lovelyrita]

36. I'm in this situation.

There were so many short-sales in my neighborhood that if I wanted to sell my house, I would need to sell it for 1/4 of what we owe. We are planning on staying here awhile but I do not know how we will ever be able to sell. At 26, I did not think I was purchasing a house that I would be living in forever.

At least we are still able to make the payments, I am thankful for that everyday.

[Rex]

39. Once we had people in govt that cared about the working class

kidding...they've never cared about our welfare, just our credit score. GOOD! If prices plunge then poor people might be able to buy a HOUSE soon.

[Nye Bevan]

44. Good. Homes are still overpriced.

Prices do indeed need to fall more to get home prices back to sensible levels. There may actually be a chance that my children may be able to afford to buy homes of their own one day.

[laughingliberal]

46. Yes. Yay! Maybe they can buy the one my husband and I put so much into after we lose it without

a dime to show. It was only a lifetime of work to get to where we could buy a home.

[Nye Bevan]

52. Why are you going to lose your house?

The value of my house has also fallen significantly, but I am not going to lose it. The fact that its value fell did not affect my mortgage payments.

[laughingliberal]

53. My husband's business, profitable since 1982, tanked with the crash of the housing market.

Double whammy. The crash of the housing market took down our business and our home value is so upside down we'll be walking away with nada-less than nada. Our state allows the lenders 20 years to sue you for deficiency.

But good news for your kids, huh? I know where they can pick up a house real cheap.

[Nye Bevan]

56. Sorry about your husband's business.

All bubbles eventually burst, and the collateral damage can be very sad.

[Odin2005]

50. the housing market must be allowed to hit bottom.

Trying to prop up the prices will just make the pain worse.

[laughingliberal]

54. I'll do everything I can to delay my foreclosure and I hope everyone else who has been...

hit in this crap will, too. The vultures waiting to pick our bones will just have to wait. :hi:

[shanti]

55. that's what they said

about the banks :eyes:

[conspirator]

57. It's called Ponzi Scheme on the middle-class (Or should I say former middle class) nt