Look at this graph, everytime when there's a burst, it lasted for more than 5 years.

Also It will bottemed out on the fifth year, not next year like the news saying.

I don't think anyone in the RE or investment/Wall Street world really has an idea as to what we might be facing.  The rhetoric on thinking the bottom is here sounds like the New Orleans Mayor on Saturday before Katrina at the Superdome. Here in Central Florida, we have inventory issues that could take years to unwind.  The longer it takes to stabilize, the more victims it will claim.  It was not the strom that destroyed New Orleans, it was the flood afterwards.  We will continue to have pricing pressure at least here in FL.

Nice Martin Wareing.

Always good to hear people in the business telling it like it is.

Martin: Nice to see another realtor posting with honesty on here~

In Phoenix, we are seeing foreclosures climb on the mls. Each month right now, about 2000 more foreclosures happen, sales are down, inventory is high, and prices keep sliding. The notices of future foreclosures are so high, that clearly this trend is still growing. By late fall, REO property will be the market.

I am afraid that is the next problem.... "dirty inventory", meaning bank-owned and we all know they will "sell it" to someone at some price.  Our Central Florida issues have 2 main issues... 1) rents vs. mortgage costs are still out of line and 2) we are currently selling at about 1,000/month pace and have been for 6 months with a backlog of 26,000 homes.  3 years ago, we were selling about 1700 homes/month with 3500 homes in inventory. OUr months ofo inventory don't look as bad as they might going forward because we average sale/inventory going backwards 12 months.  The inventory number has been pretty much the same for about 1 year, but our resales have slipped 35% in SEP when the ALT A line was removed from lenders.

I had heard and seen Phoenix was another are in the country with pressure on it. The sun will rise tomorrow, but we just have much cleanup work ahead of us that's all.

"we see whenever there's a burst, it lasted for more than 5 years."

And that's exactly why it make my blood boil when the drive by realtors pop in here with their "now's a great time to buy, you can't time the market" crap.  If anything, this downturn will be longer and more severe than anything seen in the past so what's the rush.  That said, there probably are some markets in the U.S. that didn't experience unsupported price appreciation over the last ten years where buying now makes sense.  Unfortunately, I don't live near any of those areas.

Remember, through all of this the builders are still building.  Because if they stop, their loans become due immediately.  Better to keep the loan open and build a house you know is going back to the bank than to stop and be out of a job.  So inventory will keep growing way past the rational point.

That is enirely fals Buy=Rent.  Once again, you have no clue what you are are talking about.  Builders do not have to keep building to stop the loan form becoming due.  They can simply play games.  For istance, the condo complex near my house has been under "construction" for the last 2 years.  The builder demolshed the exsting houses, then left, never to be seen again.  The builders can just simply take their time... spend 7 weeks demolishing..... 8 weeks building a foundation, and 8 months putting up the studs.  It's rather simple.  Donald Trump had dump trucks driving around in circles in Atlantic City to fool investors into thinking that he was actually building something, even though he was not.

Every time you open your mouth, you get dumber, Alps.

What about in areas unlike Phoenix, or the IE, or Vegas, etc.,  where there never was building to begin with and no building now and where *hang on to your hats* existing houses are selling and they aren't foreclosure or short sales and where the prices are actually going up (not by much but normal appreciation)?

What areas are those, exactly?  Just about every area that wasn't caught up in the initial boom was descended upon by equity locusts as the new "undiscovered" place.  Look at Idaho, for god's sake...

LOL B=R

Never Never Land and Splendaville came to mind for me.

emily,

Prices are crashing everywhere, albeit the worst places are Phoenix, the IE, Vegas, and South Florida.

When the Federal Reserve dropped interest rates in 2003 to 1%, and held them there for over a year it permitted everyone and their ugly cousin, in all four corners of the country, to have access to cheap credit. This virtually unlimited and open-ended access to credit inflated house prices because suddenly even the IHOP assistant manager could get a loan. It was like... free money just appearing out of nowhere.

The problem was that the massive demand increased prices so much that even with cheap credit housing became unaffordable, as measured by actual income. In other words: people could get the loan, but they couldn't afford to make the payments.

This is when lenders -- with the complicity of the real estate industry, appraisers, and anyone else who had a financial stake in getting the house sold -- began shenanigans such as "no doc" loans, no downpayment loans, ARMs, and outright fraud. 

The Case-Schiller housing price index indicates that housing prices were inflated in every market in the country (at least, every market it measures). And some estimates say that there are nearly 20 million dwelling units for sale in the country, with millions standing empty.

This was truly a national, even international, housing price bubble. And we're just beginning to see those prices deflate.

"Donald Trump had dump trucks driving around in circles in Atlantic City to fool investors into thinking that he was actually building something, even though he was not."

In the mean time Trump is peddling his clothes line in Macy's... "Trump's Signature Collection."
and coming to your local grill with his line of steaks... http://www.trumpsteaks.com/

"When the Federal Reserve dropped interest rates in 2003 to 1%"

You will find that the bubble started on both coasts a lot earlier than 2003 or even 2001.

Prices doubled from 1997 to 2000 without interest rates declines and during a recession.

So its not the ALL Fed Reserve that is to blame ! My two cents we had two bubbles back to back.

You will find that the bubble started on both coasts a lot earlier than 2003 or even 2001.

True, but again, however, due to interest rate cuts by the Fed in 1998 to re-inflate the market after the Asian debt crisis, Russian debt crisis, and Long Term Capital Management collapse. And yes, Case-Schiller does indicate that the housing price bubble started in the late 1990s (meaning, incidentally, that housing prices will probably fall to late 1990s levels).

Much of the "funny money" created by the late 90s Fed rate cuts went into the tech sector, whose bubble deflated in mid-2000. The 2001 Fed rate cuts were meant to revive tech, but alas, the Fed cannot predict where its funny money will flow -- could have been tulips, but it was houses instead.

Upstate NY. It never booms and never busts (not counting Buffalo which has issues more like Detroit.)

we see whenever there's a burst, it lasted for more than 5 years.

To be more specific as I've discussed it here, each bust lasted longer than the previous "boom" and this "boom" is many times bigger than the others; so it's not hard to rationalize how long it will last.

Whitetower - Yes, I see your points on that one !  Well put!  

Thank you 99 and LIB, I believe you have your thumbs on it!  Sorry for those who bought during the lengthy peak.  There are always winners, losers and bystanders in the investment game, and not all who bought were looking for an immediate profit....they just wanted to have a nice house for their families.  They still have a nice house, but it's no longer a profitable investment....so they have to choose thier course of action or inaction.  Many unsuspecting will still buy in the next year or so (hey, realtors have to eat, too!) but since prices are literally plummeting as of this writing, they will be better off (a bit closer to bottom) than those who bought recently.  I for one, will wait to see where the steep downward curve lands before buying.  Did I mention that rental prices are great right now?

I am in the middle of a relo. Just had company aid in purchase of my house, and now need to live somewhere in MA/RI area.

What are some early indicators of when the market begins to improve or rates soon to rise? I may decide to rent for a year to wait this out, but do not want to miss out on the floor with good rate time frame.

Year-over-year inventory declines are a leading indicator of a rebound, just like year-over-year inventory increases signal lower future prices.

Oh, and don't worry about missing the floor, real estate doesn't turn swiftly.  Just look how long it's taken for the boom to turn downwards.  We've been debating this thing for well over a year and many areas are just starting to show negative year-over-year prices.

I am in the middle of a relo. . . I may decide to rent for a year to wait this out, but do not want to miss out on the floor with good rate time frame.

For goodness sakes, rent - and rent for a while.  It took several years for the housing market to get into this mess, so you can bet that it will be YEARS before the correction has settled in.  Sellers are still unwillling to accept the fact that they can't get last year's price on their homes now - and why should anyone pay those prices when they see what's happened to other middle income Americans who purchased homes for prices that had been traditionally reserved for middle to high 6 figure incomes.  All you have to do is track the dramatic rise in house prices starting around 2003 or 2004 - all the graphs show lines heading due north at that point.  Prior to that time, housing prices increased - always increased - at a reasonable rate that made good sense.  What's happened here in the last several years was not only unreasonable, but unsustainable.  I still struggle to understand why folks didn't see what was happening - I've been tracking this for years, shaking my head and thinking "My God, has history taught us nothing"?

I

would

I

I wish I could shout it from the nightly news - come on America - stop purchasing over priced homes.  As long as some folks continue to purchase homes at ridiculous prices, it will only serve to slow down the correction in housing prices that MUST occur.  Think of our future generations - think about your own children - don't you want the American dream of home ownership to be available to them???

Prices absolutely MUST COME DOWN - it's the only way to ensure that housing is available to all Americans who are middle income wage earners - which by the way, is the vast majority of the population.  You are doing a disservice to your fellow Americans if you purchase over priced homes and perpetuate the drag on the economy.  Please, STOP BUYING NOW - WAIT - houses are not going away - they'll always be there.  Do your part to help restore the American dream.

Totally agree jjlatimer. It angers me to see these idiots still paying over asking price for houses in my neck of the woods. If everyone just sat back and waited, or at least offered no more than $20k less than asking price, we could regain some sanity. The American dream does not equal paying $1600/month for a "cozy fixer-upper".

- First time home buyer who's had enough of greedy idiots with empty skulls.