Posted on 02/09/2010 9:56:11 PM PST by The Magical Mischief Tour
CHICAGO (MarketWatch) -- One in five housing markets entered a second leg of home price declines in late 2009, after showing price increases for nearly half of last year, according to a report released Wednesday by Zillow.com, a real-estate Web site.
In 29 of the 143 markets tracked by the site -- including Boston, Atlanta and San Diego -- prices flattened or began to decrease again in the second part of last year, after five or more months of consecutive monthly increases, according to the site's fourth quarter real-estate market report.
Home prices in another 29 markets, including Los Angeles and New York, increased each month throughout the fourth quarter. But the rate of increase slowed from November to December in 21 markets, according to the data.
Nationwide, home values fell 5% in the fourth quarter compared with the fourth quarter a year earlier. Values fell 0.5% from the third quarter of 2009.
"While we have seen strong stabilization in home values during 2009, there are clear signs that they will turn more negative in the near-term," said Stan Humphries, Zillow's chief economist, in a news release.
"What we saw in mid-2009 was a brief respite from a larger market correction that has not yet run its course," he said.
(Excerpt) Read more at marketwatch.com ...
With all those dicey mortgages going blooey, who’s surprised?
Millions more houses will foreclose in 2010, as the five year ARMs taken out at the peak of the market (2005) start to adjust.
Note, houses that are empty (foreclosures) will sell cheaper than occupied houses in any event.
The question I have is how much more do they have to drop? I was looking at a beach house recently. Prices have dropped back to about 2004 levels (only about a 22% decrease), but someone recently suggested to me that 2000 levels might be a more realistic bottom, even though that represents about a 60% drop from the highs.
My guess is good as any. Watch the foreclosures. When they begin to stanch, then jump for your prize house.
Housing is on the precipice of a double dip. Record foreclosures mounting and climbing daily. Unemployment climbing to historical levels despite the BLS’s best attempt to mask, torture and twist the stats into “good news”.
GDP numbers that are made up of mostly government spending and artificial stimulus, not real sustainable consumer spending.
Were in deep $hit.
Business is scared of the anti-business establishment socialist who control both houses of Congress and the WH. Who all say one thing and continue to do another.
The fear that the economy has stalled and is slowly sliding backwards and the idea that these clowns are in-charge has business terrified. They realize that if faced with another punch in a double dip recession it could spell mind numbing catastrophic long term disaster. Because of the way Bambi and his merry band of Socialist will most certainly react.
The jobs bill is a joke, a pork menu for lobbyist nothing more.
If we fall into another pit it will cripple the economy to a point that might not be recoverable and business knows this. Until we have saner, more intelligent adults running the show, or at a minimum enough Republicans in COngress to block the RAT agenda nothing is going to change.
But its a long time till November and alot of damage can be done to this economy, which is still on life support.
A good buddy of mine absolutely stole a sweet house on the Florida coast, in Seaside, which is a very, very desirable area. It was originally spec-built to sell for $1.2 MM and he paid $400K for it. Completely furnished, btw. But he had cash cash, he wrote a $400K check and beat out others with slightly higher offers but requiring mortgages. At the peak, *lots* in his neighborhood of equivalent size sold for as much as $570K. Empty lots.
As far as desirable beach areas, there’s a certain point past which they ought not to decline, but as far as regular unremarkable housing, it’s very common for these things to go for well under replacement cost. I am seeing quadruplexes in and around Reno going for $50/sq ft, and those are not junkers, either, they are recent builds (post 1995, say) in apparently (from what I can tell from pix) very decent shape. OWC on some. I cannot tell you anything about the desirability of the areas they are in, but you cannot acquire land and build habitable buildings with occupancy permits for $50/sq ft.
The general rule is that you are near a price bottom when investors can buy houses and rent them out at positive cash flow rates.
A “bottom” in prices does not mean that prices will rebound back up; home prices in Japan have flatlined for over 20 years now. Could happen here.
With 19 million vacant homes and 77 million Baby Boomers hitting retirement age, there’s certainly no *rush* to buy a vacation home.
Watch the auctions. Pick up something cheap over time. Don’t pay a real-estate commission...that’s like paying retail. You want wholesale; from auctions.
Not really worth your time to chase bank-owned foreclosures and short sales, either...as DC is mucking that up with TARP and bailout money such that the banks get a better deal by keeping the non-performing real-estate instead of dumping it at a loss.
Just property auctions. Buy nothing else.
Until homes are price at 3 to 4 times the annual income of people living that area. That’s about all that can reasonably be afforded in the absence of hocus pocus financing. Some areas are still waaaaaaaaay over priced.
Watch the mortgage rates.
By such things as the government buying its own treasuries to keep interest rates artificially low, and by the homebuyers tax credit (which only serves to increase the price of houses by giving people up to $8K more to throw at real estate), the government has been doing what it can to artificially keep the price of homes inflated (which keeps the balance sheets of the banks looking good and helps to reduce the number of homeowners being so underwater that they’ll mail in the keys and walk away).
When the government finally ends the homebuyers tax credit and stops buying its own treasuries and lets interest rates rise, then the price of homes will fall even more.
That’s the time to buy.
If you buy now, better plan on staying in the home for some time, because when the government stops its artificial support, you could owe more on the house than it will then be worth, and would only be able to sell at a loss.
I’ve been looking for drop to happen this march as Alt A start to hit the fan.
Reno is back to 2002 prices. Bought a home there in 2002, sold it in 2008 for about $100k off the high values, now it is back to the 2002 price 18 months later. Still made 100k off it.
[The general rule is that you are near a price bottom when investors can buy houses and rent them out at positive cash flow rates.]
Exactly. Of course, that was the rule that was severely broken in the bubble.
It is natural for home buying to increase in Spring. The female “nesting” instinct. And then drop off later in the year. Stronger year round markets in recent years were signs of bubble economics, not natural human behavior. Let’s see what happens this spring.
How did you like living in Reno?
I kind of liked Lake Topaz (which is only a small subset of “Reno”) and Minden (which I understand is a high-priced enclave) and generally found the area “OK” though fairly beat-up; but not especially compelling. I live in No. CA now (which I utterly hate) and I dislike the ride on 80 to Reno. As I contemplate an exit from California, Nevada = somewhat attractive, but I think TX would be better.
Right now I’m reluctant to buy or own property. The problem I have with owning some of those quads in Reno is what I call “the $450 effect” which means: a bad tenant can do six months of $450/month damage in about 10 minutes.
That sentiment is my indicator that speculative fever is not yet smashed.
Until housing reverts to its traditional role as a place to hang your hat, there will be no lasting bottom just dead cat bounces all the way down.
Here’s some good advice , it’s free and worth what you paid ... Beach/oceanfront will drop later than other properties as it is owned by wealthy people that are mostly unaffected by the slowdown... you might want to look for beach property where the owner is trying to do a short sale, they are either trying to just get out from under the property or they are inches from foreclosure... DO NOT BUY THE PROPERTY (prices will drop in the next few years) LEASE THE PROPERTY ,, GET A 10 or 15 YEAR LEASE SIGNED AT A DECENT PRICE AND RECORD THE LEASE AT THE COUNTY THE SAME AS YOU WOULD A MORTGAGE NOTE OR MECHANICS LEIN. There is a new federal law signed last May 2009 that forces foreclosing parties to honor existing lease agreements.
In 5 years buy the property at what will be the ultimate lows in pricing, perhaps you could include a purchase option in the lease at whatever the current mortgage balance is today... if we have inflation you could exercise the option and get the property REALLY cheap.
We’re down 50%+ in my part of Florida (we’re at 1998 pricing now) and I see another 20% or so in the cards due to deteriorating incomes.
Thanks for all the good advice.
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