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 ...
Building inspection relates to safety issues. However details like concrete quality, nailing patterns, electrical materials, are often overlooked by inspectors for different reasons, usually pressure from bully contractors whining, or an inspector with too much experience who is freinds with everybody, and let things slide and making engineering decisions
One of the first lessons I learned in building inspection is that if you do too good of a good job you will be out of work and replaced. You can only stop work for major engineering problems, not quality details. The inspector can only do as well as the owner architect and contractor will cooperate.
Maybe, but if you don’t plan on selling within the next 3 years it really doesn’t matter. In fact, it might be a good thing if you then get your property reassessed at a lower valuation :)
Those 750k mcmansions are still selling well in my part of se pa. They are buying crap built by illegals which are slapped together in 3 weeks.
I can only hope for a slowdown in my neck of the woods. I bought a classic, beautifully-built house 2 years ago and I could get about 6% more for it today than a year ago.
Great comments, KTM - the bldg code minimum should not be confused with quality standards. On your point about concrete, I know builders who didn't know their boys were cutting concrete with too much water, using cheap paint, etc. Lot of folks playing GC that don't know what they're doing. Maybe that will change with slower production rates.
Yup, I am ****ed.... :( I bought just under 2 years ago for $350. I am trying to sell now at $380 (just enough to cover costs of selling) and my house is now at over 100 days on the market. If I didn’t have to sell, I wouldn’t, but I’m stuck...
Long term my FRiend long term. You did just fine!
Lets see how that math works out for a $250,000 home...
Buy a home for $250,000
It goes up 25% or $62,500
Home is worth $312,250
Home goes down 10% or $31,250
Home is now worth $281,250
Owner has lost 50% of his paper appreciation.
Now lets look at the folks in trouble, which you are not...
Assume 0% down payment on an ARM.
Total equity in home is $31,250 in a home worth $281,250.
Equity is 11%. Can that person refinance?
Now to the reality at hand. Most homes in the Sacramento region, where I want to buy, are down to below year 2004 price levels. Many are off 25% or even 30% off peak. I don’t even need to re-run the math above to show that people who bought after 2004 are in trouble and the people with an ARM or Jumbo are in BIG trouble.
I won’t even get into all the people in your situtation who were foolish enough to pay 0% down and then tap that $62,500 paper appreciation for a home equity loan to spend. Because that would put them $31,250 upside down with NO chance to refinance while their ARM resest or the Jumbo comes due... BIG problem for them.
You may be in good shape losing 50% of your paper gain, but there are lots of people in bad shape because they won’t be able to refinance and will lose their home. BIG problem. If that happens to enough people in your neighborhood, look for your home to go down MORE than 10%, due to their foreclosure liquidations dragging down your home prices.
This may or may not be the case in your neighborhood. I don’t pretend to know your personal situation. I am just pointing out where this 10% drop in home prices can lead and that doesn’t even account for the fact that in places like California, Nevada and Florida, many homes have plunged more than 30% in value since their peak. And that means you had ot have AT LEAST 40% appreciation to break even on a 30% drop in value.
Maybe not you, but a LOT of houses in the Sacramento area are already selling for 30% less than they sold in 2005, and prices are still trending down. Some homeowners may see may see a 40% drop from peak before this is done.
Hovnanian’s 20% off fire sales shows just how fast homes can drop 20%. The day Hovnanian slashed prices of new homes 20%, all the neighbor’s who had paid full value took a 20% hit on resale value as well.
And where did this bit of wisdom come from?
Moody's Economy pulled it right out of their ass, just like all the other predictors of the future do.
BigMack
If the average is 10% loss in a geographic area, sure, some smaller neighborhoods may be more than 10%, some less. So?
But on the whole, I think housing values are being talked down, with people selling cheap because they've been convinced that their going to lose their shirt. I disliked it when the local MSM rag talked down real estate, and I don't like it any more when people preach the message of doom and gloom on FR.
The bottom line is that real estate is *still* the most secure investment that one can make, even better than gold I'm convinced. People don't require gold to live, but they have to live somewhere, even if they rent. So there is a bottom to real estate values, at least till the point where population shrinkage occurs, because existing real estate values will be set by the cost of new housing.
Because population shrinkage can genuinely tank real estate values, the biggest threat to the value of your home is the possibility that 12 million illegals may be sent packing, leaving empty houses and rental property with no one to buy them or live in them. The people who claim that sending illegals home will only cost you a higher price of lettuce don't have a clue.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.