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Not to mention haven't home prices been rising the last few months?
Honestly I look HARD to try and see any trend in pricing and activity near me and the shear dearth of patterns in the activity is the biggest obstacle to getting a solid read on where the trend is moving.
Through my various sources both commonly available and sort of 'home grown' I just do not see ENOUGH consistent numbers sales of homes in the Chicago suburbs to decode what is happening with prices / values.
There is certainly was (is?) some 'pressure' at lower price points as folks that want / are able to take advantage of first time buyers credit do so. Though even THERE the number of "ready willing and able" buyers that typically buy the kind of houses that appeal to first time home owners IS DOWN from the peaks of years past. Some of this might be pure demographics -- the shear numbers of people in "housing buying age groups" varies and if hard to quantify until AFTER these folks get sorted out into "renter" "still students" "live at home" and other categories that BYPASS NAR type buyer surveys. That comes from BLS and HUD and other Dept of Commerce reports that tend to move slowly. Certainly the employment picture for such buyers AND the kinds of loans they can get are factors, but there are "supply side" issues too that ought to be talked about.
The past DECADE or more has seen MANY people alter the kinds / numbers of houses that typically attract first time buyers. Builders were generally putting up places that are were larger than first times would be attracted to. (I seem to recall some poster on the forum here, in maybe AZ, saying they wanted to turn a regular old 3+ bedroom place into much more open "hip" place as they did not want to be reminded that they do not yet have kids on their radar -- I suspect that may be a growing segment in many areas...) Still MOST buyers are somewhat family oriented. Or at least think they want space that is bigger than rental complexes. Flippers have aggressively expanded and improved even the smallest cheapest homes to respond to this desire. Even regular old home owners did this as the DIY/HGTV push has had people feel that improving ones' home is pretty much a must. (and it sorta is...) That has altered the pool of homes that appeal to people, but not so much that the first time buyers don't recognize they CAN sometimes go from "getting a lot for their money" to "overbuying" in the blink of eye. Thus the stats on what PRICES might be most appealing to first time buyers is hard to dissect in terms of all the details of sq feet and bedroom count.
The mix of homes that is "actively marketed" is in many ways OVERLY BROAD yet UNDER-APPEALING. Let me illustrate. Due to the forces that I have mentioned above there is more diversity of size /style / age / price in many neighborhoods than ever before. The glut of "high priced" homes that truly deserve to be priced at the point listed stands in marked contrast to the motley mix of stuff that "needs work" or "ought to be torn down". None of these options is terribly appealing for different reasons -- the high priced houses require a buyer with unsinkable confidence that they are immune from shifts in the market AND employment. Pretty rare. The low priced places requiring work pretty much need a similar buyer OR someone that is a bit desperate and simply willing to gamble at a lower stakes 'table'. The places that "ought to be torn down" have the additional burden of being a vivid reminder that "timing is everything" as more than few of these are owned by would-have-been-flippers. This is certainly influenced very heavily by what I see in my VERY local view, but I have made efforts to cross check this with friends in areas a bit further afield and I have confidence these supply issues are somewhat widespread.
So what you have is prices being reported for the MUCH SMALLER number of well priced homes that are in 'acceptable' condition but far less 'grand' than the top of the line prices that SEEM to have been thrown up virtually everywhere. Everyone knows that the bigger a pool of data the more accurate it can be to determine trends. The small number of sales should be "spikier". From what I have seen this is undeniable. I have not bothered to put the data I have into a stats package but I have eyeballed it and almost without exception the impression I get is both month-to-month and broader totals have larger variations that ever. Towns /zipcodes that might be up in price are down in volume. Or the reverse. Or both move up or down.
And that will likely happen for quite a while as the lender slowly release their shadow inventory to the open market. Painfully inch forward with short sales. Eventually "throw the bums out" through forced evictions / full blown foreclosures. Things will not be 'clear' for quite a long time AND the political forces to TRY and keep a happy face on every thing will be more difficult if this is not handled VERY carefully...
Not going to happen, the government and FED has made it clear they are going to support the housing market. They can't keep prices inflated forever, but they can drag out the correction for many years Japanese style.
The rapid collapse seen in 2008 was actually atypical, real estate is usually pretty sticky. Nobody wants to buy when prices are declining 2~3% a month, but most don't notice if prices decline .3~.5% a month.
no we can't, because we don't have a surplus and once "people" stop buying our treasuries, we can't actually do anything.
real estate was selling way too high above earnings, but the government doesn't want people to see that because then they will see the actual wealth destruction that has occurred. (and for the average american their wealth is / was tied up in their housing value as their greatest asset). instead, the government is helping the banks to "hide the losses". once this wave of building stopped to accommodate all the illegal immigrant demand, the upscale housing demand, and the refinance home project demand, all available with easy money, those jobs and that economic boom disappeared. how many people think it is coming back really? keep in mind that a recent projection by Deutsche Bank said that a whopping 48 percent of all US home mortgages will be underwater or "upside-down" by early 2011.
There have been bigger "busts" locally in places like CA and TX and OH in generations past. It is not so much that things won't "ever" come back just that the magnitude of the reversal in SO MANY places means that the timeframe for things to markedly improve is just unknown. It certainly WILL NOT happen in 12 months, as we are past that point now. 24 seems far too short. But 36? 48? 60? 84? At some point prices will increase solidly again. Really. They will. It is a bet I would gladly make, but the pay out is hard to manage!
If a crash happens it will signify that the economy is actually improving. High real estate prices reflect a dangerously leveraged house of cards that will collapse or be set on fire by hyperinflation. I am a supporter of the hyperinflation point of view and expect it to be the end of the US dollar.
When Germany had hyperinflation real estate prices actually fell due to the value of money evaporating. Even in the 70's I remember house prices falling due to high inflation and reduced disposable income.
There have been bigger "busts" locally in places like CA and TX and OH in generations past. It is not so much that things won't "ever" come back just that the magnitude of the reversal in SO MANY places means that the timeframe for things to markedly improve is just unknown. It certainly WILL NOT happen in 12 months, as we are past that point now. 24 seems far too short. But 36? 48? 60? 84? At some point prices will increase solidly again. Really. They will. It is a bet I would gladly make, but the pay out is hard to manage!
well, that isn't a bet that i am willing to make. the part you are overlooking is that our currency is being DEVALUED while this housing crisis is going on. americans have less purchasing power and now the banks are increasing their rates on the credit cards (which the recent legislation allowed with its adjustable rate clause). when will the federal reserve start to withdraw the liquidity? we have a country with high credit card debt, about to be screwed over yet again after bailing out wall street once. i fail to see how anyone can not address this as a problem going forward. the jobs are disappearing and our government refuses to even address the issue!
manufacturing is cutting costs by cutting jobs (which does temporarily help their bottom line), but when more people are unemployed just who will buy their products?
Our economy, due to the loss of industrial wealth creation, has been actually declining for a couple decades. What little wealth that has been created has been absorbed by the lenders leaving 3/4 of the American households with much more debt than assets. The building and housing boom was a financial trap designed to make certain everyone had a mortgage they had to pay off even after the value of the house collapsed. The people initiating the mortgages were paid on a commission basis and never actually owned the mortgage so they "encouraged" people (actually lied) to sign of on loans they could never afford.
Overall the economy of the last couple of decades has served as a means of concentrating wealth from the people that created it to the people that control it. These economies have happened before and, before governments became willing to interfere with financial markets, resulted in frequent collapses. I fear this economic decline will, due to government interference, effectively never end for the United States. We no longer have the internal wealth generation capacity to recover because of huge oil import costs, wasted expenses of continuing our Imperial Wars and the ferocious export of our industry.
We could recover if we were willing to protect our industrial base with countervailing tariffs, control the level of immigration and institute a progressive income tax with rates similar to the 1920’s. These steps, along with changing our economy away from imported energy to home grown and saving the money for domestic investment, would restore our nation to economic stability.
I doubt this will happen because most people are unaware of the income transfer to the upper 1% (The Great Rip-off) and the way this class controls our government for their own benefit. The owners of this country will continue to do extremely well as the rest of us sink into a post industrial slump at near poverty levels.
Our economy, due to the loss of industrial wealth creation, has been actually declining for a couple decades. What little wealth that has been created has been absorbed by the lenders leaving 3/4 of the American households with much more debt than assets. The building and housing boom was a financial trap designed to make certain everyone had a mortgage they had to pay off even after the value of the house collapsed. The people initiating the mortgages were paid on a commission basis and never actually owned the mortgage so they "encouraged" people (actually lied) to sign of on loans they could never afford.
Overall the economy of the last couple of decades has served as a means of concentrating wealth from the people that created it to the people that control it. These economies have happened before and, before governments became willing to interfere with financial markets, resulted in frequent collapses. I fear this economic decline will, due to government interference, effectively never end for the United States. We no longer have the internal wealth generation capacity to recover because of huge oil import costs, wasted expenses of continuing our Imperial Wars and the ferocious export of our industry.
We could recover if we were willing to protect our industrial base with countervailing tariffs, control the level of immigration and institute a progressive income tax with rates similar to the 1920’s. These steps, along with changing our economy away from imported energy to home grown and saving the money for domestic investment, would restore our nation to economic stability.
I doubt this will happen because most people are unaware of the income transfer to the upper 1% (The Great Rip-off) and the way this class controls our government for their own benefit. The owners of this country will continue to do extremely well as the rest of us sink into a post industrial slump at near poverty levels.
i agree with a lot of this post, although it is unfair to totally absolve the people who lied on their applications. my mom's neighbor bought a house with zero money down, borrowed 350,000 dollars against the house over a period of time, (who knows where that money went) and then defaulted on the loan and continued to live in the house rent free until eviction was completed. the house, interestingly enough, is still not on the market.
i sold a house, which was later foreclosed on (the owner had lied about income on her application as well), and that house is not on the market either. these banks are sitting on these houses and this is a ticking time bomb. people are still living in these houses, not paying rent and damaging the properties, while the banks continue to pretend that they have the value that they had before the collapse. our government has turned this mess into a real CF. how can you rebuild an economy on lies?
Floridasandy - I agree that many of the houses were sold to people that lied on the application. I wonder who told them it was OK to do it. My first suspicion would be the non-bank mortgage company commission salesman that knew he would never be held responsible if the loan defaulted.
What has really changed is that houses are no longer an object of speculation but are being sold as a dwelling for the owners. There is no longer any capital gain to be made speculating in housing. The overhang of bank owned houses being kept off the market to support current prices guarantee that speculators will loose. This is not entirely a bad thing. It makes more houses affordable to people that just want someplace to live.
I expect to have my mortgage paid off in a few years. I will continue to live in this place until the New England winters drive me out.
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Very hard to say that...
). when will the federal reserve start to withdraw the liquidity? we have a country with high credit card debt, about to be screwed over yet again after bailing out wall street once. i fail to see how anyone can not address this as a problem going forward. the jobs are disappearing and our government refuses to even address the issue! 
