Posted on 09/19/2007 9:41:10 AM PDT by Hydroshock
NEW YORK (CNNMoney.com) -- Over the next few years, more than three-quarters of the nation's housing markets will suffer a decline in home prices. Many will experience double-digit hits in a forecast that has worsened considerably in recent months.
According to an analysis conducted by Moody's Economy.com, price declines will exceed 10 percent in 86 of the 379 largest housing markets. And 290 of the cities will experience price drops of 1 percent or more. All are median prices for single-family houses.
Nationally, Moody's is projecting an average price decline of 7.7 percent. That's a jump from the 6.6 percent total price drop that the company was forecasting in June and more than twice that of last October's forecast of a 3.6 percent price decrease.
Many of the worst hit cities are in Sun Belt areas that experienced outsized home-price growth during the real estate bubble, according to Arnold Slesers, an associate economist at Moody's. The home price correction in many of these cities will be severe as unsold new homes and leaps in foreclosures add to already big inventories.
The Stockton, Calif., metro area, where Moody's predicts a 25 percent price drop, will be the hardest hit among the 100 most populated cities surveyed.
(Excerpt) Read more at money.cnn.com ...
/semi off topic.
That means 1/4 of the markets will be stable, or gain.
Our property gained 25% during 2005 alone. Why should I care about a 10% loss?
Hey, but what if they built with really strong styrofoam and chickenwire? ;-)
I recently sold my house & am renting until this whole thing shakes out.
Maybe I’m looking at this whole thing wrong. But for what it’s worth.......last time we had our home appraised, it came in at $550,000. We payed $215,000 for it seven years ago. If the value dropped 10%, that’s only $55,000. It’s still worth a lot more than we payed for it. I’m not that worried about it. Now, if we just bought it at $550,000 and it dropped $55,000, I might be worried. But.....it will come up eventually.........always does. The key is, did I do responsible financing?
And since people keep flooding into the Phoenix area, I'm sure we're solid for the long haul.
Bunk. It’s already been happening with declines of 10-15%. We are not going to see housing drop 30%.
You and others will be alright, but many who bought in the past 2 years will get shafted. Timing is frequently very important in business decisions.
Well, this isn’t all bad. I’m sure that my county tax assessment will drop as well. I mean, I was able to get them to drop my new home’s assesed value down to the purchase price- (rather than the 120% of purchase price they tried to assess it as “Market Value” just sixty days after the purchase ) so they’ll probably just keep dropping their “Market Value” tax assessments to keep up with the trend. /end sarcasm
Integrity in materials and craftsmanship has giving to the wayside too.
I was visiting a friend at his new $750,000 McMansion last year, and was astounded to see bowed walls, poorly fitted moldings and trim, and a cracked dry wall, with cheap plastic fixtures throughout the house. He got ripped off bad.
Of course, what really amuses me about this sitation is the guy that lives 2 houses down from this guy now has his house for sale (similar type, age, condition, size, etc) for $499K.
later read
If you don’t have to sell, this is a real opportunity to lower your property tax bill. I’ve always had to file a protest to get a reduced valuation however; the county NEVER lowers it on their own. My 2008 tax bill had a proposed a 3% increase in valuation from 2007. I was able to argue for a 9% reduction based on comparable sales normalized to square feet. Very profitable time spent.
I’m seeing that, too. It’s pretty bad when a house that’s 20 years old looks better than a new house. When we were buying 4 years ago, we looked at a few new homes, saw all the cheap and shoddy work and materials, and decided to stick to homes that were at least 10 years old and not in PUDs.
This is the problem. Expectations have been raisd and now most believe their house is worth what it was in early 2006. Sellers are also getting advise to either rent or just wait until the market improves. The problem is that there are better investments out there.
Sellers are not yet hurting enough and it's going to take at least another year before the market reaches bottom and begins to move upwards. Prices are going to move a lot lower and with increased inflation the real price of homes will drop still further.
I agree. In the market of the last several years, agents have encouraged owners to over-price their house, saying that people would pay more, because interest rates were so low. Now, owners keep the prices high, until forced to offer a more reasonable amount, because they know the buyer will undercut the asking price, so they want to start higher up. It’s all been built on smoke and mirrors, and now is starting to unravel (sorry about the mixed metaphors!)
All that misery sure sets your mouth watering.
There is an incredible demographic bubble and a lot of folks are going to be heading to assisted living homes, smaller homes, and homes with greater accessibility (i.e. not two story, no stairs, wide doors, etc. That should mean that large 4+ bedroom two-story homes will be coming on the market in record numbers, probably in excess of supply.
Therefore, I fully anticipate a supply demand imbalance in such that high-end housing prices will drop. In the longer term as the baby boomers die off, either their kids will be getting inherited money and investing in bigger homes or the hospitals, doctors and nursing homes will clean out the estates near the end of life.
The opposite thought that I have is that there are lots of forces at work right now that all seem to be increasing the price of a home that do not appear to be stoppable! For example in the new National Electric Code 2008 version there are electrical code changes that will add substantially to the cost of a new home (tamper proof receptacles, AFCI outlets, etc.).
In a like manner most utilities are charging ever increasing hook up fees for new construction associated with water, roads, sewage, electrical, and other connections.
Finally, the whole "green" thing as is seen in LEED's and Green Building Council requirements is raising the costs of housing and commercial real-estate. That and the regulatory cost of permitting new housing developments will tend to raise the "cost" of a new home, so much of this will also raise the "value" of an existing home to a "typical consumer."
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