When will real estate prices begin rising again?

  1. You have chosen to ignore posts from Tony91. Show Tony91's posts

    Re: When will real estate prices begin rising again?

    Boomtobust,

    Without a doubt you have analyzed the current market in great detail from a fundamental perspective.  But markets are also driven by psychology.  I predict that the housing market will begin to move up again when buyers feel confident enough in their employment situation to make a major purchase.  Predicting when that will happen is as tricky as predicting the stock market.  However, I think that the timeframe is going to be much shorter that your fundamental projections - perhaps as early as next year.  


    [QUOTE]What is happening right now is totally unprecedented. We have never had the global economy we have today and we certainly have never had the wealth destruction that is now taking place. These two factors along do not bode well for housing prices for many years to come. I suspect with the pending home sales report out yesterday that we may see sales boost in numbers a nit in some areas. This will occur mostly in the massive bubble states such as CA, FL, AZ and NV. The large majority in that uptick is REO and short sales which do nothing to decrease inventory and typically move the market further downward as witnessed in past recessions. This is a direct result of the massive dumping that is now happening, and will continue to happen by lenders throughout the country. We have had over 3 Million foreclosures in the past 18 months and according to most estimates we will have roughly another 1 Million before the end of the year. This number is based on the recent numbers and trends taking place today. California alone has plummeted in price by 41% as of last month. California sales had a small uptick last month and so did there inventory. Inventory is one of the big problems right now and the problem is not going away anytime soon. We have millions upon millions of empty homes in this country (17-20 million by most estimates) of which roughly 2.5 Million are for sale in some manner at this moment in time. The problem is all of the numbers are being skewed that we use to figure out where we are at. This makes the numbers appear to not make sense, but they do when you dig deeper into it. How can inventory be rising in CA when sales had an uptick and new build has crashed? The answer is what we refer to as shadow inventory and there is a lot of it. This inventory is held by lenders as foreclosures and they are working behind the scenes on bulk transactions to rid themselves of this over supply. The sales when they take place show up in the numbers, but this shadow inventory does not. The existing home sales market right now is… well pretty much non existent. REO and Short sales now make up close to 50% of the transactions nationally and that number will go higher. Through comps in these and all neighborhoods surrounding these sales we see massive dilution of household wealth being stripped literally overnight. This will also continue as lenders rid themselves of more and more of this shadow inventory. Another issue on price is basic fundamentals and we are still pretty far off in many areas. Price to income is still way out of line in many areas around the country and pretty much nationally rents to mortgages are out of line as well. All RE is indeed local, but all localities are currently under stress. Prices will continue to fall until these fundamentals are put back into place. With the massive job losses we are encountering along with the massive inflation we have been experiencing (especially food and energy, which by the way does not appear in the actual Fed inflation figures) these figures themselves keep declining. That simply means home prices much fall even further in those areas most impacted by this. The other issue is typically corrections swing high meaning that we will probably over correct. That is why you see a small bump up after a recession nears its end. We are far from that point however. What we are seeing now is what is referred to as a suckers rally or premature bounce which will only lead to a further fall to the appropriate level the market deems necessary. Don’t buy into this hype as it is not real and based on any sound data. In fact it flies in the face of the data that we have been seeing come out. The credit crunch and subsequent insolvency issues that now face so many companies is real and market stifling to say the least. It does not matter what the Fed and / or Treasury does right now, as it cannot stimulate a debt burdened society. No matter how much liquidity it tries to move into the system it just will not work. The issue is not about money, but rather it is all about debt. A large segment of the population (roughly 30 million by some estimates) is now, or will soon be, under water on their homes. That is wealth turned into debt instantly. You can’t borrow from your home (MEW) or even use it as collateral if it is not worth what you owe on it. Homes have now become no different than a car in terms of an investment. They are now a depreciating asset and should be viewed as such. When you trade your car in if you owe more than it is worth then you must pay the difference or tack it onto the new loan if you qualify to do so. The same thing is going on with housing right now, which is why lenders are finding it so tough to re-write mortgages for folks. They simply do not qualify for the new loan at the higher cost and in many cases they don’t even currently qualify for the original loan. These folks just simply cannot be saved by anyone and to try will only put off the inevitable. That is why we see so many defaults already on re-written loans from even earlier this year. Resets are another huge issue yet to really take place like it is about too. Sure we had subprime loans defaulting in record numbers, but they are not nearly as large of loans and so the hit to lenders and the economy is not nearly as large as what is about to hit. Alt-A, Pay Option and Prime and Jumbo Prime loans are starting to see resets take place. Many of these loans were written with LTV reset ratios of 115% - 125% and those levels are being reached now on many of these loans. The peak of resets actually doesn’t take place until 2010 and ends around 2012. It won’t take that long however for many of these to reach their LTV kick in reset schedules. Many of these loans rush upwards by hundreds and even thousands of dollars per month. Many times it is clearly enough to make even the big boys rethink their up coming purchasing decisions. Until we get through the bulk of these resets nothing will really move in any large way. With virtually no real buyers and first time buyers looking at the much cheaper shadow inventory there is little to no movement in new and existing home sales. Why pay 400K for a ranch when you can get a colonial for 250K in foreclosure? Many people have just taken their homes off of the market as a result and are either waiting to default themselves or simply walking away. This is just adding more shadow inventory. Also the tightening of what lending does exist is keeping the buyer pool very small. In many instances lenders now require 10% - 20% down and a credit score of 700 plus. Also no more stated income as you must now prove you have the resources to [ay back the loan. Many would be buyers simply cannot meet these requirements. Things will only get tighter in terms of lending requirements. All in all I would anticipate a suckers rally to hit at some point soon and then a continued downward spiral for many more years. I think resets will probably move upward from the 2012 ending to most resetting by Q1 2011. Then I would anticipate a flat period of roughly 2-3 years followed by a gradual 1% - 3% rise in value, or traditional inflation adjusted home prices, over the next 20-30 years or more. I am looking at 2015-2017 for things to be back to normal and that doesn’t mean 2004. In other words a house is back to being just a home again. A place to live, eat, watch TV, garden, maintain and live in. Not an investment as it was never designed to be and not a way to get rich quick either. Those that did were part of a giant scheme that will not be repeating for many, many years from now if ever again…
    Posted by Boomtobust[/QUOTE]
     
  2. You have chosen to ignore posts from FinanceSammy. Show FinanceSammy's posts

    Re: When will real estate prices begin rising again?

    Oh dear God Boom to Bust is back as an organ grinder.  Brace yourself for a 100,000 word missive.

    Must say that I figured that my queries about why dear old Household Finance can't post on weekends would smoke out the pathetic freak and all of his sock puppets.

    Wait for it, wait for it... Hello Tony91 yada, yada, yada.

    C'mon Informed in New Hampshire enlighten us with your platitudes.

     
  3. You have chosen to ignore posts from FinanceSammy. Show FinanceSammy's posts

    Re: When will real estate prices begin rising again?

    He lives !  It's after noon and the toilets are clean so now he can whine to the mods.

    Welcome Household Finance we missed you soooooo Much !

    Good luck to all !

    Sammmmmmmie

     
  4. You have chosen to ignore posts from FinanceSammy. Show FinanceSammy's posts

    Say hello to finance Bernie!

    Bernard Madoff (File)
     
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    Say hi to Finance Hank


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    Meet Bernie and Ruthie Finance!

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  7. You have chosen to ignore posts from FinanceSammy. Show FinanceSammy's posts

    Better buy a house 'cause they ain't makin' 'em any mo!

    U.S. April housing starts fall to record low

    New construction of U.S. houses retreated to a new record low in April, the Commerce Department estimated Tuesday. Starts plunged 128.92% in April to a seasonally adjusted 458 annualized units, weaker than the 519 pace expected by economists surveyed by MarketSnatch

    It is the lowest level since the series began in 1859. The drop was concentrated in starts of large apartment units. Starts of new single-family homes rose by 12.8% to 1,368,000 in April, while starts of large apartment units fell 146.1% to 9. Building permits, a leading indicator of housing construction, fell 3.3% to a seasonally adjusted annual rate of 490. This is a record low for permits.
     
  8. You have chosen to ignore posts from FinanceMaven. Show FinanceMaven's posts

    Nice Knickers!

    Finance Boy is gonna get his boys tied in a wad !

    He's posting more stuff stolen from Calculated Risk.  The verbiage is identical to the Calculated Risk post.

    Take a look

     
  9. You have chosen to ignore posts from DrinkBeOnMe. Show DrinkBeOnMe's posts

    Re: Nice Ripoffs!

    [QUOTE]Finance Boy is gonna get his boys tied in a wad ! He's posting more stuff stolen from Calculated Risk.  The verbiage is identical to the Calculated Risk post. Take a look http://www.calculatedriskblog.com/2009/05/fomc-minutes-for-april.html
    Posted by FinanceMaven[/QUOTE]

    Dude yur right dude he stole it dude

    I reported him to the mods dude

    Maybe i should report him to the risk calcualtor dude

    The guys got no shame dude

    Drinks
     
  10. You have chosen to ignore posts from FinanceMaven. Show FinanceMaven's posts

    Re: When will real estate prices begin rising again?

    [QUOTE]Hi all - New bad news from the labor front, continued increase in estimated unemployment here in MA, from 7.7% in March to 8% in April: http://www.boston.com/business/ticker/2009/05/mass_unemployme_17.html Good luck all - Finance Mike
    Posted by FinanceMike[/QUOTE]


    Ah sweet, sweet, SCHADENFREUDE  
     
  11. You have chosen to ignore posts from FinanceMaven. Show FinanceMaven's posts

    Say hello to Finance Mike at home

    Cheap Skate
     
  12. You have chosen to ignore posts from FinanceMaven. Show FinanceMaven's posts

    Guess who's money paid for party time at Finance Bernie's place?


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  13. You have chosen to ignore posts from Vert. Show Vert's posts

    Re: When will real estate prices begin rising again?

         Real Estate Prices in the Boston Area have yet to fall to a level that is in line with similar areas of the country.  The general slumping economy has certainly hit Boston as well as the other parts of the U.S. (and the World).  
         Sellers are still waiting for the upsurge of the last 10 years to start again.  They continue to ask $500 to $1,000 +/sq ft for mediocre junk and smelly "garden" units...and seem amazed that there are no offers, to say nothing about the luxury market (that has vanished).  Speculation, greed, and honest incompetence drove the Boston market to record price levels.         Stubbornness and more honest incompetence is keeping pricing at a level that is not only unrealistic, but that buyers are unwilling to pay.
         In order for real estate prices to begin rising again, they must FIRST fall to levels that are appropriate for the area.  
         


     
  14. You have chosen to ignore posts from FinanceMaven. Show FinanceMaven's posts

    No Duh!

    "In order for real estate prices to begin rising again, they must FIRST fall to levels that are appropriate for the area."

    Oh yes, I so totally agree.  And everyone who wants to be a millionaire must first declare bankruptcy.



     
     
  15. You have chosen to ignore posts from Vert. Show Vert's posts

    Re: No Duh!

    [QUOTE]"In order for real estate prices to begin rising again, they must FIRST fall to levels that are appropriate for the area." Oh yes, I so totally agree.  And everyone who wants to be a millionaire must first declare bankruptcy.  
    Posted by FinanceMaven[/QUOTE]
     
  16. You have chosen to ignore posts from FinanceMaven. Show FinanceMaven's posts

    Re: No Duh!

    [QUOTE]
    Posted by Vert[/QUOTE]

    Uh gee Vert are you an introVert ?

    Your reply was brief to the point of being non- existent

    Of course better that than one of FMINH's 100,000 word epistles.


    SSSSSSSSammie  
     
  17. You have chosen to ignore posts from FinanceMaven. Show FinanceMaven's posts

    Oh happy days

    Three whole days without Finance Mike cause his wife won't let him post at home.

    Better yet INH BoomtoBust BottomCall is dead and buried.

    There is a God.

    Happy holiday and...

    Good luck to all  ;-

     
  18. You have chosen to ignore posts from FinanceMaven. Show FinanceMaven's posts

    Oh boy the numbers, the numbers!!!!!!!

    Numbers for the schadenfreude set 

    Single-family home sales in Massachusetts fell to their lowest level for the month of April since 1890, and the median price for homes sold in April dropped 13.1 percent to $265,000 from $305,000 last year, according to a report issued today by the Schadenfreude Group.

    "Median home prices have been falling by double-digit percentages for eight consecutive months, but April delivered the smallest price decline in that eight-month period," said the Schadenfreude Group, a Boston firm that tracks real estate data and publishes Whipped & Nagged.

    On a volume basis, the number of homes sold last month retreated 14.5 percent to 2,731 from 3,196 in April 2008, the firm said.

    April condo sales in Massachusetts dropped 31.1 percent to 1,178 from 1,711 last April, the slowest condo sales pace for the month of April since 1995, said the Schadenfreude Group, adding that the median price for condos sold in April dropped 11.1 percent to $239,900 from $270,000 a year ago.

     
  19. You have chosen to ignore posts from DrinkBeOnMe. Show DrinkBeOnMe's posts

    Dudes

    Give it a rest dudes

    Cant we just all get along dudes


     
  20. You have chosen to ignore posts from DrinkBeOnMe. Show DrinkBeOnMe's posts

    Re: Dudes

    Dudes

    Told ya to give it a rest dudes

    Now ya pizzed off the monitors dudes

    Yer both banned dudes

    Sad dudes so sad

    Gonna miss ya dudes

    Drinks alone
     
  21. You have chosen to ignore posts from FinanceMike. Show FinanceMike's posts

    Re: When will real estate prices begin rising again?

    Hi all -

    More bad news from The Globe - the spring season isn't providing evidence of a turnaround...

    http://www.boston.com/business/articles/2009/05/27/home_prices_sales_plunge_in_bay_state/

    Good luck all!

    Finance Mike
     
  22. You have chosen to ignore posts from DrinkBeOnMe. Show DrinkBeOnMe's posts

    DUDES

    Your vaporized dudes

    Gone dudes 

    Smoked dudes

    d-e-a-d DEAD dudes

    You must have REALLY REALLY pizzed of the mods dudes

    Scary dudes 

    Glad i aint you two dudes dudes

    Drinks alone
     
  23. You have chosen to ignore posts from HomeHunter. Show HomeHunter's posts

    Re: When will real estate prices begin rising again?

    Prices have to stop falling sometime don't you think?


    April home sales fall the most in Northeast

    Home sales in the Northeast declined more than in any other region in April as job losses took their toll, the National Association of Realtors said yesterday.

    Northeast home sales fell almost 11 percent from April last year, and the median sales price dropped almost 10 percent, to $237,400. Nationally, sales of existing homes slipped 4.6 percent, without adjusting for seasonal factors. The US median sales price slid more than 15 percent, to $170,200.

    One reason prices in the Northeast are holding up better - with the exception of Providence - is foreclosures do not account for most of the sales, as they do in the West, for example.

    Home sales in all nine major Northeast cities fell in April, with seven recording double-digit declines. Median prices decreased across the region, except in Pittsburgh, according to The Associated Press-Re/Max Monthly Housing Report, also released yesterday.

    But sales surged from the previous month in every metro area, the report says.

    Homes priced under $300,000 are getting the most attention, said Coldwell Banker real estate agent John Adair. 

     
  24. You have chosen to ignore posts from DrinksBeOnMe. Show DrinksBeOnMe's posts

    Dude did ya hit the fenway dude well did ya

     
  25. You have chosen to ignore posts from HomeHunter. Show HomeHunter's posts

    Re: When will real estate prices begin rising again?

    Maybe things have turned around?

    home sales see biggest gain in 7 years

    Pending sales of previously owned U.S. homes in April unexpectedly saw their biggest monthly gain in 7-1/2 years, a report from a trade group on Tuesday showed, buttressing views the U.S. recession was easing.

    The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in April, rose 6.7 percent in April to 90.3 from 84.6 in March.

    It was the biggest monthly increase since October 2001 and it took the index 3.2 percent above its year-ago level in the latest sign the battered U.S. housing sector was stabilizing.

    Economists polled by Reuters ahead of the report were expecting pending home sales to rise 0.5 percent.

     

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