Home prices fall a record 14.4%....Ouch!

[ArtsieAng Super Moderator Find all posts View Profile Close ArtsieAng]

Home prices fell at record pace in first quarter: S&P
Tue May 27, 2008

NEW YORK (Reuters) - Prices of single-family homes plunged a record 14.1 percent in the first quarter from a year earlier, marking a pace five times faster than the last housing recession, according to the Standard & Poor's/Case Shiller national home price index reported on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas fell 2.2 percent in March from February and plummeted a record 14.4 percent from March 2007.

Economists expected prices for the 20-city index to fall 2.0 percent on month and 14.0 percent from a year earlier, according to the median forecast in a Reuters survey.

"There are very few silver linings that one can see in the data," David Blitzer, chairman of S&P's index committee, said in a statement.

Falling home prices have become the scourge of the housing market that is seeing its worst downturn since the 1930s. Home values since last year have been dropping below balances owed on many mortgages, leaving borrowers with no equity and more likely to succumb to foreclosure.

The crisis in foreclosures, which pressure prices even lower, has spurred numerous plans by regulators and lawmakers that aim to keep borrowers in their homes by forgiving a portion of their loan's principle.

Housing markets that grew the most during the housing boom, such as Las Vegas, Nevada and Miami, Florida, are leading the decline, S&P said.

S&P said its composite index of 10 metropolitan areas declined 2.4 percent in March, for a record 15.3 percent year-over-year drop.

(Reporting by Al Yoon, Editing by Chizu Nomiyama)

Home prices fell at record pace in first quarter: S&P | Special Coverage | Reuters




© Thomson Reuters 2008 All rights reserved

[Keitht Super Moderator Find all posts View Profile Close Keitht]

Probably stating the obvious, but house price rises or falls are only of importance if the house is being sold. In a falling market, if prospective vendors don't put their properties on the market, other prices will tend to stabilise over time.

[riverdees05 Platinum Contributor Find all posts View Profile Close riverdees05]

Wouldn't you know that we would be trying to sell our Missouri home, now

[ArtsieAng Super Moderator Find all posts View Profile Close ArtsieAng]

Wouldn't you know that we would be trying to sell our Missouri home, now

Oh, that's a shame. I feel for you. You know what, you only need one buyer, and you never what what can happen. Hang in there, you just might get lucky.

[Fern Senior Member Find all posts View Profile Close Fern]

I agree with Keith; as long as you aren't trying to sell your house, you don't have a loss. And even if you are, if you've owned it awhile there still isn't a loss, just less profit than there once was.

We've been here over four years now. Even though there was a "correction" to the house prices, they'll never go as low as what we paid for ours.

I am seeing very low prices in some areas, though. There is a new project in Mountain Falls, in the far Southwest part of Las Vegas, and NEW 2 bdrm "starter homes" of about 1200 to 1500 sq. ft. start at $170K now. It's the first time I've seen new houses under $250K that weren't condos.

Fern

[4ARedOctober Super Moderator Find all posts View Profile Close 4ARedOctober]

What goes up must come down. We were lucky we bought at the bottom in '95/'96. But were not moving so it does not really mean....much thank goodness for Prop 13.

[Keitht Super Moderator Find all posts View Profile Close Keitht]

I have to say that I was very fortunate last year. I was executor of my mother's estate and the final thing to sell was her house. It was built in the 1960s and apart from a new kitchen installed in the late 70's by me, it was completely unmodernised. That means original electrical wiring, no central heating, original bathroom etc. It sold at the full asking price within 2 weeks of going on the market in July 2007. Her neighbours house is currently on the market. Identical size and construction to my mother's, but fully modernised and with an extension on the rear. It is on the market for the same price I sold mum's house for. That suggests a price drop of about £10-£15k or 5% to 7.5% in that time.

[dougp26364 Senior Member Find all posts View Profile Close dougp26364]

Wouldn't you know that we would be trying to sell our Missouri home, now

On the other hand, the new home your buying will most likely be suffering the same fate. The biggest problem occurs when people have their homes mortgage over what it's worth and must move due of employement considerations. In those cases they can't sell for what's is owed and many will just walk away, creating a forecloser nightmare. So if you're selling to buy another home, the biggest issue may be getting the sale made in order to complete your move. If the house you buying is in a market more depressed than the one your in you could come out ahead.

My parents bought and sold several houses from the 60's into the 90's. The housing market never really affected them that much because dad always put down a good deposit and he always had equity in his houses, even if it wasn't as much as he would have liked. The markets he was buying in was always similar and he generally moved up rather than sideways or backwards in home size. Sometime's it took longer to sell the house, sometimes it sold quickly. Once he had to owner finance a home until the buyer could get things arranged where he could get a bank loan (down payment issues and VERY slow market). That was the only time my dad was ever really concerned about his finances in relationship to the housing market.

When you get down to it, I really don't think the housing market decline is secondary to a recession so much as it's a market correction. The market has been a sellers market for some time now. I've known houses to go on the market and have offers by the end of the first day. I've seen some idiots get into a bidding war over a house and then move out of that house in 3 or 4 years. I've seen people buy additional homes on speculation that the value would continue to go up and they sell it for a profit just like stocks. Those things can be big mistakes if you're not careful. Add to this banks lending money for homes with money down and you have a reciept for disaster.

Right now I'm extremely nervous about what our daughter and her fiance are doing. He owns a home that he's been "renting" to a friend. The friend can't buy the home because he's allowing his mother to live in the home he owns in his name (and has a loan on) and the bank won't give him a second home loan.

Now our kids want to build a home but don't have any money to put down and can't sell the first house for the equity in it to use as a down payment. To make matters worse, our daughter fiances borrowed the $10,000 down payment for the first house. Some idiot banker has agreed to give them a 100% (no equity) loan to build this new house. Haven't the banks learned this is VERY BAD business and puts these kids into a very high risk group for foreclosure? To top it off the house their building is only a two bedroom home and is rather small with an unfinished basement. It will be fine for a few years but it's not going to take them anything to outgrow this starter home. No down payment and they own a second house that they've been unable to sell with a renter that could walk away without remorse if he has any sort of major (or minor) life change. This is akin to playing chicken with an oncoming train and expecting to win.

With luck everything will work out for them. Hopefully the worst thing that happens to them is they're stuck in a house that's smaller than is comfortable once they start having children. Perhaps that won't even be in issue. I've seen fools dance between the raindrops before without getting soaked. Hopefully they'll have this sort of luck.

[cbcjs Junior Member Find all posts View Profile Close cbcjs]

southern cal

I live in So. Cal and it is brutal out here. Many bought homes at the height of the market and they are jumping ship like there is no tomorrow. Why should they stay when many put 3% down and some 0% and their interest rates have spiked to double digits. The RE agents, loan brokers, banks, wall street and greedy buyers are all taking a hit and I for one am glad. It is bringing sanity back to the real estate market.