National Home Prices Double Dip

[Samson]

...use Case-Shiller data you get a much longer timeline it shows the 1920s bubble being nearly as bad....

......
Looking to the future we can believe an additional 20% plunge to the floor we've had for half a century, or maybe a 50% drop down to the levels we had in the 20's and 30's.

Bleak.

I wonder if that's why it was called "The Great Depression."



The recent punge in home values cannot be compared with anything in the history of the US, even the Great Depression: Lord knows where the ramifications will lead, however here are my predictions:

Middle Class

Category A: The generation that bought first homes 2000-2008 will be immobile.

Category B: The generations that could buy homes after 2008 will instead rent (probably from the first category).

 

[Samson]

well at least you are still above water, a lot of peeps aren't, but that sux anyway.

As long as my rep power is higher than yours, I'll be happy.

If rep power makes a person happy, I need a lot of it.

More sex works too....

PM me,

 

[waltky]

Housing market still in the toilet...

Home values see biggest drop since 2008 in first quarter, Zillow says
5/9/2011 - Number of homeowners under water amounted to 28.4% of single-family homeowners

U.S. home values fell in the first quarter at the fastest rate since late 2008, real estate data firm Zillow Inc said Monday, suggesting that a bottom will not be seen until 2012 at the earliest. Zillow said its home value index fell 3 percent in the first three months of the year from the previous quarter, and was down 8.2 percent year-over-year.

The number of homeowners under water -- or, those who owe more on the mortgage than their house is currently worth -- amounted to 28.4 percent of single-family homeowners, representing a peak since Zillow began calculating the data in 2009. That was up from 27 percent in the fourth quarter of last year. Foreclosures also rose, following the moratoriums that had been in place in late 2010. In March, one out of every 1,000 homes was in foreclosure. Given all those factors, it is unlikely home values will reach a bottom this year, Zillow said, and the firm pushed its forecast out to 2012.

"Home value declines are currently equal to those we experienced during the darkest days of the housing recession. With accelerating declines during the first quarter, it is unreasonable to expect home values to return to stability by the end of 2011," Zillow chief economist Stan Humphries said in a statement. Almost all of the 132 markets covered by Zillow saw home value declines. Only Fort Myers in Florida, Champaign-Urbana in Illinois, and Honolulu, Hawaii, managed quarterly increases.

Home values see biggest drop since 2008 - Business - Personal finance - Real estate - msnbc.com

See also:

Housing downturn worsens foreclosure crisis
5/9/2011 - No end in sight to foreclosure quagmire

Four years after a wave of rogue mortgage lending sent the U.S. housing market into the worst collapse since the Great Depression, the devastating flood of resulting foreclosures shows no sign of abating. In some ways, the problem is getting worse. House prices are falling again, forcing more homeowners “underwater” — owing more than their house is worth. Lenders’ shoddy document practices have brought widespread court challenges, slowing the process and leaving millions of homeowners in limbo.

And the foreclosure crisis continues to weigh heavily on the fragile economy. “Right now, it’s the second-biggest drag on the economy after the surge in oil prices,” said Moody's Analytics chief economist Mark Zandi. Already some 5 million homes have been lost to foreclosure; estimates of future foreclosures range widely. Zandi, who has followed the mortgage mess since the housing market began to crack in 2006, figures foreclosures will strike another three million homes in the next three or four years.

Congress and the White House have run out of ideas to save those homes, he said. "There's no political appetite to do anything," he said. "So we're on our own." There were many causes of the foreclosure crisis — and plenty of blame to go around among mortgage lenders, regulators and, in some cases, the borrowers themselves. But as the crisis has accelerated it also has swept up families who, through no fault of their own, have lost or are in danger of losing their homes.

The government's efforts to stem the crisis are widely viewed as a failure. Its flagship foreclosure relief program, the Home Affordable Modification Program, has been hampered by confusion over its terms, lenders’ widespread refusal to forgive loan principal and a “trial modification” process that, in some cases, leaves homeowners worse off than when they entered the program. “The biggest problem with the program is that noncompliance is still rampant, and it’s not improving,” said Alys Cohen, an attorney with the National Consumer Law Center, which is lobbying for more effective foreclosure prevention programs.

More Housing downturn worsens foreclosure crisis - Business - Personal finance - Mortgage Mess - msnbc.com

 

[expat_panama]

Two observations from the graph: it doesn't look like housing cost are done correcting; it would have been impossible to look at that chart before the crash and not see a bubble.

Seems that way but predicting the future is a lot easier than being proven right. It's a lot safer to say that when prices plunged that way in the past they kept going down and then leveled for a few years before coming back up. Sure, there's no law that says it has to be that way, it's just a lot easier to believe that what's happened before is going to happen again, rather to believe that this time is different.

 

[007]

Well... now hold on a minute... didn't the baboon in the white house fix the housing market? I mean I regularly hear the dems talking about the "recovery." How could things possibly be getting worse? ...

Not a big fan of Obama, I've voted LP since 1980, but that was the clown college drop-outs in congress in his first two years and his big Wall St. contributors getting a quid pro quo of Geithner and Bernancke for bankrolling his campaign that screwed the pooch. Obama recognizes that he is an economic idiot and has done no worse than Bush in his own actions towards the economy which for a community organizer vs. an MBA is not bad at all.

I'd laugh, but I believe you're serious, to which I can only wonder what rock you've been living under.

No, Bush spent his share of money too, but no one, NO ONE, has come anywhere even CLOSE to spending the amount of money the kenyan baboon has, and it was all pissed away on 40 year old liberal pet projects, propping up big donars to the dems, socializing America and hundreds of new programs in the single largest expansion of government in the history of the United States of America.

No, there is no comparison between Bush and the kenyan baboon. The baboon is in a class ALL HIS OWN. He is the worst President in our history by such a wide margin, no one may ever catch him. I just hope we can correct all the things he's FUCKED UP in the time he's fraudulently held the office.

 

[william the wie]

...use Case-Shiller data you get a much longer timeline it shows the 1920s bubble being nearly as bad....

Thanks for the heads-up. From googling "Case-Shiller data table download" this may be what you mentioned--

The prices don't seem to show a '20's bubble, just a 20-year depressed market. The 07 peak is there and the CS numbers pretty much match the Fed's new 1 fam. stats that also spiked 60% above previous peaks.

Looking to the future we can believe an additional 20% plunge to the floor we've had for half a century, or maybe a 50% drop down to the levels we had in the 20's and 30's.

Bleak.

Good find, Ex-Pat but this is not the traditional graph I looked at it again this graph is probably adjusted for sq. footage differences and amenities which the original graph wasn't. 1896-1923 was the period in which the transition was made from full frame to nationwide balloon frame and possibly from brick to block in masonry. I'm not sure about the masonry part but I saw the remodeling of my grandmother's house and Dad pointed out the lighter framing grandpa put in in the additions in the 1910s and 20s. I do know that the transition greatly reduced the costs of construction and homeownership went way up 1921-6. It might well be a better graph if the change of homeownership as a percentage of the population was included.

Just like in the naughtly oughts the early 1920s saw a huge expansion in homeownership 21-6 and then it began shrinking until the late 1930s.

 

[Samson]

Two observations from the graph: it doesn't look like housing cost are done correcting; it would have been impossible to look at that chart before the crash and not see a bubble.

Seems that way but predicting the future is a lot easier than being proven right. It's a lot safer to say that when prices plunged that way in the past they kept going down and then leveled for a few years before coming back up. Sure, there's no law that says it has to be that way, it's just a lot easier to believe that what's happened before is going to happen again, rather to believe that this time is different.

"prices plunged that way in the past??"

The point of the thread is that prices for homes have NEVER plunged anything like this in the past.

We are in Uncharted Water with Gilligan at the Helm.

 

[william the wie]

Two observations from the graph: it doesn't look like housing cost are done correcting; it would have been impossible to look at that chart before the crash and not see a bubble.

Seems that way but predicting the future is a lot easier than being proven right. It's a lot safer to say that when prices plunged that way in the past they kept going down and then leveled for a few years before coming back up. Sure, there's no law that says it has to be that way, it's just a lot easier to believe that what's happened before is going to happen again, rather to believe that this time is different.

"prices plunged that way in the past??"

The point of the thread is that prices for homes have NEVER plunged anything like this in the past.

We are in Uncharted Water with Gilligan at the Helm.

Well you using a graph of median home prices as a function of median income in another thread got me convinced that a minimum drop of 59% from peak would be needed to stabilize the market. But that is based on all other things being equal, which of course they are not. People who lose their homes will in all likelihood be forced to migrate to places where wages, cost of living and rents are lower. So I suspect that home prices will drop more like 75% before localized housing shortages can restart the construction trade.

 

[Samson]

Seems that way but predicting the future is a lot easier than being proven right. It's a lot safer to say that when prices plunged that way in the past they kept going down and then leveled for a few years before coming back up. Sure, there's no law that says it has to be that way, it's just a lot easier to believe that what's happened before is going to happen again, rather to believe that this time is different.

"prices plunged that way in the past??"

The point of the thread is that prices for homes have NEVER plunged anything like this in the past.

We are in Uncharted Water with Gilligan at the Helm.

Well you using a graph of median home prices as a function of median income in another thread got me convinced that a minimum drop of 59% from peak would be needed to stabilize the market. But that is based on all other things being equal, which of course they are not. People who lose their homes will in all likelihood be forced to migrate to places where wages, cost of living and rents are lower. So I suspect that home prices will drop more like 75% before localized housing shortages can restart the construction trade.

People don't lose their homes because they decline in value.

 

[percysunshine]

I'm waiting for the strategic default wave to hit. At some critical number of either underwater mortgages 30%, 33%, 40% or 50% or REOs and shortsales as a part of the market the housing market will crash through the trendline heavily the real question is what measurement of trendline to use. Reversion to the mean in oz. of Gold or Silver, house price as a multiple of income, real dollars and other measures all give very different answers. Median house nationwide could go to $45K on house price as a multiple of income but that would just about collapse the west coast and northeast states setting off mass migration.

This is going to get extremely weird because a housing crash of this magnitude has never been seen before.

I believe this is what you're trying to say:

Holy shit Batman! It is all Bush's fault.

 

[Samson]

I'm waiting for the strategic default wave to hit. At some critical number of either underwater mortgages 30%, 33%, 40% or 50% or REOs and shortsales as a part of the market the housing market will crash through the trendline heavily the real question is what measurement of trendline to use. Reversion to the mean in oz. of Gold or Silver, house price as a multiple of income, real dollars and other measures all give very different answers. Median house nationwide could go to $45K on house price as a multiple of income but that would just about collapse the west coast and northeast states setting off mass migration.

This is going to get extremely weird because a housing crash of this magnitude has never been seen before.

I believe this is what you're trying to say:

Holy shit Batman! It is all Bush's fault.

How original.

 

[percysunshine]

I believe this is what you're trying to say:

Holy shit Batman! It is all Bush's fault.

How original.

Opportune anyway. I still have a problem with why this is such a mess. I mean, for everyone that bought a house, someone sold a house. Like any bubble, be it dot coms in the 1990s, or Florida real estate in the 1920s, it was a zero sum game...unless you held on too long. No value was created, nor destroyed in the grand scheme of things.

 

[Samson]

Holy shit Batman! It is all Bush's fault.

How original.

Opportune anyway. I still have a problem with why this is such a mess. I mean, for everyone that bought a house, someone sold a house. Like any bubble, be it dot coms in the 1990s, or Florida real estate in the 1920s, it was a zero sum game...unless you held on too long. No value was created, nor destroyed in the grand scheme of things.

Why it is a mess is because many do not accept responsibility for their investment.

And WHY SHOULD THEY?

The Govt bailed out Banks, right?

If I bought a house for say, $100,000 using only $20,000 of my own money, and now the house is worth only $50,000, why should I be the last looser in America to forfeit $50,000 while everyone else walks away from their home and only loses $20,000?

 

[percysunshine]

How original.

Opportune anyway. I still have a problem with why this is such a mess. I mean, for everyone that bought a house, someone sold a house. Like any bubble, be it dot coms in the 1990s, or Florida real estate in the 1920s, it was a zero sum game...unless you held on too long. No value was created, nor destroyed in the grand scheme of things.

Why it is a mess is because many do not accept responsibility for their investment.

And WHY SHOULD THEY?

The Govt bailed out Banks, right?

If I bought a house for say, $100,000 using only $20,000 of my own money, and now the house is worth only $50,000, why should I be the last looser in America to forfeit $50,000 while everyone else walks away from their home and only loses $20,000?

Ha. The winners were those that put 0% down, traded up, and rolled the ARMs, and then sold when things started going bust in 2007. It was a big con game underwritten by Congress and will be financed by tax payers. The same thing happened in the S&L loan scam in the 1980s.

 

[Samson]

Opportune anyway. I still have a problem with why this is such a mess. I mean, for everyone that bought a house, someone sold a house. Like any bubble, be it dot coms in the 1990s, or Florida real estate in the 1920s, it was a zero sum game...unless you held on too long. No value was created, nor destroyed in the grand scheme of things.

Why it is a mess is because many do not accept responsibility for their investment.

And WHY SHOULD THEY?

The Govt bailed out Banks, right?

If I bought a house for say, $100,000 using only $20,000 of my own money, and now the house is worth only $50,000, why should I be the last looser in America to forfeit $50,000 while everyone else walks away from their home and only loses $20,000?

Ha. The winners were those that put 0% down, traded up, and rolled the ARMs, and then sold when things started going bust in 2007. It was a big con game underwritten by Congress and will be financed by tax payers. The same thing happened in the S&L loan scam in the 1980s.

Vegas doesn't exist because there are many "winners."

And people buying a home for $100,000 were not trying to get rich, however they didn't expect to be financially saddled with such a huge fuckin' loss either, particularly when financial institutions that lost BILLIONS got their asses pulled from the fire.

 

[percysunshine]

Why it is a mess is because many do not accept responsibility for their investment.

And WHY SHOULD THEY?

The Govt bailed out Banks, right?

If I bought a house for say, $100,000 using only $20,000 of my own money, and now the house is worth only $50,000, why should I be the last looser in America to forfeit $50,000 while everyone else walks away from their home and only loses $20,000?

Ha. The winners were those that put 0% down, traded up, and rolled the ARMs, and then sold when things started going bust in 2007. It was a big con game underwritten by Congress and will be financed by tax payers. The same thing happened in the S&L loan scam in the 1980s.

Vegas doesn't exist because there are many "winners."

And people buying a home for $100,000 were not trying to get rich, however they didn't expect to be financially saddled with such a huge fuckin' loss either, particularly when financial institutions that lost BILLIONS got their asses pulled from the fire.

I do not disagree with you at all. Another episode of Government trying to social engineer outcomes leading to unintended consequences. Which mostly involve screwing the average joe. That said, it was just a transfer of wealth .. to the politically connected.

 

[Toronado3800]

Supply and demand drive home prices. Let's face it, monthly payments are what folks see though. This is where lowering the interest rates raises home values artificially. Another thing is counting other sources of income and allowing a greater percentage of a loan to be borrowed.

Sure enough though once all the tricks are played out supply and demand come back into play. Seems our existing houses just are not falling apart as fast as new houses are being built.

We can either decrease supply by tearing down some houses which are obsolete. Big trouble to be pro-active about it. Can try to tighten up funds for old home rehab.

Or we can increase demand by making it a little easier for those willing to work to be citizens instead of sending the money back home.

 

[Samson]

Ha. The winners were those that put 0% down, traded up, and rolled the ARMs, and then sold when things started going bust in 2007. It was a big con game underwritten by Congress and will be financed by tax payers. The same thing happened in the S&L loan scam in the 1980s.

Vegas doesn't exist because there are many "winners."

And people buying a home for $100,000 were not trying to get rich, however they didn't expect to be financially saddled with such a huge fuckin' loss either, particularly when financial institutions that lost BILLIONS got their asses pulled from the fire.

I do not disagree with you at all. Another episode of Government trying to social engineer outcomes leading to unintended consequences. Which mostly involve screwing the average joe. That said, it was just a transfer of wealth .. to the politically connected.

Conspiracy Theory.

There is no "Transfer of Wealth." From where? To whom? What shell game was played?

No one REALLY lost anything, unless EVERYONE walks away from their house, and that's not gonna happen: You GOTTA LIVE SOMEWHERE, right?

Sure there's plenty of people who will use any excuse to run from their committment, but I don't think the critical mass of these will outweigh those that will say, "Yeah, this sucks, but it isn't the end of the world: I'll need to get another job; kids will need to work to get through school; we won't be flying to France for vacations."

 

[percysunshine]

Vegas doesn't exist because there are many "winners."

And people buying a home for $100,000 were not trying to get rich, however they didn't expect to be financially saddled with such a huge fuckin' loss either, particularly when financial institutions that lost BILLIONS got their asses pulled from the fire.

I do not disagree with you at all. Another episode of Government trying to social engineer outcomes leading to unintended consequences. Which mostly involve screwing the average joe. That said, it was just a transfer of wealth .. to the politically connected.

Conspiracy Theory.

There is no "Transfer of Wealth." From where? To whom? What shell game was played?

No one REALLY lost anything, unless EVERYONE walks away from their house, and that's not gonna happen: You GOTTA LIVE SOMEWHERE, right?

Sure there's plenty of people who will use any excuse to run from their committment, but I don't think the critical mass of these will outweigh those that will say, "Yeah, this sucks, but it isn't the end of the world: I'll need to get another job; kids will need to work to get through school; we won't be flying to France for vacations."

Well, from the taxpayers to the underwriters. It was called TARP.

There was also a transfer of wealth from people who just wanted a home, to flippers. Come on, when the most popular cable TV show in America is called 'Flip This House', what do you think is going on? It is a classic bubble. The speculators that got out fast enough did just fine.

 

[Kevmo]

Hi,

I've been thinking about the housing thing today after the news broke, and I have a new goofy, uneducated, came-up-with-it-today, no formal training, theory...

Housing is now going through a "Reverse Bubble." (I looked this term up, since my brilliant mind came up with it, and apparently it is occasionally used by amateurs like me.)

Here's my theory: The population continues to expand - this is a mathematical certainty. But building new houses costs a LOT more than you can buy a "used" house now. Eventually, all these houses are going to be purchased, and then there will not be too many houses left. So we have to start building them. For like, double to triple to quadruple, etc... what we're used to paying. Suddenly, all the existing inventory is going to go through the roof.

I mean, I just bought a giant 6 bedroom brick house for $20,000 -- but I had to insure it for $750,000 because nobody could EVER even come CLOSE to rebuilding it for $20k.

So that's it. Very simplistic.

I wonder how long it will take?

Kevmo