Posted on 06/30/2010 2:46:10 PM PDT by blam
House Prices Are Still Too High And They're Going To Tank -- Ritholtz
Henry Blodget
Jun. 30, 2010, 11:47 AM
We had Barry Ritholtz on TechTicker yesterday. He's still a big bear on housing...
(go to the site of to article to view a video)
We're on our way to a second leg down in housing prices, says Barry Ritholtz, writer of The Big Picture a founder of investment research firm Fusion IQ.
Why?
In short, because house prices are still too high.
Even after a plunge of more than 30% from the 2007 peak to the 2009 trough, house prices still did not fall to their long-term "fair value" level relative to incomes and rents of the past century. Over the next year or so, Ritholtz expects prices will resume their fall and drop at least another 10% before bottoming.
What are the factors that will continue to drive prices down? Mainly, an ongoing imbalance of supply and demand.
Basically, we still have way too many houses for the current level of demand. It's true that houses are more "affordable" than they have been for decades, but many of the folks who might be interested in buying houses have lost their jobs or are working off huge debt loads accumulated in the past. And that means that they're not queuing up to buy still-over-priced houses again.
Normally, after a bubble, prices not only return to the mean but crash right through it, and Ritholtz thinks that that may be possible again this time.
[snip]
(Excerpt) Read more at businessinsider.com ...
Housing prices fall, yet my property tax continues to skyrocket.
Fight your county tax assessment. I did and got them to knock off $42K from my appraisal which will save me about $800 per year!!
Prices haven’t gone down that much around here. Fantasy reigns in some people’s view of the world.
I feel sorry for people who are desperately trying to sell their homes.
My assessment dropped 20K this year, 13K last year. I am officially underwater with my mortgage, and starting to worry. I can now easily cut my housing costs in half by renting and walking away. How long until I do that? I would think that another year will push me out of my home if the economy does not bounce back. It will soon be a choice of paying my debt or eating financial crow and hoping to live another day. Lost 50K in gross income last year, and am on track to beat that this year.
Add to the drop in house prices the 3.8% tax on “unearned income” hidden in Obamacare that will apply to the full selling price of the home and home owners will have even less equity when they sell. We all may soon be getting our housing assignments from the federal Ministry of Housing just like in the old Soviet Union.
You sir officially made me feel better.
You sir officially made me feel better.
I have a buyer with a pending offer of $265,000 (house listed for $300,000-seller paid $365,000). well, appraisal came in today at $250,000. Prices continuing to drop...so we’re forced back into the negotiating process. Can’t close anyway since FEMA extension hasn’t been approved by the Senate yet (house in flood zone)...they are way too busy with Kagan; then congress recesses after tomorrow. Getting harder and harder to make a living as a Realtor.
I heard they extended the house purchase credit again.
“Add to the drop in house prices the 3.8% tax on “unearned income” hidden in Obamacare that will apply to the full selling price of the home and home owners will have even less equity when they sell. “
This is not correct.
It applies only to the sum beyond the profit of $250k (twice if married). I assume there are indeed few single people who bought a house long time ago (e.g. at $50,000) and can now get $300,000 for it so they would have to pay the ObamaCare tax of 3.8% of that 50,000.
For most people, this is not an issue (especially married people who are allowed $500k capital gains before 3.8% tax kicks in)
I’m sorry to hear that. Having to sell merchandise @ 80% off gives me a little taste of the frustration you must be experiencing, since a business is certainly not one’s home. I pray everything improves for you.
Life is risky; sometimes that’s good and sometimes, not so much.
Good.
That's a nice way to make sure that homes are being purchsed only by people who can afford them.
Wonder what land prices have been doing? I’ve been thinking of buying land, building on it later.
In Santa Barbara? What goes for $185K in Santa Barbara? Is it a condo? I'm not picking on you, just curious, that's all. That is a NOSEDIVE! Yipes.
it passed the House
still to go to Senate
only extends effective date to closing
original purchase agreement had to be signed by May 31 - no change there
like most fedgov programs it’s loaded with fraud
over 1200 people in jail have received it
most of them are likely members of the Baraqqi Coalition
http://money.cnn.com/2010/06/23/real_estate/money_stimulus_fraud/
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