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Replies (21)
- mephiston5
- Contributions:43
I think it depends on the area...Orlando, in my mind, has another 10-15% to go before everything is said and done.
- mickee
- Contributions:380
My county has gone down by 27% since first quarter of this year.
Other economic pressures may put further pressure on on price declines. Chrysler won't be leasing cars anymore cause they can't sell the cars after the lease is up since the value has gone down substantially on many models that suck gas like water..........will this mean less luxury cars on the roads.......perhaps yes cause many people will be forced to buy what they can AFFORD........the same will happen to houses, since financing in the last 5-7 years of homes have been the equivilant of leasing a car. The jig is up!!
It is all about BALANCE!
- mickee
- Contributions:380
its probably not a good idea to compare homes with cars or stocks
"its probably not a good idea to compare homes with cars or stocks"
Actually what 3GirlsVA said makes sense.
- space_acer
- Contributions:4311
No one was buying homes or cars... just borrowing/leasing... begging for credit/refinancing.
this has been as much as debt bubble as a housing bubble...
- kelargo
- Contributions:794
"AFFORD" is the key to what 3GirlsVA said..
I look at my area and I see a lot of McMansions hitting the REO Auction block in the next few weeks/month. These are homes priced above the current sub-prime REO inventory by a factor of 3 to 5. The value of these McMansions will be re-adjusted by *who* will be *left* buying those houses.
The plight of McMansions does have parallels to the limited number of people want to buy the gas guzzler SUVs.
When I bought my minivan in 1999 it was $26K and when I went to buy another minivan in 2007- the same van model/make with only 2 more extras was now $40K. House prices increased while incomes stayed relatively flat, easy lending has allowed the uptick in cars and house prices to increase so drastically. When the lease is up and consumer can't afford to BUY it the car goes back, when the reset on a ARM is up and the owner can't afford the new terms then the house goes back all the same, except with a foreclosure there is more financial damage. Right now car makers can't sell the cars for what they thought they could sell for since their value has gone down significally due to higher gas prices and consumer belt tightening. Banks can't sell their foreclsoure properties for what they leveraged them for, all the same these financial institutions are loosing on their gamble, but in my eyes it is the consumer who may ultimatley win when they can actually afford to purchase these items without fancy financing or putting themselves in a financially precarious position just in the name of transportation or a roof over their head. The myriad of foreclosures on the banks books across the country are not because people just walked away, they got into a loosing proposition though it was sold to them as a win win cause no one considered that it could go south.
If Visa and Amex stopped letting consumers charge for a week the entire retail industry would collapse!!! People are living above their means.
Some gas stations have gone back to the credit/cash price again.......cheaper if you pay in cash
CASH IS KING AGAIN!!!
Way back in the day (pre 1950s) women were not put on the loan for a home because they were not considered a financial stake holder in the deal. Then when women started to work and mortgage companies decided in the 1960s to add women to the transaction when approving the loan docs, which meant that a couple could afford more home with the wife's income included. I recently read a book that analyzed the correlation of women working and their economic contribution to the family income and how it contributed to the increases in prices of homes.
- space_acer
- Contributions:4311
which meant that a couple could afford more home with the wife's income included.
3 Girls -
It is odd today that many actually believe that home prices have sky rocketed due to dual incomes (Buying more homes!). As you point out, professional women have been contributing to a dual income household for several decades. Such phenonomon had little impact on prices in prior decades. I dont see this as a factor in price inflation.
- space_acer
- Contributions:4311
Can
- space_acer
- Contributions:4311
Can you provide Title and author... thanks
I checked the book out from the financial section of the library, I tried to find out if the library kept a checkout history but I don't think so. I may have to find it again. The book looked at prices of all types of consumer products and housing, it looked at the change in how these items were purchased/financed and how before the 1960's women were rarely put on the papers when it came to signing the mortgage note. Then little by little they began to work and included as a contributing factor. Financing on the whole allowed prices of most everything to increase, yes along with inflation but in many instances ahead of inflation and in direct correlation to financing.
Where I lived in GA homes were cheaper and most of the women I knew stayed at home. In Northern VA where I currently live there are hardly any women who stay at home. Doubtful it is just because every mother in VA likes to work, esp when I know many who have HAD to go back to work so they can afford the house and rising cost of everything.
- Mark75NYC
- Contributions:1316
bah ... what does the International Monetary Fund know? Bella and Alpine tell me everything is OK, there is no housing crash. Barney Frank fixed all that, didn't he?
- Alex07
- Contributions:64
DC metro area Norther Virginia is still over priced 100% from 2001 price.
- 2 Big 2 Fail
- Contributions:0
Huh? So are you saying that house prices must fall by 100%? What do you want, a free house?
- JayMac26
- Contributions:87
You are showing your cards as to why you are such a bad investor Alpine. When something is overvalued by 100%, it has to drop by 50% to get to its fair value.
If you don't understand this concept, you should keep your money in a passbook savings account and leave the investments and investment advice to the grown-ups.
- 2 Big 2 Fail
- Contributions:0
I'm glad your back.
[content removed by moderator for being a personal insult]
- BuyEqualsRent
- Contributions:1491
In an ordinary housing decline, first you have high unemployment which leads to a reduction in housing prices. This time, housing is leading the way. Job losses are just now starting to kick in, which means another big leg downwards for housing. I think 20% nationally is optimistic, I think we're in for 25-30% by 2010-11.
LMAO moment this weekend............at my high school reunion I was seated next to someone who was in the realty biz............OMG I had chipmunk cheeks from the sheer pressure of wanting to spew all over him after hearing him spout out that the media was at fault for hte downturn......my hub threatened me not to talk any doomer talk.......
My brother's copy of Realtor magazine came today......."Step into the Limelight: media training and acting techniques will give you an edge in the field" is the lead story....... I will have to post the highlights.
U.S. house prices overvalued by up to 20 percent: IMF paper
** Realtors will always say the opposite**
http://www.reuters.com/article/newsOne/idUSN2542244220080726
WASHINGTON (Reuters) - The downward spiral of U.S. housing prices still has a way to go and homes were overvalued by between 8 percent to 20 percent in the first quarter of this year, according to research by an International Monetary Fund economist published on Friday.
In his report "What goes up must come down? House price dynamics in the United States," IMF economist Vladimir Klyuev used several economic techniques to determine by how much U.S. home prices are overvalued.
Klyuev drew from a government study of single-family home prices to conclude that values were "around 14 percent above equilibrium in the first quarter of 2008, with a plausible range of 8 to 20 percent."
His research showed that home prices became considerably overvalued from 2001 and while the housing market has started to correct itself, there is still a long way to go.
Klyuev's research included data gathered by the U.S. Office of Federal Housing Enterprise Oversight which regulates mortgage-finance companies Fannie Mae and Freddie Mac and collects purchase price data.
Klyuev analyzed the dynamics of home prices and found the inventory-to-sales ratio the most important driver of changes in property values in the short run.
"Starts in foreclosures, which obviously add to inventory, seem to also exert additional downward pressure on prices," he added
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