Posted on 09/15/2010 4:28:17 PM PDT by DeaconBenjamin
The trouble with many of the "indicators" we report is that some are pretty current and others are severely lagging. Home sales are generally the former and home prices the latter.
That's why, given the combination of the expiration of the home buyer tax credit and the increasing number of loans moving to final foreclosure, we knew that home prices overall would take a hit, but it would take a while.
Well we're here.
Two new reports out today prove the consequences of oversupply of organic inventory (12.5 months on existing homes in July according to the National Association of Realtors) and the shadow inventory of foreclosed properties (estimates vary widely and wildly). CoreLogic's Home Price Index shows home prices "flat" in July as transaction volume continues to decline. "This was the first time in five months that no year-over-year gains were reported," according to the release. In June, prices were up 2.4 percent year over year. In addition, "36 states experienced price declines in July, twice the number in May and the highest number since last November when prices nationally were still declining."
And there's the rub.
Prices have been recovering since last Fall, largely thanks to the artificial stimulus of the $8000/$6500 home buyer tax credit. But prices were also benefiting from a slight bump in confidence in the housing market, fed by an apparent drop in the foreclosure numbers. In reality, the foreclosure numbers were dropping only because banks and states were delaying the process, as they tried to cram as many borrowers as possible into what we now know is a largely unsuccessful government-backed mortgage modification program.
Now home buyer confidence is back in the dumps, which is clear from another report out today showing that for the 3rd straight month the percentage of home sellers on the market who have slashed their asking prices at least once has gone up. Twenty-six percent of sellers on the market in August, according to Trulia.com, had lowered their expectations, and hence their prices. Sellers on the market today have cut $29 billion off their collective home equity.
We spoke to two sellers in Northern Virginia, Stephanie and Gabriel Mikulasek, who have dropped their asking price by $21,000. "We thought it was the value of the house that we could probably get, if the market would pick up a little bit, and people were a little positive," Gabriel told us. "What we found out is that the market is pretty slow; people are very hesitant to make bids, so we decided to make it a little more attractive and lessen it, and see how it goes."
They say today's buyers are only looking for great deals, so if you price the home at its actual value, nobody's interested. You have to go below.
Some of you responding on the blog yesterday said that your markets are just fine, even seeing competition in offers again; I'm sure this is true in many local areas. The trouble is that those areas are in the vast minority. Unless we see a marked, widespread increase in home sales over the next several months, prices will go from flat to down once again.
My brilliant neighbor - who is selling her house which she purchased four years ago (height of market prices) and buying a house back in her home town(lowest prices) - is calling it *HOUSE SWAPPING*.
She is taking a loss of $50K but saving $50K on the new home.
It’s all relative.
“...if you price the home at its actual value, nobody’s interested. You have to go below.”
This is known as being delusional.
yup my property is worthless...but county has not lowered appraisals
We did the same thing, downsized but upped quality now that kids gone, pulled out all our equity, 30 yr fixed loan sub 5% rate, expect to pay back with Baraqqi minibucks.
More evidence of hyperinflation?
****pulled out all our equity****
That EQUITY is the key.
they need to revisit bankruptcy law and allow for lien stipping.
It is ALREADY allowed for commercial property.
It is ALREADY allowed to strip off complete second mortgages on homes.
Home prices are based on a fraud and need a reboot.
They’re getting their reboot.
There are approximately 8 million foreclosed homes currently held by banks. 8 million homes. That is really a stunning amount.
I wouldn't look for homes to drop much more in CA, at least in the desirable areas along the coastal plain. Might happen in San Berdo or Riverside....
Burn baby burn!!!!!!!!!!!
Uh, that's an illogical statement. Actual value is what you can sell for. If you can't sell it for its "actual value", then that is not its actual value.
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